New Swiss Court Ruling on Short-Time Work Compensation
In a recent ruling, the Cantonal Court of Lucerne decided that holiday and public holiday compensation for persons employed on a monthly salary must be taken into account when assessing short-time work compensation on the basis of the Covid-19 Ordinance.
The normal procedure requires an individual calculation
Within the framework of the normal procedure (outside the Covid-19 Ordinance), the Unemployment Insurance Act (UIA) requires that holiday and public holiday compensation be taken into account. This is done by deducting the annual holiday and public holiday hours (e.g. five weeks of holiday based on a 40 hour week = 200 hours, and 8 public holidays of 8 hour each = 64 hours) from the annual working hours (e.g. 2080 hours) of persons employed on a monthly salary. In a second step, this net annual working time (e.g. 1816 hours) is divided by 12, resulting in the monthly working time (e.g. 151.3 hours). In a third step, the relevant monthly salary (calculated in accordance with UIA-practice) is divided by the monthly working time. This results in the compensable hourly rate, which serves as a basis for the short-time compensation under UIA.
Hence, in the context of the normal procedure holiday and public holiday compensation is taken into account by deducting the effective holiday and public holiday hours from the annual working hours as this reduces the monthly working hours and, consequently, increases the compensable hourly rate.
Summary procedure must consider holiday and public holiday compensation
The Cantonal Court of Lucerne has held that, in principle, the same holds true if the short-time compensation is determined within the scope of the Covid-19 Ordinance. If the short-time work compensation – which is paid as a lump sum in a summary procedure pursuant to the Covid-19 Ordinance – does not take into account the holiday and public holiday compensation, this constitutes a violation of the UIA.
In its ruling (which is not yet final), the Cantonal Court of Lucerne did not specify the form in which the holiday and public holiday compensation must be taken into account. However, it has pointed out that in the summary procedure according to the Covid-19 Ordinance, the employers have to accept a simplified calculation and are not entitled to an individual calculation as shown above for the normal procedure. Instead, according to the Cantonal Court of Lucerne, the authorities may use more standardized parameters as a basis for their calculation, such as the statutory holiday entitlement (four weeks), collective bargaining agreements, statistical average values or a fixed compensation amount.
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Jana Bieli and Remo Wagner from Loyens & Loeff Switzerland LLC in Zurich regularly advise clients in employment law and social security law matters. Please contact our Swiss Employment Law or Litigation team for more information about how you can safeguard your rights in connection with short-time work compensation.