Daily benefit in case of hospitalization: Continued payment of salaries in the event of illness

The employer's obligation to continue to pay salaries is governed by Article 324a of the Swiss Code of Obligations (CO). The law stipulates that employers must continue to pay their employees their full salaries for a limited period of time in cases of illness. They are obliged to do so for a certain period of time, based on the years of service and also whether the employment relationship has lasted more than three months or if it was entered into more than three months ago. The provision also applies if an employee is prevented from performing her work as a result of pregnancy.

The law only specifically regulates the duration of the obligation for the first year of service: the obligation to continue to pay salaries lasts three weeks. From the second year of service onwards, it exists "for an appropriate longer period of time". But what does this mean exactly? In order to make this formulation easier to apply, the use of different scales - the Bern Scale, Basel Scale and Zurich Scale - have become established in practice.

Yes, they can. The obligation to continue to pay salaries may be replaced by an equivalent provision (Art. 324a para. 4 Swiss Code of Obligations). Employers are therefore able to exempt themselves from this obligation and minimize their financial risk by taking out collective insurance for daily sickness benefits (KTG) with adequate insurance cover. If a daily sickness benefit solution is not equivalent in the sense of the aforementioned article of the law, it does not replace the obligation to continue salary payments, but supplements them. This is the case, for example, for waiting periods of 30 or 60 days.

Insurance is compulsory for the employer if it is required by the collective employment agreement (GEA). In all other cases, KTG is voluntary. Depending on the situation and sickness event, the obligation to continue to pay salaries can quickly become a major financial challenge for a company, so insurance is generally recommended.

It can ease the financial burden on the employer, offer security, and provide employees with an income in the event they are unable to work due to illness. As a rule, the insurance pays the daily allowances for 730 days less the waiting period. This therefore prevents gaps in cover until disability insurance (IV) or occupational retirement provision (BVG) kick in. Another common advantage is that the employer is supported by the case management of the insurance company. This provides support by helping to quickly reintegrate the affected employees back into everyday working life.

The collective insurance for daily sickness benefits is concluded between the insurance company and the employer as policyholder for the benefit of the insured employees. This is why the employer pays the premium. Both the employer and the employees benefit equally from the insurance. Therefore, in practice, it is often the case that employees have to pay a part of the premium. Participation in the payment of premiums does not arise automatically based on the law. If no applicable collective labour agreement (GAV) provides for it, it must be agreed with the employees in the contract of employment.

For the applicable calculation method, the respective KTG insurance policy or the General Conditions of Insurance must be checked. In principle, the basis for the calculation is the AHV-liable wage that was paid before the onset of illness. As a rule, the employer insures 80 percent of the wage with the insurance for daily sickness benefits, although they can also insure 90 or 100 percent. In the event of a 100 percent inability to work due to illness, the employee will receive his daily allowance after the waiting period, which can be 7, 14, 30, 60 or 90 days, has expired.

Calculation example:

• Insured annual salary: 100,000 Swiss Francs
• Amount of insurance for daily sickness benefits: 80 Percent
• 80 Percent of 100,000 Swiss francs = 80,000 Swiss francs
• 80,000 Swiss francs / 365 days = 219 Swiss francs per day

Good to know:

If the employer agrees to a waiting period of more than 2 to 3 days during which no salary is paid at all, this may result in the insurance solution no longer being at least an equivalent arrangement within the meaning of Article 324a Section 4 of the Swiss Code of Obligations (OR). Complete exemption from the obligation to continue to pay salaries would therefore not be ensured. It therefore pays to consult an expert. 

Benefits paid out by the insurance for daily sickness benefits are not subject to compulsory social security. Therefore, no deductions have to be made for OASI, IV, EO or ALV. The situation is different if the salaries are paid by the employer as part of his obligation to continue to pay salaries. In this case, it is still income with an obligation to contribute.

Whether there is still entitlement to the daily allowance depends on the contract conditions of the individual insurers. If a so-called subsequent benefit is granted, the insurance company will continue to pay the benefits, with the exception of certain limitations, even if the employee has already left the insured company.

If the employee is prevented from working due to pregnancy, the statutory obligation to continue to pay salaries pursuant to Article 324a of the Swiss Code of Obligations (OR) also applies.

As a rule, the employer has the option of voluntarily supplementing the maternity compensation benefits according to the Loss of Earnings Compensation Act (LECA) in his insurance for daily sickness benefits with childbirth benefit cover.

Hospital and treatment costs due to an illness are usually covered within the framework of the mandatory health insurance according to the KVG or the voluntary supplementary health insurance.

The law does not specifically define how long the obligation to continue to pay salaries after the first year of service should last. It should be for "an appropriately longer period of time". In order to quantify this appropriate period of time more precisely, several scales have become established in judicial practice that help to determine the duration of the obligation to continue to pay salaries. These are the Zurich scale, the Basel scale and the Bern scale.

Example: Oskar Müller, resident in the canton of Aargau, has been employed by an SME in the canton of Zurich for 3.5 years when he needs to be hospitalized for several weeks due to a serious illness. Following this he spends several weeks in rehab. His employer has not taken out insurance for daily sickness benefits.

Continued payment of salaries according to Bern scale

Continued payment of salaries according to the Zurich scale

Mr. Müller is in his 4th year of service with his employer. The Zurich scale is used for the assessment, as he works in the canton of Zurich. Employees are therefore entitled to continued payment of their salary by their employer for a period of 10 weeks. If they were employed under the same conditions in the canton of Neuchâtel, where the calculation is based on the Bern scale, they would be entitled to continued payment of their salary for two months.