What is paid sick leave insurance and what should employers in Switzerland consider when getting it? This guide explains.
Sick leave with pay is a basic employee right in Switzerland. But unlike other employee benefits like paid vacations, it is unpredictable and difficult to plan for.
How much paid sick leave are employees entitled to?
In Switzerland, the amount of paid sick leave which employees are entitled to depends on how long they have been employed by an employer. As a rule, employees are entitled to 3 weeks of paid sick leave during the first year under your employ. This obligation applies from the fourth month of employment. Paid sick leave entitlements vary between cantons. In some cantons, longstanding employees are entitled to as much as 46 weeks (more than 10 months) of paid sick leave.
How can employers protect their budgets?
Due to the unpredictable nature of illness, many Swiss insurance companies offer paid sick leave insurance to employers. When you take out these insurance policies for your employees, you transfer indemnity for paid sick leave from your business to the insurance company.
Swiss law requires that the coverage offered by the insurance company match paid sick leave obligations. If an employee is entitled to 3 months of sick leave at full pay and the insurance provides up to one year of sick leave at 80% of pay, the benefit paid out is in fact greater than the entitlement even though it is paid out over a longer time frame.
Many Swiss health insurance companies (including ÖKK, Sanitas and CSS) provide paid sick leave insurance, as do some universal insurance companies. Benefits and premiums vary broadly between insurers.
What should I pay attention to when choosing a paid sick leave insurance policy?
1. Some insurance companies which offer paid sick leave insurance let you choose the level of coverage (80% to 100% of employee salaries), the length of time during which benefits will be paid (1 or 2 years, for example) and the number of sick leave days which you will cover as the employer before the insurance takes over.
2. Many policies require employees to meet certain disability levels in order for claims to qualify. For example, the full benefit may only be paid out if your employees lose at least 70% of their ability to work, as per medical reports. Some policies only pay out full benefits in the event of 100% loss of work capability.
3. The maximum daily compensation paid out by a policy is another point worth checking into. Daily compensation is generally based on the employee’s salary, but virtually all policies limit the maximum daily compensation paid out. This limit can range from a maximum payout of 300 francs per day to a maximum of 600 francs per day or even more. Make sure to choose a policy with a maximum daily benefit that matches your employee’s daily earnings.
4. Some policies include clauses which allow the insurers that issue them to stop paying out compensation if your employees leave your employ. For example, if a chronic illness prevents an employee from working for you any longer, they could lose their right to insurance benefits when you terminate their employment. This is okay if you simply want to fulfill your obligations, but it can result in financial difficulties for employees which leave or which you let go. Some insurers continue paying benefits for the full benefit term, even if the employee leaves your employ.
5. Age limits are also important. Some insurance companies issue policies for employees right up until they reach retirement age, while others will not issue paid sick leave insurance for employees above the age of 50! For this reason, the age of your employees directly affects which policies you can choose from. Age is also relevant to premiums, which are based on the ages and genders of the insured individuals.
How can I save on premiums?
Typically, the premiums for paid sick leave insurance are shared by employers and employees. Insurance providers typically require employers to cover a minimum of 50% of premiums.
As a rule, the higher the deductible and the lower the benefit (in relation to the salary) and the benefit term, the less you pay in premiums.
The deductible, in this insurance type, is typically a franchise deductible in which paid sick leaves which are shorter than a predefined term must be covered by the employer, while the insurance company covers longer paid sick leaves. Choosing to have the insurance only cover sick leaves which last longer than a predefined amount of time (1 week, for example) can significantly reduce premiums.
A number of policies bundle paid sick leave insurance with other insurances. For example, paid sick leave may be bundled with supplementary maternity leave insurance which makes up the difference between the social security maternity insurance benefit and the employee's full salary. It may also be bundled with accident income compensation insurance which flls the gap in loss-of-income compensation. Unless you want to take out those insurances as employee benefits, you can save money by getting stand-alone paid sick leave insurance.
Premiums vary broadly between policies and insurers. The most expensive policies can easily cost twice as much as the most affordable policies. For that reason, requesting multiple quotes and comparing offers carefully can help both you and your employees to save a lot of money.
More on this topic:
Choosing the right accident insurance for your employees
Employer costs to consider when hiring explained
Small business money saving tips
Business bank account comparison
Business credit card comparison
Business loan comparison
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