What is sickness loss of earnings insurance?
An accident is covered by LAA. An illness is not. Yet depression, cancer or major surgery can keep an employee off work for months.
Sickness loss of earnings insurance pays replacement income when an employee is unable to work because of illness. It protects the worker against loss of salary, and the employer against a financial burden that can quickly become considerable.
Is this insurance mandatory in Switzerland?
No, there is no systematic obligation. However, many collective labour agreements require it, notably in construction, hospitality or cleaning. You must therefore check case by case what applies to the company.
Even if the sector does not require insurance, this does not free the employer from its duties.
Salary at 100%
The employer must continue paying salary in case of illness, at 100%, for a limited period. In French-speaking Switzerland, the Bern scale is the reference: three weeks in the first year, then a duration that increases with seniority.
After three months
The duty only applies after three months of employment, unless the contract was concluded from the outset for more than three months.
Transfer of the risk
The employer can replace this duty with insurance, provided the benefits are at least equivalent to the legal regime (art. 324a para. 4 CO).
What exactly does it cover?
The daily allowance
The core benefit is payment of a daily allowance during inability to work. Three parameters define it.
80 %
of insured salary
Some policies go up to 90 or 100%, in return for a higher premium.
720 / 730 d
depending on the regime
720 days within a 900-day period, with the waiting period included in the 720 days. Or 730 days minus the waiting period.
0 to 180 d
sometimes more
The longer it is, the lower the premium, but the more the employer itself bears the salary cost at the start of the incapacity.
Example: eight months of incapacity
An employee totally unable to work for eight months, with a policy providing 80% of salary and a 30-day waiting period. The employer pays full salary the first month, then insurance takes over at 80% until return to work.
Insured salary
Unlike LAA, there is no statutory cap. Insured salary is defined in the contract.
Maternity
Many policies provide benefits in case of maternity, on top of the federal allowance. This guarantee is never automatic: it is optional.
What is not covered
Incapacities below 25% generally give no right to benefits. Illnesses existing before joining the insurance may be subject to a reservation.
Legal scale without insurance
Without an IJM contract, salary continuation is limited to art. 324a CO. In the first year, that can mean only three weeks at 100%.
Common pitfalls
Believing insurance exists when only art. 324a CO applies
Many employees discover when they fall ill that their employer has taken out no insurance. Salary continuation is then limited to the legal scale, for example three weeks in the first year of service. Beyond that, nothing.
Underestimating the waiting period
A 60 or 90-day waiting period materially reduces the premium, but the employer remains bound to pay salary during that period, according to the legal scale. A company with many recently hired employees thus bears a very real risk.
Losing cover when leaving the company
Collective insurance ends when employment ends. An illness that started during the cover period continues in principle to be indemnified until the right is exhausted, but any new condition is not.
The employee has a right to switch to individual insurance, to be exercised within a short deadline, often 30 days under the ICA, 90 days under LAMal. After that deadline, the right is lost. The individual premium is fully at the insured person’s cost and substantially higher.
Neglecting reservations when switching insurer
This is the most costly trap for an employer. When a company switches insurer, ongoing incapacities remain in principle with the former insurer, and the new insurer may refuse to take over existing cases. A poorly prepared switch can leave an employee without cover for a condition already declared.
Not sure whether you can cancel? We will take care of it.
You do not need to interpret your policy, GIC or legal provisions yourself.
Simply send us your current insurance policy and, if applicable, the latest letter received from your insurer.
We take care of:
We check its term, expiry date, notice period and cancellation conditions.
Expiry, 3rd year, premium increase, ongoing cases or another situation: we look for the first cancellation ground that actually applies to your case.
We compare premiums, but above all benefits: rate, duration, waiting period, insured salary, maternity, reservations and takeover of ongoing cases.
Once you have chosen, we organise the new cover and the steps needed to switch insurer.
We also handle the steps with your current insurer, making sure the ground, date and cancellation deadline are respected.
We align insurance, contracts and duties
We compare daily-allowance offers according to your payroll, sector, CLA, absence history, desired waiting periods and HR policy. We also check consistency with employment contracts, LAA and occupational pension.
Coordinate your people insurance
Sickness salary cover must work with LAA, LPP and the company’s other covers.