Newsletter 1/2021: Paternity leave: What employers need to know


I. Questions and answers 1. What is the purpose of paternity leave and paternity allowance? The purpose of paternity leave is to build up and strengthen the father's relationship with the new-born child and to involve the father more closely in family life. Paternity leave does not replace the entitlement for vaca-tion, which is why the employer may not consider it as absence deductible from the overall vacation balance. Paternity compensation replaces the employer's obligation to continue paying wages during paternity leave and compensates the father for lost wages during this time. 2. Who is entitled to paid paternity leave? The man who is entitled to a paternity allowance under the Act on Income Compensation (EOG) is the man who a) is the legal father at the time of the child's birth or becomes the legal father within the following six months. The child relationship is established by marriage to the mother, by acknowledgement of paternity or by a court judgment. b) was compulsorily insured within the meaning of the Federal Old Age and Survivors' Insurance Act (AHVG) for the nine months prior to the birth of the child. This insurance period is reduced accordingly if the birth of the child occurs before the end of the ninth months of pregnancy. c) has been gainfully employed (full or part-time) for at least five months during that period, except as provided in subparagraphs (e) (i) through (iii); and d) at the time of the birth of the child (i) is an employee or self-employed person, or (ii) works in the business of the wife and receives a cash salary; or e) at the time of the birth of the child (i) is unemployed and receives daily benefits from unemployment insurance, (ii) is performing military or civil service, or (iii) is unable to work as a result of an accident, illness or disability and receives daily benefits from social or private insurance or is in a valid employment relationship but has already exhausted the salary continuation entitlement. Periods of insurance and employment completed in an EU or EFTA member state are taken into account, but must be documented with a form E104 of the foreign insurance institution. In contrast to the daily allowance under the Income Compensation Act, the entitlement to paternity leave under the Code of Obligations (CO) al-ready arises if the employee is deemed to be the legal father of a child at the time of its birth or becomes so within the following six months. A father who is not entitled to daily allowances (paternity compensation) can therefore also take paternity leave and, according to a not uncontroversial opinion, must be paid for one to two days regardless of the circumstances if he is employed on a monthly salary. 3. Is there also an entitlement to paternity leave in the case of adoption? No. However, those affected can claim paid (controversial!) paternity leave of one to two days based on art. 329 para. 3 CO if they are employed on a monthly salary. In addition, individual employment contracts, collective employment contracts (GAV), general employment conditions or cantonal law sometimes provide for an adoption allowance. 4. Who determines when paternity leave is taken? Formally, it is the employer who determines when paternity leave is to be taken, whereby he must take into account the wishes of the employee. In practice, the employee's wishes will (almost) always take precedence over the employer's business interests, even if the employee wants to take the full two weeks of paternity leave from the birth of his child at very short notice. 5. Can paternity leave also be taken by the day? Yes. If the father takes his leave by the day instead of by the week, he will be paid an additional two daily allowances for every five days financially compensated. 6. Does paternity leave have to be taken? No. The right to paternity leave is a right and not an obligation of the employee. However, employees may not contractually waive the exercise of this right in advance. If paternity leave is not effectively taken, it lapses without compensation. 7. What is the amount of paternity compensation? The paternity allowance is paid as a daily allowance and amounts to 80% of the average income earned before the birth, but not more than CHF 196.00 per day. This limit is reached at a gross monthly income of CHF 7,350.00. Therefore, high earners suffer a substantial loss of income during paternity leave unless their employer pays them supplementary wages during this period voluntarily. 8. When does the entitlement to paternity compensation arise? The entitlement arises irrespective of the duration of pregnancy if and as soon as the child is born viable. 9. When does the right to paternity compensation end? The entitlement ends (i) after the expiry of the framework period of six months after the birth, (ii) after the max. 14 daily allowances have been exhausted, (iii) if the father dies, (iv) if the child dies, or (v) if paternity is revoked. 10. How and to whom is the paternity allowance paid? In practice, it is usually the employer who, at the father's request, applies to the relevant compensation office for paternity compensation, advances the daily allowance and demands payment of the compensation itself. This is because the paternity allowance is only paid once in arrears after the end of the entitlement (e.g. complete withdrawal or expiry of the six-month framework period). 11. What if the employer has already voluntarily granted paid paternity leave before 1 January 2021? Any contractually agreed paid paternity leave shall continue to be granted in accordance with the contract after the statutory paternity leave comes into force. However, the statutory paternity leave and compensation shall be credited against this time or payment. 12. What happens if benefits from other social insurance programs coincide with paternity compensation? If a person was entitled to a daily allowance from disability insurance, health insurance (KVG), accident insurance, military insurance or unemployment insurance until the entitlement to paternity compensation began, the paternity compensation shall at least correspond to the daily allowance previously received (grandfathering). There is no vested right to daily sickness benefits from voluntary daily benefits insurance based on the Insurance Contract Act (VVG). 13. Do contributions to AHV/IV/EO and ALV have to be paid on the paternity allowance? Yes, the usual social security contributions (AHV/IV/EO and ALV) must be paid on the paternity allowance. 14. Is the employee covered by accident insurance during paternity leave? Yes. However, accident insurance premiums are not payable on paternity compensation. 15. Is the employee insured under the occupational pension plan during paternity leave? The employee's occupational pension insurance coverage will continue during paternity leave on the basis of the previous coordinated salary (on which contributions are also levied during paternity leave). 16. Is the father specially covered during paternity leave? Paternity leave does not constitute a blocking period. Employees can therefore in principle also be dismissed during paternity leave. The most significant change in the law concerns art. 335c para. 3 CO. Accordingly, the notice period is extended by any paternity leave days not yet taken (at the longest by the 14 days if no day has yet been taken) in the event of ordinary termination by the employer after the end of the probationary period. This means that the employment relationship is extended if the father is entitled to it even if he does not become a father until the last day of the notice period. At least, the employment relationship is extended until the last day of paternity leave and not until the next ordinary termination date (usually the end of the month), unless the employee subsequently waives such a day-by-day extension of the employment relationship (controversial!) or asserts his claim to the paternity leave not yet taken against a new employer (see question 18). 17. What applies if the father falls ill during paternity leave? Analogous to maternity compensation, the employer's obligation to continue to pay wages is also deemed to be satisfied in the case of paternity compensation pursuant to art. 324a CO. If the employee falls ill during paternity leave, the employer's obligation to continue to pay wages is not revived until the end of the paternity leave (controversial!). 18. Can the paternity leave entitlement be "taken along" in the event of a change of job? Yes. Employees can choose within the six-month framework period whether they want to take paternity leave under the old or new employment relationship (controversial!). The purpose of the framework period, i.e. the possibility to take leave flexibly and to take into account the needs of the family, precludes a shortening of the framework period and of paternity leave due to a change of job. The fact that the EOG does not mention the change of job as a reason for termination of the entitlement to paternity compensation (see question 9) and that the situation of an entitlement to compensation according to the EOG and a simultaneous lack of entitlement to leave according to the CO should be strictly avoided additionally speaks in favour of the possibility to "take along" the statutory paternity leave not yet taken. 19. Is there also an entitlement to paid paternity leave for births in the second half of 2020 if the six-month framework period has not yet expired on 1 January 2021? Most likely yes (controversial!). The entitlement to paternity compensation exists if the eligibility requirements are met for the remainder of the six-month framework period, even if the birth occurred between 2 July 2020 and the entry into force of statutory paternity leave on 1 January 2021 (as an aside: in the case of maternity compensation, this was explicitly provided for in the transitional provisions). 20. How is paternity compensation funded? The paternity allowance is financed by employers and employees through (half-financed) EO contributions of 0.50 percent of wages (new). II. Conclusion and recommendations The introduction of paid two-week paternity leave is a positive step in the direction of partnership-based childcare. Unfortunately, the regulations in question were drafted at short notice and are therefore unclear in isolated cases. It is to be hoped that the courts will clarify these ambiguities quickly. To avoid conflicts, employers should definitely review their contractual documentation under employment law and take appropriate precautions to implement the new legal regulations. In particular, the EO contribution rate must be adjusted in payroll accounting. Bern/Basel, February 2021 Kellerhals Carrard Employment and Social Security Law Group

I. Questions and answers

1. What is the purpose of paternity leave and paternity allowance?

The purpose of paternity leave is to build up and strengthen the father's relationship with the new-born child and to involve the father more closely in family life. Paternity leave does not replace the entitlement for vaca-tion, which is why the employer may not consider it as absence deductible from the overall vacation balance.

Paternity compensation replaces the employer's obligation to continue paying wages during paternity leave and compensates the father for lost wages during this time.

2. Who is entitled to paid paternity leave?

The man who is entitled to a paternity allowance under the Act on Income Compensation (EOG) is the man who

a) is the legal father at the time of the child's birth or becomes the legal father within the following six months. The child relationship is established by marriage to the mother, by acknowledgement of paternity or by a court judgment.
b) was compulsorily insured within the meaning of the Federal Old Age and Survivors' Insurance Act (AHVG) for the nine months prior to the birth of the child. This insurance period is reduced accordingly if the birth of the child occurs before the end of the ninth months of pregnancy.
c) has been gainfully employed (full or part-time) for at least five months during that period, except as provided in subparagraphs (e) (i) through (iii); and
d) at the time of the birth of the child (i) is an employee or self-employed person, or (ii) works in the business of the wife and receives a cash salary; or
e) at the time of the birth of the child (i) is unemployed and receives daily benefits from unemployment insurance, (ii) is performing military or civil service, or (iii) is unable to work as a result of an accident, illness or disability and receives daily benefits from social or private insurance or is in a valid employment relationship but has already exhausted the salary continuation entitlement.

Periods of insurance and employment completed in an EU or EFTA member state are taken into account, but must be documented with a form E104 of the foreign insurance institution.

In contrast to the daily allowance under the Income Compensation Act, the entitlement to paternity leave under the Code of Obligations (CO) al-ready arises if the employee is deemed to be the legal father of a child at the time of its birth or becomes so within the following six months. A father who is not entitled to daily allowances (paternity compensation) can therefore also take paternity leave and, according to a not uncontroversial opinion, must be paid for one to two days regardless of the circumstances if he is employed on a monthly salary.

3. Is there also an entitlement to paternity leave in the case of adoption?

No. However, those affected can claim paid (controversial!) paternity leave of one to two days based on art. 329 para. 3 CO if they are employed on a monthly salary. In addition, individual employment contracts, collective employment contracts (GAV), general employment conditions or cantonal law sometimes provide for an adoption allowance.

4. Who determines when paternity leave is taken?

Formally, it is the employer who determines when paternity leave is to be taken, whereby he must take into account the wishes of the employee. In practice, the employee's wishes will (almost) always take precedence over the employer's business interests, even if the employee wants to take the full two weeks of paternity leave from the birth of his child at very short notice.

5. Can paternity leave also be taken by the day?

Yes. If the father takes his leave by the day instead of by the week, he will be paid an additional two daily allowances for every five days financially compensated.

6. Does paternity leave have to be taken?

No. The right to paternity leave is a right and not an obligation of the employee. However, employees may not contractually waive the exercise of this right in advance. If paternity leave is not effectively taken, it lapses without compensation.

7. What is the amount of paternity compensation?

The paternity allowance is paid as a daily allowance and amounts to 80% of the average income earned before the birth, but not more than CHF 196.00 per day. This limit is reached at a gross monthly income of CHF 7,350.00. Therefore, high earners suffer a substantial loss of income during paternity leave unless their employer pays them supplementary wages during this period voluntarily.

8. When does the entitlement to paternity compensation arise?

The entitlement arises irrespective of the duration of pregnancy if and as soon as the child is born viable.

9. When does the right to paternity compensation end?

The entitlement ends (i) after the expiry of the framework period of six months after the birth, (ii) after the max. 14 daily allowances have been exhausted, (iii) if the father dies, (iv) if the child dies, or (v) if paternity is revoked.

10. How and to whom is the paternity allowance paid?

In practice, it is usually the employer who, at the father's request, applies to the relevant compensation office for paternity compensation, advances the daily allowance and demands payment of the compensation itself. This is because the paternity allowance is only paid once in arrears after the end of the entitlement (e.g. complete withdrawal or expiry of the six-month framework period).

11. What if the employer has already voluntarily granted paid paternity leave before 1 January 2021?

Any contractually agreed paid paternity leave shall continue to be granted in accordance with the contract after the statutory paternity leave comes into force. However, the statutory paternity leave and compensation shall be credited against this time or payment.

12. What happens if benefits from other social insurance programs coincide with paternity compensation?

If a person was entitled to a daily allowance from disability insurance, health insurance (KVG), accident insurance, military insurance or unemployment insurance until the entitlement to paternity compensation began, the paternity compensation shall at least correspond to the daily allowance previously received (grandfathering). There is no vested right to daily sickness benefits from voluntary daily benefits insurance based on the Insurance Contract Act (VVG).

13. Do contributions to AHV/IV/EO and ALV have to be paid on the paternity allowance?

Yes, the usual social security contributions (AHV/IV/EO and ALV) must be paid on the paternity allowance.

14. Is the employee covered by accident insurance during paternity leave?

Yes. However, accident insurance premiums are not payable on paternity compensation.

15. Is the employee insured under the occupational pension plan during paternity leave?

The employee's occupational pension insurance coverage will continue during paternity leave on the basis of the previous coordinated salary (on which contributions are also levied during paternity leave).

16. Is the father specially covered during paternity leave?

Paternity leave does not constitute a blocking period. Employees can therefore in principle also be dismissed during paternity leave.

The most significant change in the law concerns art. 335c para. 3 CO. Accordingly, the notice period is extended by any paternity leave days not yet taken (at the longest by the 14 days if no day has yet been taken) in the event of ordinary termination by the employer after the end of the probationary period. This means that the employment relationship is extended if the father is entitled to it even if he does not become a father until the last day of the notice period. At least, the employment relationship is extended until the last day of paternity leave and not until the next ordinary termination date (usually the end of the month), unless the employee subsequently waives such a day-by-day extension of the employment relationship (controversial!) or asserts his claim to the paternity leave not yet taken against a new employer (see question 18).

17. What applies if the father falls ill during paternity leave?

Analogous to maternity compensation, the employer's obligation to continue to pay wages is also deemed to be satisfied in the case of paternity compensation pursuant to art. 324a CO. If the employee falls ill during paternity leave, the employer's obligation to continue to pay wages is not revived until the end of the paternity leave (controversial!).

18. Can the paternity leave entitlement be "taken along" in the event of a change of job?

Yes. Employees can choose within the six-month framework period whether they want to take paternity leave under the old or new employment relationship (controversial!). The purpose of the framework period, i.e. the possibility to take leave flexibly and to take into account the needs of the family, precludes a shortening of the framework period and of paternity leave due to a change of job. The fact that the EOG does not mention the change of job as a reason for termination of the entitlement to paternity compensation (see question 9) and that the situation of an entitlement to compensation according to the EOG and a simultaneous lack of entitlement to leave according to the CO should be strictly avoided additionally speaks in favour of the possibility to "take along" the statutory paternity leave not yet taken.

19. Is there also an entitlement to paid paternity leave for births in the second half of 2020 if the six-month framework period has not yet expired on 1 January 2021?

Most likely yes (controversial!). The entitlement to paternity compensation exists if the eligibility requirements are met for the remainder of the six-month framework period, even if the birth occurred between 2 July 2020 and the entry into force of statutory paternity leave on 1 January 2021 (as an aside: in the case of maternity compensation, this was explicitly provided for in the transitional provisions).

20. How is paternity compensation funded?

The paternity allowance is financed by employers and employees through (half-financed) EO contributions of 0.50 percent of wages (new).

II. Conclusion and recommendations

The introduction of paid two-week paternity leave is a positive step in the direction of partnership-based childcare. Unfortunately, the regulations in question were drafted at short notice and are therefore unclear in isolated cases. It is to be hoped that the courts will clarify these ambiguities quickly.

To avoid conflicts, employers should definitely review their contractual documentation under employment law and take appropriate precautions to implement the new legal regulations. In particular, the EO contribution rate must be adjusted in payroll accounting.

Bern/Basel, February 2021

Kellerhals Carrard Employment and Social Security Law Group

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