Insolvency compensation

Purpose
In the event of an employer becoming insolvent, insolvency compensation (IC) covers employees’ open salary claims for a maximum of four months. In principle, IC may only be claimed for work that has been carried out.

Who is insured/entitled to claim?
Employees obliged to make contributions who work for employers that are subject to enforcement proceedings in Switzerland or employ staff in Switzerland are entitled to IC if ...

  • bankruptcy proceedings have been opened against their employer; or
  • the only reason bankruptcy proceedings have not been opened is that no creditor has declared their willingness to cover the costs in advance as a result of obvious over-indebtedness; or
  • they have made a demand for seizure of salary claims against their employer; or
  • a provisional debt-restructuring moratorium has been granted; or
  • a judicial deferment of bankruptcy has been granted.

Benefits
Insolvency compensation covers open salary claims for a maximum of four months at a rate of 100% for the same employment relationship. Any 13th month salaries or bonuses, vacation or public holiday compensation are considered on a pro rata basis. However, a maximum salary of CHF 12,350 (since 1 January 2016) per month can be compensated.

There is no entitlement to IC for people who, in their capacity as a shareholder, as a stakeholder with a financial interest in the company or as a member of the most senior executive decision-making committee, can make or have a significant impact on the employer's decisions, as well as their spouses working at the company.

Application for insolvency compensation
Applications for IC must be made by each individual employee to the responsible public unemployment insurance fund (at the company’s domicile).

Deadlines
The application for IC must be made with 60 days of ...

  • the bankruptcy being published in the SHAB;
  • the provisional or definitive debt-restructuring moratorium being published in the SHAB;
  • the judicial deferment of bankruptcy being published in the SHAB;
  • the enactment of the seizure/the day on which certification of seizure is issued; or
  • becoming aware that the deadline for providing an advance payment of costs has expired unused pursuant to Art. 169 para. 2 FDEBA (in the case of obvious over-indebtedness).

Do you have any questions?
The public unemployment insurance funds can provide specific details on insolvency compensation (see also the guidelines for insured persons – Insolvency compensation). 

https://www.arbeit.swiss/content/secoalv/en/home/menue/unternehmen/versicherungsleistungen/insolvenz.html