Welcome to our latest article on managing child benefit!

Specific rules to be aware of

International Conventions

In Switzerland, family allowances for children living abroad are only paid if Switzerland is obliged to do so under an international social security agreement. Such agreements exist in particular with the European Union (EU) and the European Free Trade Association (EFTA). For agricultural workers, agreements also exist with certain other countries, such as Türkiye.

Type of benefits that can be exported
Where an entitlement to benefits exists, only certain benefits are exported:
o Child allowance and training allowance: exported.
o Childbirth allowance and adoption allowance: not exported.
o Household allowance for agricultural workers: exported in certain cases.

Education abroad
Children leaving Switzerland for training purposes are presumed to remain resident in Switzerland for five years, thereby continuing to be entitled to family allowances. However, this presumption may be overturned if certain criteria are met, such as loss of compulsory health insurance (LAMal) or lack of regular contact with Switzerland.

Special cases
EU/EFTA nationals
Nationals of EU/EFTA countries who are gainfully employed in Switzerland are entitled to benefits for their children who are resident in the EU/EFTA. (Benefits are also payable to persons not in gainful employment domiciled in Switzerland, provided their children live in the EU/EFTA).
Children living in non-contracting countries
Family allowances are not generally paid for children living in countries with which Switzerland does not have an agreement, except in the case of certain Swiss employees working abroad or seconded by a Swiss company.

Brexit
Since 1 January 2021, the rules for the United Kingdom have changed. People in a situation of expatriation or residence with the UK before this date continue to receive family allowances, but new cross-border situations after 2021 no longer give entitlement to these allowances.

How ekspert can help
Managing family allowances for children living abroad involves in-depth knowledge of complex rules and tedious administrative procedures. At ekspert, we specialise in this area and offer comprehensive services to manage these aspects for you:

o Entitlement analysis: to determine your employees’ entitlement to family allowances in accordance with the relevant international conventions.
o File management: to set up and follow up files with the relevant institutions.
o Personalised advice: to optimise their entitlements and answer your specific questions.
o Administrative follow-up: to ensure that the benefits received are those due, taking into account any changes in legislation or circumstances.

Entrusting us with the management of your staff’s family allowances relieves you of the associated administrative burden, saves you a lot of time and ensures that your employees’ rights are fully respected.
By delegating this task to us, you strengthen your employer brand and offer your employees peace of mind and comfort!

Contact us today for more information!

Entrusting the administrative management of your staff to ekspert PLC, an Abacus partner specialising in these procedures, means choosing peace of mind and time saving.

Our experts will take care of all the complex formalities and subtleties of the law, so you don’t have to worry or wonder. Find out how Julie, our specialist, clarifies the most technical aspects of training allowances with a customer who has subscribed to our AdminPack service.

Julie (ekspert) : Hello Mr Martin, how can I help you today?
Paul Martin (HR Manager customer): Good morning. I’ve got some questions about training allowances for one of our employees, but frankly I don’t think it’s really useful. I don’t think he’s entitled to it, but I want to be sure.
Julie: I understand your concerns. What exactly do you want to know?
Paul: In my experience, benefits are only available if the child is at least 16. Our employee’s child is 15 and is about to start post-compulsory education. That’s not going to work, is it?
Julie: In reality, if the child has completed compulsory schooling and is at least 15 years old, he or she can receive training allowances from the start of his or her post-compulsory training. The age limit of 16 is not a blocking criterion.
Paul: Really? I thought it was rigid. And these allowances are only paid for a year, aren’t they?
Julie: Not at all. The benefits are paid until the end of the child’s training, but no later than the month in which he or she turns 25.
Paul: OK. But if the child starts training before the age of 16, that complicates things, doesn’t it?

Julie: In fact, if the child starts training before the age of 16, the employee can benefit from the allowances as soon as the child has reached the age of 15. There are no additional complications.
Paul: And if the child works while studying, that cancels out the benefits, doesn’t it?
Julie: No, as long as the child’s gross income does not exceed CHF 2,450 per month or CHF 29,400 per year, including the 13th salary, this does not cancel the benefits. Please note that daily allowances from certain insurance companies are also considered as income.
Paul: I’ve been told that retroactive allowances are impossible. So if the employee doesn’t apply in time, or if they provide us with the training certificate after the training has started, they lose their entitlement.

Contact us today to find out how we can simplify and optimise the administrative management of your staff!

Priority beneficiaries and differences between cantons

The administration of family allowances is a complex and confusing area. Between federal and cantonal laws, types of allowances and eligibility conditions, it’s easy to get lost in the maze of this administration!

At ekspert, an Abacus partner specialising in payroll management and HR administration, we understand the subtleties and challenges involved.

To better understand where our added value lies, let’s analyse together a situation that may seem simple at first sight, that of a child whose parents are both eligible for family allowances.

How do you know who has priority?

By law, only one allowance can be paid per child. In this case, the following order of priority applies:

1. Employed person: If one parent is employed and the other is not, the employed parent receives the allowance.
2. The person with parental authority: If both parents work, the one with parental authority (or who had it until the child came of age) has priority.
3. The person living mainly with the child: If parental authority is held jointly or if neither parent has it, the parent living mainly with the child has priority.
4. The child’s canton of residence: If both parents live with the child, the parent who works in the child’s canton of residence has priority.
5. Highest income: -If both parents work in the child’s canton of residence, or if neither parent works in that canton, the parent with the highest income subject to AHV is given priority. -If neither parent has a salaried income, the parent with the highest self-employed income has priority.

What if the parents work in different cantons?

The situation becomes more complex: the parent with the highest income, whether employed or self-employed, is given priority. However, if the non-priority parent lives in a canton offering higher benefits, he or she can receive the difference between the two cantons’ benefit amounts. Please note, that this difference is only paid if the parent is gainfully employed; otherwise, no additional allowance is paid.

What if the parents are divorced?

It is therefore essential to determine who has parental authority. If it is shared, the order of priority follows the same rules as for non-divorced parents. The situation of each parent must be examined carefully, taking into account whether they are gainfully employed and the child’s canton of residence.

Conclusion

ekspert’s aim is to simplify this process for our customers, by offering a quality service and in-depth expertise.

Companies can thus free themselves from administrative constraints, with complete confidence that their obligations will be carried out accurately and in compliance with legislation.

As you can see, by entrusting the management of their family allowances to ekspert, an Abacus partner specialising in payroll management and the associated administrative procedures, companies are a double winner!

Next article

Our series on family allowances continues! We’ll be back shortly with our next article on training allowances. See you soon!

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Global survey reveals key trends

We would like to share with you the results of a recent study carried out by a global player in centralised payroll solutions, which aims to assess payroll’s current performance, resilience and strategic contribution, as well as reporting on its future potential.

The COVID-19 pandemic has highlighted the need for a more innovative approach to payroll operations. Companies need to make their payroll functions more forward-looking and pragmatic, with a focus on better integration at all levels.
The study also reveals that payroll transformation initiatives over the next few years are being driven by factors such as cost optimisation, digitisation, operational efficiency and improving the employee experience.

What do organisations need to ensure an efficient payroll?

Payroll accuracy
Payroll accuracy is crucial to employee retention. However, the study reveals that the average rate of payroll accuracy is only 78%, highlighting the need to streamline, connect and digitise payroll systems and processes.

Balancing a global vision with local expertise
In a global market, businesses need a holistic view while maintaining local knowledge, including payroll information. The study highlights the increased need for the right organisational structure and technology for integrated reporting and analysis, underlining the importance of leveraging local expertise rather than focusing too much on global delivery.

Consider the importance of IT
Data security is essential when processing payroll data. Yet the results show that many companies lack contingency plans and data security manuals, highlighting the need to minimise IT complexity and strengthen security protocols.

From operational to strategic – the modern payroll team
As businesses look to improve operational efficiency, a combination of the right payroll strategies and payroll talent is essential to meet business objectives and prepare for the future.
To deliver effective payroll, fundamental changes are required in the processes, tools and skills within payroll functions.

Working with payroll specialists such as ekspert ensures that the employee experience is improved, payroll is accurate, technology is more reliable and data security is strengthened.

*Source: ADP – What to expect from payroll in 2024?

Accurate and transparent payroll management is essential to the smooth running of any business, especially in times of uncertainty and change. It is crucial to employee engagement, productivity and well-being, ensuring that employees are fairly rewarded for their contribution to the success of the business. However, challenges persist.

According to a recent survey by a global player in centralised payroll solutions, errors in payroll processing are on the rise, with only 33% of companies reporting 90% or better accuracy in payroll processing, down from 52% before 2020. What’s more, almost a third only discover these errors during a payroll audit, while a quarter only detect them when they receive a complaint from an employee.
This situation is worrying because it is leading to an increase in requests for clarification from employees: in fact, almost half of the companies surveyed report an increase in payroll-related requests since before 2020. Yet despite a growing awareness of these issues, only 36% of companies plan to actively tackle them in the next two to three years.

In addition, there is a growing shortage of skilled staff to manage payroll effectively, with almost 48% of employers reporting difficulties in finding the required skills from outside their organisation. This situation is compounded by the fact that payroll teams spend a considerable amount of time on secondary administrative tasks, with more than one in five companies surveyed (22%) estimating that their teams spend more than 30 hours a week consolidating data between payroll and HR systems. Fortunately, there are some promising solutions!

Nearly 70% of companies claim to have introduced more frequent internal audits over the last three years, and 61% have conducted employee surveys to detect payroll errors.
However, it is the automation of payroll processes that could significantly improve efficiency, with only 53% of companies surveyed acknowledging that less than 30% of their payroll processes are currently automated.

This is where outsourcing payroll to specialists such as Ekspert makes real sense.
Outsourcing their payroll management allows companies to be relieved of the current challenges it entails, such as researching and financing innovative technological solutions and training and developing staff.
Using this solution would not only improve the accuracy and efficiency of payroll, but also free up employees’ time so that they can concentrate on higher value-added tasks.
In conclusion, payroll management is much more than a simple administrative task. It is an essential pillar of the company, which deserves all the attention it needs to evolve into the future.
When you turn to Ekspert, specialists in payroll management and an Abacus partner, you can be sure of being surrounded by professionals experienced in this complex and strategic process.

*Source: ADP-The_potential_of_payroll-Global_payroll_survey_2022_CH_EN

And how can you make it more profitable?

In the world of HR and finance, cutting costs is often at the top of the priority list. This drive to optimizing costs intensified after the pandemic to ensure long-term business continuity.

Did you know that, on average, remuneration accounts for 50-60% of a company’s expenditure?
The cost of running payroll varies depending on a number of factors, including the size of the business, the payroll operating model and the cantons/countries where employees are based. If you manage payroll in-house, costs include the purchase of software licences, installation of hardware and software, as well as the human and material resources required to run the payroll and maintain and upgrade the payroll infrastructure. Companies therefore need to think strategically about payroll management.
And that’s where Ekspert – a payroll specialist and Abacus partner – comes in!
Opting for an outsourced payroll management system can result in substantial savings, ranging from 15% to 35%.
Let’s see how:

1. Reduced compliance costs: outsourcing compliance monitoring to a payroll provider avoids the costs associated with ensuring compliance with local employment laws, thereby reducing potential penalties.
2. Reduced direct costs: choosing an outsourced payroll solution reduces the time and therefore the costs spent on entering HR data into the CRM and on finding answers to employees’ questions (tax, employment law, pensions, family allowances, etc.).
3. Elimination of payroll errors: payroll errors can lead to costly staff turnover. A unified payroll reduces pay errors, which translates into significant savings in terms of recruitment and integration.
4. Increased efficiency of the payroll process: payroll outsourcing enables many of the related tasks to be automated, reducing the time spent on tedious processes and allowing you to concentrate on higher value-added tasks.
5. Efficient payroll reporting: consolidated payroll reports provides easy access to reliable data, reducing the time needed to draw up reports and enabling faster, more informed decisions.

In addition, it is important to consider hidden costs, such as the integration, training and replacement of payroll professionals, as well as system maintenance costs.
By outsourcing payroll processing, companies can convert the fixed cost of payroll administration into a variable cost, based on the number of employees and company sites involved. This offers greater flexibility and savings on a large scale.
In conclusion, while the issue of payroll cost is important, it is essential to consider the potential savings and long-term financial benefits of an efficient and cost-effective payroll.

By entrusting payroll management to specialists such as Ekspert, Abacus partner, companies can not only make substantial savings, but also benefit from cutting-edge expertise in the field of payroll management and salary administration in Switzerland.

PayrollManagement #Profitability #Outsourcing #Efficiency #HumanResources #Finance

Your Abacus partner explains the potential impact of this change

Dear professionals, a major transformation is on its way for the Swiss labour market.
Imagine an environment where every employee enjoys greater financial security in the event of illness. This is precisely what the recent Swiss parliamentary initiative is proposing, and it could mean the end of the Bern, Zurich and Basel scales as we know them.
Under article 324a of the Swiss Code of Obligations (CO), sick employees receive their salary for a fixed period, but only after three months’ employment. At present, this is managed either by the cantonal scales or by collective insurance. The cantonal scales vary according to seniority, offering up to 3 months’ salary after 5 years’ service. Group insurance, on the other hand, guarantees at least 80% of salary for up to 730 days, with the premium partly covered by the employer.
The Swiss National Council recently approved a motion for a new law requiring employers to insure all employees against loss of earnings in the event of illness. The aim of this measure is to offer more uniform protection, avoiding the current disparities. However, it raises questions, particularly for small businesses, about the financial impact of this obligation.

How will this affect payroll management?

At Ekspert – Swiss Payroll Specialist and Abacus Partner – we are keeping a close eye on these legislative developments to offer you payroll management and outsourcing solutions that anticipate these changes. Our expertise enables us to adapt your company’s payroll practices, ensuring compliance and financial optimisation in the changing legislative landscape.
Do these changes represent an opportunity or a challenge for Swiss companies?
How is your company preparing to navigate this new framework?
At Ekspert, specialists in Swiss payroll management, we’re here to help!

What do you need to be aware of when applying for sabbatical leave in terms of dealing with the pension fund, AVS and insurance?

It all depends: if your employee is paid during his/her leave, then 1st and 2nd pillar contributions are maintained.

If not, be sure to inform your employee of the following, as the consequences can be serious:

1st PILLAR (AVS/AI) :

If the employee’s main residence remains in Switzerland, the obligation to contribute to the 1st pillar (AVS/AI) continues. Abroad, the obligation to contribute ceases, but it is sometimes possible to make voluntary contributions to the AVS/AI to avoid pension gaps.

2nd PILLAR (BVG):

Unpaid leave can leave a gap in your pension fund. However, this can be avoided by making voluntary 2nd pillar contributions. Contributions can be made after the fact, as “buy-backs”.

3rd PILLAR (FISCA account/private pension provision) :

restrictions apply in the event of a leave of absence of one calendar year or more.

ACCIDENT INSURANCE :

This will no longer be valid 31 days after entitlement to at least half salary ceases. In the event of a prolonged period without pay, you may wish to advise the employee to take out “conventional” insurance, which extends the company’s accident insurance for up to six months.

SICKNESS BENEFIT INSURANCE :

You can also recommend that they extend their daily sickness benefit insurance accordingly.

SOCIAL SECURITY

The minijob threshold increases from €450 per month to €538 per month.

The transitional area between the minijob threshold and compulsory insurance increases from €450.01 to €850 per month to €538.01 to €2,000 per month.

Contribution assessment limits in social security also increase. In unemployment insurance, the contribution assessment limit increases from €82,500 per year to €85,200 per year. In health insurance, the contribution assessment limit for employees increases from €58,250 per year to €60,500 per year. In the pension insurance, the contribution assessment limit for employees increases from €82,500 per year to €85,200 per year and for self-employed persons from €71,500 per year to €74,400 per year.

INCOME TAX

The basic tax free income increases from €10,908 to €11,604.

The child tax free allowance increases from €3,192 to €3,350.

The marginal tax rates are increased by 6.3%. The top marginal tax rate of 42% is levied on taxable income of €66,761 or more.

IMPACT

The changes in social security and payroll tax have a positive impact on employees. By increasing the minijob threshold and the transitional area, more employees can benefit from insurance exemption. The increase in contribution assessment limits means that employees keep more of their income. The increase in the basic allowance and the child allowance leads to a lower tax burden.

Overall, the changes lead to a relief for employees.

A TRUE FLEXIBLE RETIREMENT: from 1 January 2024, the concept of retirement age will be replaced by that of reference age in Switzerland, offering a more flexible retirement with measures such as flexible receipt of pensions and anticipation of payment of pensions between the ages of 66 and 70.

HARMONISATION OF THE REFERENCE AGE FOR WOMEN AND MEN: the retirement age for women will be gradually increased from 64 to 65 as of Jan. 1st 2025, harmonising in 2028.

REFERENCE AGE FOR OCCUPATIONAL PROVISION (LPP-2E PILIER): the reference age for occupational provision will be aligned with that of the AVS, offering similar possibilities between the ages of 63 and 70, as well as partial retirement.

HOME OFFICE FOR BORDER WORKERS: for French border workers, up to 40% of their working time may be spent at home; for Italian border workers, up to 25% of their contractual working time may be spent working from home.