Daily sickness benefits (IJM): when are they essential for an SME in Switzerland?

Extended sick leave is a governance issue: business continuity, HR rules, payroll impacts, and coordination with other insurance coverage. In Switzerland, daily sickness benefits (IJM) are not mandatory, but they quickly become a management tool when an SME cannot absorb a prolonged absence with its own funds.

In this article, you leave with a simple decision-making framework: understand your obligations, qualify your exposure, choose a coherent IJM structure, and document the system so that it remains clear and actionable (executive, CFO, HR).

1) IJM in Switzerland: the framework to know before deciding

Maintaining salary: the basic obligation

The State Secretariat for Economic Affairs (SECO) reminds employers that the law requires them to pay full salary in the event of illness for a limited period, provided the employment relationship has lasted more than three months (or was concluded for more than three months). During the first year of service, the minimum is three weeks, and the duration then increases "fairly" depending on the circumstances. SECO also clarifies that salary payment is 100% from the first day of illness (there is no waiting period under the statutory scheme).

The scales used by the courts (risk indicators)

When no collective bargaining agreement (CBA) provides for a more favorable rule, the State Secretariat for Economic Affairs (SECO) indicates that the courts rely on scales (Basel, Bern, Zurich). French-speaking Switzerland is linked to the Bern scale in the SECO table.

For an SME, these scales are mainly used to manage risk: without IJM, the company finances the absence, and several absences in the same year of service can be added together.

Illness vs. accident: two opposing viewpoints

Regarding accidents (LAA), coverage is mandatory and the mechanism is different. Suva reminds us that in the event of incapacity for work due to an accident or occupational disease, the daily allowance corresponds to 80% of the insured earnings and is paid from the third day, depending on the degree of incapacity.

Regarding illness, the starting point remains the maintenance of salary (and a possible daily sickness allowance if you implement it).

LAMal or LCA: two possible frameworks

The FOPH (BAG) explains that daily allowance insurance can be concluded under two laws: LAMal (social insurance) or LCA (private law contract).

The Federal Administrative Court (FAC) specifies, for the LAMal (Swiss Health Insurance Act), a right to conclude for persons domiciled in Switzerland or working there, aged 15 to 65, as well as a minimum framework in case of incapacity for work of 50% (at least 720 days in a period of 900 days).

For the LCA, the BAG recalls contractual freedom (no obligation to admit) and the possibility of freely agreeing on amount and duration.

Equivalence: when the daily sickness allowance “replaces” salary maintenance

SECO points out that the law does not mandate the purchase of daily sickness benefits (IJM), but that it is often stipulated in the employment contract. It also indicates that most IJM schemes provide 80% of salary for 720 or 730 days within a 900-day period.

Above all, SECO specifies that a solution is considered equivalent when it pays 80% for 720 days and the employer pays at least half of the premium.

2) When daily sickness benefits (IJM) become essential for an SME: decision criteria

Daily sickness benefits become essential when the risk of illness is no longer manageable without making hasty decisions. Here are the most useful criteria from a management perspective.

1. Absorption capacity (cash and margin)

If cash flow cannot support a prolonged salary burden, the daily salary stabilizes the budget: a planned bonus rather than a potentially large shock. The issue is less about whether or not to pay, and more about absorbing the uncertainty or transferring it.

2. Concentration of risk on key positions

A small or medium-sized enterprise (SME) can be highly vulnerable if a few people concentrate production, customer relations, or expertise. A long-term sick leave often creates a double cost: maintaining salary and reorganization (replacement, increased workload, outsourcing).

3. Contractual constraints (collective bargaining agreements/collective agreements, contracts, HR clauses)

SECO points out that collective bargaining agreements (CBAs) and collective work contracts (CTTs) may provide for a longer obligation period.

In certain situations, IJM is the simplest way to document compliance and align internal practices.

4. Need for a stable and defensible HR rule

SECO specifies, for example, that the employer can require a medical certificate from the first day (even if contracts stipulate a later start date).

Without a written framework, you multiply the exceptions, which creates social and governance risks.

Mini case study 1: Service SME, rare expertise, extended shutdown

A small service company relies on rare expertise. An employee falls ill and their incapacity is prolonged. Management must ensure customer deliveries while maintaining a consistent HR approach.

Decision-making guided by:

• Manage: identify the exposure (obligation to maintain salary + replacement capacity).

• Document: formalize the reporting rule, certificates, and who decides on job adaptations.

• Follow up: establish a follow-up schedule (HR, manager, finance) and a clear reporting process if a daily allowance exists.

Without IJM, the matter is managed on an ad-hoc basis. With IJM, the SME secures its replacement capacity and clarifies compensation rules, which reduces internal friction.

3) Building a controllable IJM: parameters to arbitrate and impacts

A useful daily rate is one that can be managed. Three parameters change everything: waiting time, rate, and duration. And a cross-cutting issue: documentation.

Waiting period: where the company retains the risk

The waiting period determines how long the company finances the claim before the insurance takes over. Examples of benchmarks mentioned by insurers:

• Helvetia: payment depends on the waiting period, usually 14, 30, 90 or 180 days.

• Groupe Mutuel (IJM LCA): intervention at the end of a chosen waiting period (3, 7, 14, 30, 60 or 90 days).

Governance arbitration:

• shorter waiting period: simpler rule, faster protection, often higher premium;

• longer delay: premium often lower, but higher residual charge and need for cash discipline.

Benefit rates: equivalence and social policy

SECO gives a benchmark of equivalence at 80% (with premium sharing).

AXA points out that 80% corresponds to the equivalent insurance solution recognized by law and that higher rates offer additional security.

Decide explicitly whether you are aiming for equivalence (standard framework) or a higher maintenance level (HR policy).

Duration and counting mechanism

The reference points of 720/730 days out of 900 days often appear in official and practical sources: SECO and KMU.admin.ch cite them as frequent characteristics.

The BAG also mentions, for LAMal, a minimum of 720 days in a period of 900 days in case of 50% disability.

What matters, from the CFO's perspective, is understanding how duration is counted (by case, by period) and how relapses are managed.

What needs to be documented

• Populations covered (employees, categories) and rules in case of entry/exit.

• Definition of the salary elements taken into account (fixed, variable).

• Process for absence from illness: announcement, certificate, frequency, confidentiality (SECO reminds that the certificate must not contain a diagnosis).

• Declaration procedure: who declares, when, with what documents.

• Follow-up rules: periodic check-ins, accident vs. illness coordination.

• Time discipline: Helsana indicates that a late notification or the absence of a certificate may delay the start of benefits, or even lead to a refusal.

Mini case study 2: Rapid growth, heterogeneous contracts, misunderstood rule

SMEs grow quickly. Historical contracts don't all tell the same story (daily allowances for some, continued salary for others). When a termination occurs, HR and finance can't always provide clear answers to the teams' questions.

Decision-making guided by:

• Steering: mapping the applicable rules (contracts, CCT/CTT, scales).

• Document: standardize the rule and specify the bonus sharing if you claim equivalence (SECO: employer at least half).

• Follow up: update the salary base annually and test the reporting process.

Here, the IJM becomes indispensable both to reduce financial risk and to secure social cohesion.

4) Guidelines and checklist

Reference table: duration of salary maintenance (Bernese scale, French-speaking Switzerland)

Table extracted from the Bernese scale column published by SECO (reference applicable in the absence of a more favorable CCT/CTT).

Checklist for piloting, documenting, and monitoring

Pilot

• Do you have a clear view of the obligations (contracts, collective bargaining agreements/collective agreements, scales)?

• Can your cash flow withstand a prolonged shutdown without urgent intervention?

• Are you aiming for an equivalent solution or reinforced support?

Document

• IJM clause and bonus sharing (if equivalence is targeted).

• Certificate procedure and confidentiality.

• Declaration process and documents.

• Accident/illness coordination.

Follow

• Annual review: staff numbers, salaries, consistency of clauses.

• Testing of the process (declaration, follow-up, internal communication).

• Simple dashboard: long absences, ongoing cases, reintegration decisions.

5) Common mistakes and how to avoid them

• Confusing accident and illness: the LAA (Suva) logic does not cover illness.

• Choosing a waiting period without financing capacity: you retain the risk during this period.

• Claiming equivalence without documenting the sharing of the bonus (SECO: employer at least half).

• Underestimating the documentary discipline: announcement, certificates, documents.

• Forget about partial disability: the degree must be documented, otherwise monitoring becomes inconsistent.

6) Questions to ask your insurer/broker (10 questions)

1. Does the solution aim for equivalence in the sense of the SECO benchmarks, or a complement?

2. What is the waiting period, and what happens during that period?

3. What benefit rate, and on what salary basis (included/excluded elements)?

4. How is the duration of benefits calculated (per case, per period, relapse)?

5. Rules and thresholds in case of partial incapacity (pro-rata, supporting documents)?

6. What documents are needed for the declaration and follow-up (certificates, frequency, forms)?

7. What are the reporting deadlines, and what are the consequences of late notification?

8. How is the contract coordinated with the accident (LAA) and other systems?

9. What exclusions/reservations, particularly in LCA (contractual freedom recalled by the BAG)?

10. At the end of an employment contract: what are the rules for exit, continuity and informing the employee?

Conclusion

The IJM (Individualized Daily Management) is essential when SMEs no longer want to manage sickness risk on the fly: limited cash flow, dependence on key personnel, contractual requirements, or the need for a uniform HR policy. The SECO, BAG, and Suva guidelines provide the framework; the value then lies in the methodology: managing exposure, documenting the policy, and monitoring cases in a disciplined manner.

Next step: map your obligations (contracts, collective bargaining agreements, employee populations) and test your absorption capacity. If the answer is uncertain, the IJM becomes a governance decision.