Why KTG matters for every employer
When an employee stays home due to illness, the employer cannot simply stop paying wages. In Switzerland, the obligation to continue remuneration during incapacity for work stems from Article 324a of the Code of Obligations (CO) and, in many cantons, from cantonal provisions that are more favourable to the employee. For SMEs, this means a concrete financial risk: months of salary paid without production.
Daily sickness allowance — in German Krankentagegeld, abbreviated KTG — is the insurance instrument that covers this risk. Unlike accident insurance (UVG), which is mandatory for all employers, KTG is not universally required under federal law: it depends on collective bargaining agreements (CBAs), cantonal agreements or a voluntary choice by the company. However, in Swiss practice, most employers with at least one employee take out a KTG policy.
This guide explains how KTG works in the context of Swiss SMEs, what costs to expect, how to integrate it into payroll management and how to record it correctly in accounting with Accountex.
Legal framework: wage obligation and insurance coverage
Before evaluating a KTG policy, it is essential to distinguish three overlapping regulatory levels:
Art. 324a CO
Federal obligation to continue paying 100% of salary in case of illness, if the employment relationship lasts or was entered into for more than three months. The minimum duration depends on length of service and the applicable cantonal scale (Bern, Basel or Zurich): for example, under the Bern scale — used in the majority of cantons — at least 3 weeks in the first year, then progressively longer periods (up to 6 months only from the 20th year of service). The entitlement renews at the start of each year of service. The employer may request a medical certificate of incapacity for work.
Cantonal law
Some cantons (Geneva, Ticino, Neuchâtel, Jura, Valais and others) provide longer durations or more favourable conditions than the federal case-law scales. The employer must apply the provision most favourable to the employee among CO, canton and individual contract.
CBAs and GAVs
Collective bargaining agreements and generally binding collective labour agreements (GAVs) may require membership in a KTG insurance scheme with minimum conditions: percentage covered, duration, waiting period. A KTG policy can replace the legal obligation only if equivalent under Art. 324a para. 4 CO (generally: at least 80% of salary for 720 days within 900 days, premium at least half paid by the employer, maximum 3 initial waiting days). Sectors such as construction, metalworking, healthcare and hospitality often have specific obligations.
Comparison of the main KTG plans
KTG policies offered in Switzerland share a common structure, but differ in waiting period, percentage and duration. Here is a typical comparison of the most common variants among SMEs:
| Parameter | Standard plan | Extended plan | CBA/GAV plan |
|---|---|---|---|
| Waiting period (deductible) | 30 days of illness | 0–14 days (early coverage) | Per CBA (often 2–30 days) |
| Benefit | 80% of insured salary | 80–100% of insured salary | CBA minimum (e.g. 80% for 720 days) |
| Maximum duration | 720 days within 900 days | 720 days (possible extension) | 720 days (standard services GAV) |
| Insured salary | Actual salary, max CHF 300,000/year | Same limit, with supplementary option | CO salary included, with variable caps |
| Indicative premium | 1.0–2.5% of total payroll | 2.5–4.5% of total payroll | Sector-negotiated rate |
| Suitable for | SMEs with low turnover, moderate risk | Companies with key staff, low waiting period | Sectors with binding GAV |
Note: premiums vary by sector, average age of employees, claims history and total payroll volume. Always request a personalised quote from an insurer or compensation fund.
Salary continuation and KTG: how they interact
The operational mechanism follows a precise sequence that the employer must understand to avoid double payments or coverage gaps:
Illness and medical certificate
The employee reports the absence and submits a medical certificate within the deadlines set by internal regulations (normally from the 3rd day, unless otherwise provided contractually). The employer records the absence in the payroll system.
Waiting period
During the insurance waiting period (typically 30 days), the employer continues to pay the full salary, with no insurance reimbursement. This period often coincides with the CO wage obligation for employees with low seniority.
KTG commencement and benefit claim
Once the waiting period has elapsed, the employer submits the claim to the insurer. The benefit generally covers 80% of the insured salary. The employer may voluntarily top up the difference to 100% (salary supplement), according to the employment contract or company practice.
Reimbursement and case closure
The insurer pays the KTG benefit to the employer (not directly to the employee). The employer continues to pay the employee's salary and offsets it with the reimbursement received. At the end of the covered period, assess the transition to disability insurance (AI/IVG).
KTG costs for an SME
The cost of KTG insurance is a recurring expense that directly affects personnel costs. Here is how to calculate it and where to place it in the budget:
Calculating the annual premium
The premium is calculated on the insured payroll, which includes base salary, regular bonuses and other remuneration elements included in the contractual definition. Typical formula:
Annual premium = Total payroll × Premium rate (%)
Example: a company with CHF 800,000 in annual payroll and a rate of 1.8% pays CHF 14,400/year, or CHF 1,200/month. The premium is generally fully or at least half paid by the employer (minimum required for equivalence under Art. 324a para. 4 CO).
Hidden costs to consider
- 100% salary supplement: if the company covers the difference between 80% KTG and full salary, the remaining 20% is an additional uninsured cost.
- Short waiting period: reducing the deductible from 30 to 0 days increases the premium by 30–60%.
- Administrative management: HR time for claims, follow-up and reimbursement reconciliation.
- Social contributions: OASI/DI/EO and occupational pension (LPP) continue on the salary actually paid to the employee; the KTG benefit paid to the employer is not subject to social contributions.
Integration into payroll management
Correct payroll management during illness requires clear distinctions between continued salary, insurance benefit and voluntary supplement:
| Pay item | During waiting period | After waiting period (with KTG) |
|---|---|---|
| Base salary paid | 100% — borne by employer | 100% (if supplement) or 80% (if KTG only) |
| KTG benefit received | None | 80% of insured salary — paid to employer |
| OASI/DI/EO contributions | On salary actually paid | On salary actually paid |
| LPP contributions | On salary actually paid (normally 100%) | On salary actually paid — check fund regulations |
| Taxable income | Employee gross salary | Gross salary — KTG benefit is not employee income |
| Salary certificate (ELM) | Standard sickness absence code | Same code — KTG does not appear on certificate |
In Accountex, recording the absence with the correct code ensures that payslips, salary certificate and accounting remain aligned. The KTG benefit received from the insurer does not pass through the employee's payslip: it is a reimbursement to the employer.
Accounting entries in Accountex
KTG generates accounting entries at three distinct points. Here is the typical scheme for an SME with a Swiss chart of accounts:
1. Insurance premium payment (monthly or quarterly)
| Account | Debit | Credit |
|---|---|---|
| 6400 — Staff insurance premiums (KTG) | CHF 1,200 | |
| 1020 — Bank | CHF 1,200 |
The KTG premium is a tax-deductible personnel cost. Classify it in the staff insurance account, separate from UVG and LPP.
2. Salary payment during illness
| Account | Debit | Credit |
|---|---|---|
| 6200 — Salaries | CHF 7,000 | |
| 6300 — OASI/LPP social contributions | CHF 1,050 | |
| 1020 — Bank / 2100 — Social liabilities | CHF 8,050 |
Salary continued during illness is recorded as ordinary personnel cost, regardless of the prospect of KTG reimbursement.
3. Receipt of KTG benefit from insurer
| Account | Debit | Credit |
|---|---|---|
| 1020 — Bank | CHF 5,600 | |
| 6400 — Staff insurance premiums (KTG) | CHF 5,600 |
Alternatively, some SMEs use a suspense account "Receivables from KTG insurer" (1109) when submitting the claim and close it upon receipt. Both approaches are valid if applied consistently.
Employer obligations: operational checklist
To manage KTG without errors, the employer — or their fiduciary — should periodically verify the following points:
- ✓Verify membership obligation: check whether a CBA or GAV requires KTG and with what minimum parameters (waiting period, duration, percentage).
- ✓Align waiting period and CO obligation: the insurance waiting period should cover at least the legal salary continuation period for the majority of employees.
- ✓Declare total payroll correctly: errors in the insured payroll can lead to benefit reductions in the event of a claim.
- ✓Report absences promptly: many policies require notification within 30 days of the start of illness.
- ✓Document salary supplement: if paying above 80%, define this in writing in staff regulations or the individual contract.
- ✓Reconcile reimbursements quarterly: in Accountex, compare open KTG receivables with insurer statements to avoid outstanding items.
- ✓Plan the transition to DI: after the 720 KTG days are exhausted, the employee may be entitled to a DI pension — initiate the procedure with the competent DI office.
KTG, UVG and salary insurance: essential differences
Confusing staff insurance coverages is a common mistake. Here is how to distinguish them:
UVG (accident)
Mandatory. Covers occupational and non-occupational accidents. Daily allowance from the 3rd day (80% of salary). Managed separately from KTG.
KTG (illness)
Voluntary or required by CBA. Covers illness only. Typical 30-day waiting period. Benefit paid to employer, not employee.
Salary insurance (SI)
Mandatory employer coverage in case of insolvency (ICRA). Not to be confused with KTG: it protects employees' wage claims, not the company's illness risk.
Conclusion: plan KTG as an investment, not a cost
For a Swiss SME, KTG insurance is not a bureaucratic optional extra but a structural component of personnel management. Without coverage, a prolonged illness of a key employee can erode months of liquidity — especially if the company voluntarily tops up salary to 100%.
The key is alignment: between CO (and cantonal) wage obligation, policy parameters and internal remuneration practice. With Accountex, premiums, continued salaries and KTG reimbursements are recorded consistently, ensuring a clear view of actual personnel costs and simplifying year-end closing.
Before renewing the policy, it is worth simulating the financial impact of different waiting periods and verifying that the declared payroll is up to date. A fiduciary or employment consultant can help calibrate the plan best suited to your company's risk profile.