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Question to Jurilo from a lawyer who wanted to "know" what Jurilo really knows:
The daily sickness benefits insurance refuses to provide benefits for an employee who was dismissed, released from duty, and then fell ill. The daily sickness benefits insurance argues as follows (whereby the policyholder is the employer, whom we advise): Our position is based on the Federal Court ruling 4A_151/2021 dated 09.09.2021, which therefore does not represent an individual view of XYZ, but a final instance decision that the entire Swiss insurance industry can follow. On 11.04.2025, our policyholder (hereinafter: PH) terminated the employment relationship with the insured person effective 31.07.2025. At the same time, she released him from duty with immediate effect (waiver of work performance). On 14.04.2025, the insured person reported sick and claimed incapacity to work. Daily sickness benefits insurance is indemnity insurance. There must be an actual and concretely provable loss (Art. 1 SB KTG, Edition 09.2021). However, in the present case there is no loss. Our PH had already waived the insured person's work performance until 31.07.2025. This situation is the same as that which underlay the Federal Court ruling 4A_151/2021 dated 09.09.2021. Both the cantonal court and the Federal Court decided that the policyholder suffered no loss for the duration of incapacity to work during the release from duty. Only after the end of the release from duty could – if the incapacity to work continued – a loss arise. We have also already assured you that we will compensate for proven incapacity to work extending beyond 31.07.2025 (see our email dated 21.07.2025). Since there is no loss, we have no obligation to provide benefits during the original notice period, i.e., until 31.07.2025. What can the employer counter here (the goal is for daily sickness benefits to be paid)
Answer from Jurilo:
The argumentation of the daily sickness benefits insurance is based on the principle of indemnity insurance and on the Federal Court ruling 4A_151/2021. Nevertheless, from an employment law perspective and considering the contractual structure of a collective daily sickness benefits insurance, there are several approaches with which the employer can counter the refusal of benefits.
1. Direct claim of the employee from collective insurance
According to Art. 87 ICA and Art. 112 para. 2 CO, the insured employee in a collective daily sickness benefits insurance generally has their own claim against the insurer, even if the insurance contract is in the employer's name. This applies in particular when the insurance provides for benefits in case of illness-related incapacity to work and the insured event occurs during the contract period.
2. Insured event has occurred – illness during release from duty
The release of the employee from duty does not mean that no incapacity to work within the meaning of the insurance can exist. What is decisive is whether the insured event (illness-related incapacity to work) occurred during the insurance coverage. This is the case here: The illness was reported on 14.04.2025, i.e., during the ongoing employment relationship and insurance coverage.
The release from duty does not change the fact that the employee continues to be subject to the employer's right to give instructions under the employment contract and would in principle be obligated to perform work – even if the employer waives this. The incapacity to work is therefore not purely hypothetical, but real, as the employee would have been obligated to perform work without the illness.
3. Equivalence of the insurance solution and continued salary payment obligation
The employer can rely on Art. 324a para. 4 CO, according to which she is exempt from the statutory continued salary payment obligation if an equivalent insurance solution exists. This equivalence requires that the employee receives a benefit in case of illness that covers at least 80% of the loss of wages. If benefits are refused although the conditions are met, the employer faces a subsidiary continued salary payment obligation under Art. 324a para. 1-3 CO.
Therefore, the employer has her own interest in the insurance providing benefits in order not to be held liable herself.
4. Purpose of daily sickness benefits insurance – protection of the employee
Daily sickness benefits insurance serves to protect the employee from loss of wages due to illness. The insurance's argument that there is no loss because the employer waived the work performance ignores the purpose of the insurance. The loss lies not only in the economic disadvantage to the employer, but also in the loss of earnings of the employee, which is intended to be covered by the insurance.
5. Review contractual terms
It should be reviewed whether the insurance conditions (GTC) expressly exclude an obligation to provide benefits during the release from duty. If this is not the case, the employer can argue that insurance coverage also exists during the release from duty as long as the employment relationship continues.
6. Difference from ruling 4A_151/2021
In ruling 4A_151/2021, the insurance's obligation to provide benefits was denied because the employer suffered no economic loss. However, this ruling concerned a constellation in which the insurance was structured as pure indemnity insurance and the employer acted as the policyholder. If in the present case the employee has a direct claim (e.g., through assignment or contractual arrangement), the situation is to be assessed differently from a legal perspective.
Conclusion and recommendation:
The employer can counter the refusal of benefits by the daily sickness benefits insurance as follows:
Reference to the employee's direct claim under Art. 87 ICA and Art. 112 para. 2 CO.
Argument that the incapacity to work occurred during an existing employment relationship, and therefore an insured loss exists.
Reference to the equivalence of the insurance solution and the resulting expectation that the insurance will provide benefits in order to relieve the employer of the continued salary payment obligation.
Review of the GTC as to whether release from duty is explicitly mentioned as a ground for exclusion – if not, there is an obligation to provide benefits.
Distinction from ruling 4A_151/2021, as the constellation there was different (no direct claim by the employee, pure indemnity insurance in favor of the employer).
The employer should request the insurance to review its refusal of benefits again taking these points into consideration and otherwise to provide a written, reasoned rejection stating the relevant GTC provisions. If necessary, legal clarification by a court can also be considered.
Sources:
Art. 324a para. 1-4 CO
Art. 87 ICA
Art. 112 para. 2 CO
