On 27 September 2019, the federal chambers adopted the 3rd revision of the Family Allowance Act (FamZG), thus triggering two major reforms and the modification of legal basis. These changes come into force on August 1, 2020, in particular the lowering of the age limit for collecting the education allowance.
The Family Allowance Act is intended to cover at least part of the child maintenance costs borne by parents. Qualified as direct cash benefits, the benefits provided for by the FamZG concern at the federal level :
- child allowances;
- post-compulsory education allowances.
Some cantons also foresee birth and adoption allowances.
In Switzerland, parents eligible for family allowance are:
- employed parents;
- self-employed parents;
- non-working parents with low income;
- parents working in agriculture.
Changes as of August 1st, 2020
1. The age limit lowering to 15 years old for post-compulsory education allowance
Based on the assumption that a child in post-compulsory education and training will generate higher costs for the parents, the post-compulsory education allowance is financially more advantageous than the child allowance.
According to the current law, entitlement to the post-compulsory education allowance arose under the following conditions:
- from the month following the one during which the child reaches the age of 16 ;
- the child must follow a de jure or de facto recognised regular training course to which he or she devotes the major part of his or her time with the aim of obtaining a diploma or a general education serving as a basis for different professions.
In reality, many children initiate post-compulsory education prior to this age. As the youngest children are generally not under 15 years old, it was no longer financially coherent to maintain a right to the allowance from the age of 16. The new limit for obtaining a post-compulsory education allowance has therefore been reconsidered at 15 years of age.
Our advice for employers
The implementation of these regulations will come into force at the same time as the start of the school or apprenticeship year, therefore we recommend the following action plan to the employers:
- inform employees of this age reduction, which entitles them to education allowances ;
- if, as an employer, you receive family allowances that you repay to your employees, we would advise you to adjust the family allowance amounts in the pay slips as soon as you receive the decision from the family allowance office, and to review the accuracy of all family allowances paid;
- in the case of direct receipt of family allowances by the employee, it is important that the new amount of education allowances be integrated and adapted into the tax at source basis. If the employer is not attentive to this adjustment, he could be obliged to pay part of the tax at source for the employees concerned.
We also recommend that employers take this opportunity to ensure that all employee data is up to date in anticipation of the changes in tax at source that will take effect in 2021.
As an indication, there is a prohibition to cumulate the right to an education allowance and a child allowance at the age of 15. The office regulates this principle when granting the allowances.
2. Unemployed mothers with maternity compensation
As mentioned in the basic concepts above, unemployed individuals who receive unemployment benefits are not eligible for the payment of family allowances under the FamZG scheme.
In the foreseen case of unemployed mothers raising their child(ren) alone, as long as they receive maternity allowance under the loss of earnings scheme, they were not eligible for family allowances. Thus, no allowance could be paid as the law did not legislate for this situation.
As a comparison, if in the same situation the child was recognised by a father, by means of the legal aid, the granting of family allowances was possible. Thanks to this new revision of the law, this inequality is now corrected as of August 1st.
3. Creation of a legal basis for financial support intended for family organisations
Currently, the legal possibility to apply for subsidies and to set the conditions for entitlement to such subsidies is not regulated in a federal law but only in the Constitution. The introduction of this point in the FamZG remedies this breach of the rule.
The scope of this new legal basis will allow financial assistance to be granted to:
- family organisations, which are active nationwide or in any language region and which, in accordance with their purpose, are of public utility, denominationally neutral and politically independent ;
- promotion areas « family support, family counselling and training for parents » and « reconciliation of family life and work/training».
Our experts are at your disposal for any further advice.