Bonuses, commissions and sickness cover: define the salary before the claim

The business question

Variable remuneration makes a protection percentage difficult to interpret. Eighty per cent of which income: base salary, recent commission, annual average or another policy definition? A salesperson’s household may depend on earnings that the employer has never checked against the declared insurance salary.

Understand the mechanism

Accident and sickness contracts can use different salary definitions and limits. Payroll declaration, annual reconciliation and benefit calculation should not be presumed identical. A quotation based on a round salary estimate cannot establish how an exceptional bonus or fluctuating commission will be treated.

Hypothetical business case

A fictional sales employee earns CHF 5,000 monthly base salary plus irregular commissions. A six-month absence prompts the company to discover whether the insurer uses declared variable remuneration and what evidence is required. The example illustrates a definition problem; it does not assume that every commission is insured.

Decisions before you commit

Prepare an anonymised twelve-month remuneration history and ask for a worked benefit calculation. Separate base salary, commission, discretionary bonus and expense reimbursement. Verify how new hires without a full earnings history are handled, and update payroll reporting when the remuneration scheme changes.

Your evidence pack

Keep salary clauses, commission rules, payslips, expense classifications and insurer responses. Have the employee benefits summary refer to the confirmed insured remuneration definition. If the policy omits an important component, evaluate both the additional insurance cost and the employer’s remaining contractual exposure.

Stress-test the decision

Build the salary example from an ordinary year and an unusually strong year. The insurer’s treatment of a one-off award should be explained separately from recurring commission. Ask who must update declared remuneration and whether the declaration is reconciled annually. Consider a new sales hire, a promotion and a territory change, because their past earnings may not resemble their future remuneration. Once the calculation basis is understood, explain it in plain language to staff. A headline protection percentage is helpful only when employees know what that percentage is applied to.

Trade-offs and implementation

Expense reimbursement should not be treated as income replacement merely because it appears on a payslip. Classification and evidence matter. Likewise, a contractual sales commission and a discretionary award may require different analysis. The employer should obtain an explicit answer instead of removing uncertain components without telling the worker.

Test partial incapacity as well as complete absence. When a salesperson continues earning some commission, payroll and the insurer need a consistent explanation of actual work and remuneration. Ask how adjustments are documented and reconciled. A simple fixed benefit illustration may not capture that situation. After clarifying the rules, develop a remuneration-to-insurance mapping for payroll so new bonus types trigger a review. This avoids relying on one knowledgeable person’s memory. Staff can then understand both the normal protection and the uncertainty associated with earnings that vary substantially across periods.

Involve payroll whenever a new remuneration category is introduced, including awards designed by another department. The insurance mapping should be reviewed before the first payment.