Written by Peter Harrison


Switzerland is known as the headquarters for many international and European companies and it is an attractive proposition because of the quality of its banking system. It also has relatively low corporate tax rates and has a privileged relationship with the EU that no other country can boast. Switzerland is also known as one of the most regulated companies in the world from a labour perspective and Swiss labour leasing laws can impact upon any contractor working abroad. Here we’re looking more closely at labour leasing in Switzerland and how it is applicable to foreign contractors.

WHAT IS THE SWISS LABOUR LEASING LAW?
The Swiss market is regulated to protect its workers and domestic employment by the State Secretariat for Economic Affairs. It is designed to prevent Swiss employers recruiting staff through foreign management companies and recruiters. Swiss labour-leasing companies are only allowed to place personnel in the employment or under contrast with a Swiss client if they have a valid Swiss labour leasing licence. Obtaining a licence requires meeting certain criteria.

LEGALLY LABOUR LEASING IN SWITZERLAND
Individual contractors will usually work under an umbrella company in Switzerland and therefore it is the umbrella company’s responsibility to obtain a Swiss labour leasing licence. To undertake labour-leasing from abroad federal and cantonal authorisations are required and the management company must also register at the Swiss Commercial Register, officially state they are a labour leasing company. The company must also have the financial means and provide financial surety of a minimum of CHF 100,000 to gain the necessary licences and they must have offices based in Switzerland. Finally, the company must have a dedicated and appropriate person responsible for labour leasing matters.

Any business knowingly operating without a valid labour leasing licence can be fined up to CHF 100,000 (circa GBP 80,000) and company illegally engaging labour leased staff can be fined as much as CHF 40,000 (circa GBP 42,000). There are further penalties such as being banned from working in Switzerland and even imprisonment for companies and individuals who help illegal workers to enter Switzerland.

Any foreign company can apply for a labour leasing licence provided they meet the original criteria and from the perspective of contractors, this can affect their working setup in Switzerland, such as whether they choose to work through their own personal services company.

FOREIGN PERSONAL SERVICES COMPANIES IN SWITZERLAND
EU or EFTA self-employed contractors using a foreign personal service company are not permitted to provide their services to a Swiss-based firm for longer than three months. They are then required to take employment from a Swiss management company. The agreement in place between Switzerland and the EU allows for free movement of people, but this isn’t the case for companies and so it is important that your personal service company cannot be used unless it is set up itself as a labour leasing organisation in Switzerland. This is an impractical and unnecessary step for most contractors and after their first three months most find employment through a labour leasing company and ensure they have the right work permits in place.

Swiss legislation is very tight and strictly monitored, with high penalties if you attempt to bend the system. Both foreign and Swiss companies are subject to labour leasing laws and must hold the appropriate licences to employ foreign contractors.

Working in Switzerland brings many benefits, fantastic quality of life and great salary retention, but it must be done properly within the confines of the law.