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Understanding Swiss Labour Leasing Laws

May 31, 2018

Zurich

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By: Ana Santos

Everyone knows Switzerland is a haven for many international and European companies who choose to settle in the country because of the well-known and in general very attractive low corporate taxes. What many are not aware of is actually how strict and complex immigration laws are in Switzerland and more specifically the labour leasing laws that can hugely impact foreign employers, employees and also contractors. In this blog, I will look at some of the important scenarios that employers need to look out for, in light of labour leasing restrictions imposed by the State Secretariat for Economic Affairs, also known as the SECO, which regulates the Swiss labour market.

The most complex point within labour leasing laws since the SECO´s new guideline released in June 2017, is intra-group staff leasing. Essentially the question is: Can a foreign employee work for a company that is not it´s formal employer and work under the supervision / orders of a third party? In order to answer this we need to look into the Federal Act on Employment Services and the Hiring of Services (LSE).

In these cases two main aspects need to be assessed, the subordination aspect and the integration of the employee within the new employer. It is critical to understand if the employee will be under the supervision and direct instructions of the third party and to understand if the employee will be physically working at the premises, effectively being integrated into the employer's organizational structure. If yes, then this is undoubtedly staff leasing and the leasing company based in Switzerland needs to have the proper Swiss labour leasing license in place.

It is important to remember that the leasing of services provided by staff in Switzerland coming from an employer based abroad is absolutely not allowed under the LSE. Only in seldom and exceptional cases can staff leasing employers be exempt from a license. Always consult with your advisor for the full exemption possibilities.

The SECO also narrowly forbids Swiss employers hiring their staff by engaging with foreign management or recruitment companies. This being said, the big question for our clients is: Is it possible to place foreign staff in Switzerland through a management company? And if so, how?

Local labour-leasing companies, also called umbrella companies, can indeed place staff into a Swiss client, but for this they have to have a valid Swiss labour leasing license. In order to obtain a license various criteria needs to be fulfilled. After these conditions are met, any request for a contractor to be placed still needs to be approved by respective Cantonal authorities as well as the Federal authorities.

Now the next question is often: Is it possible to work in Switzerland as a contractor if I am self-employed through my own limited company? The answer is yes. However, labour leasing laws in Switzerland are very strict and there are high penalties for non-compliance so take notes on how you can make sure you are respecting the rules. EU and EFTA contractors can provide their services through their own personal service company registered abroad up to 90 days in a calendar year. Exceeding this timeframe means you are no longer compliant and you have three options before reaching this point: you cease all work in Switzerland; you take employment through a Swiss based labour leasing company and your third option is to set up yourself as an independent contractor in Switzerland.

Labour leasing laws are very restrictive in certain instances for employers and it is always important to keep these in mind before hiring or sending foreign employees to Switzerland.

If you have any questions with regards to labour leasing and how best you can start your hiring process, please contact [email protected]. 

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