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Understanding labour leasing in Switzerland

Boasting a wide range of industries and renowned for its high quality of life, Switzerland has become a top contracting destination.  The rules governing mobility of labour have opened up considerably in recent years, meaning that any national of an EU State may work in Switzerland with minimal paperwork. However, Switzerland is also well-known as one of the most regulated countries in Europe from a labour perspective.

Swiss labour leasing law applies to all placements, both temporary and permanent, of personnel in Switzerland and imposes several key rules:

 

  • A foreign labour-leasing company (e.g. agency, consultancy) may not place personnel at the premises of a Swiss end client

 

  • A Swiss labour-leasing company may only place personnel at the premises of a Swiss end client if in possession of a valid Swiss labour leasing licence

 

  • A Swiss company may not use a foreign labour-leasing company to provide personnel

 

These rules are strict and unambiguous and mean that foreign agencies wishing to do business in Switzerland are left with only two options: open a local office and obtain a labour leasing licence, or make use of a local partner.

While the former option seems preferable, there is considerable cost involved: other than initial investment in opening a new office, the process of obtaining the labour leasing license itself is far from cheap and the recent strength of the Swiss franc means running costs are higher. A critical mass of business must be reached in order to make it a viable option. The latter option, on the other hand, requires a high level of trust as the local partner will often be a recruitment agency itself.  In addition there is a ‘Catch 22’ associated with an arrangement with a local partner because, as a Swiss company, it may fall foul of the ban on recruiting via a foreign labour-leasing company.  Specialist advice is a must.

Companies found to be in breach of Swiss labour leasing law are punishable by fine: the Swiss authorities will pursue Swiss companies first (typically the end client) and then any foreign companies found to be in breach. The contractor or employee will not usually be held liable for breaches unless they are deemed to be a principal of a company involved (director or owner of a foreign limited company working in Switzerland on contract, for example) and/or unless they are not complying with local tax and social security regulations.

Both the agency and the end client are responsible for complying with Swiss regulations and procedures; both would therefore be well-advised to seek expert local advice before any contracts are signed. That said, with compliant procedures in place and a sound knowledge of the local contract opportunities, Switzerland could be viewed as an expanding, profitable marketplace.

For more information on conducting business in Switzerland please feel free to contact us on +41 32 732 1500 or send an email to info@sigma-cs.com