DOING BUSINESS IN SWITZERLAND
A recruitment company that wishes to provide services to clients in Switzerland needs to have a Swiss establishment that is registered in the Swiss register of commerce. It must also obtain the licences for the Hiring of Services and for Private Placement Services. A company that makes available their employees’ services to another unconnected company is considered to be offering services for hire. A company that introduces job-seekers and hirers for the purpose of concluding a contract of employment is considered to be providing a placement service. According to the Federal Act on Employment Services and the Hiring of Services (AVG) of October 6th 1989, the licences for these activities can be obtained from the competent cantonal authorities.
In order to obtain these licences a number of conditions have to be fulfilled; the business must be registered in the Swiss Commercial Register, it must have suitable offices and it may not engage in any other activities which could be detrimental to the interests of the employees or the clients. The responsible managers must be Swiss or EU citizens or foreigners who already have a residence permit. They have to have a good reputation (no convictions, no bankruptcy, no outstanding tax liabilities etc.) and the necessary professional skills. Samples of the client contracts and the employment contracts have to be handed in with the application. In the case of labour hire, a deposit, usually in the form of a bank guarantee, has to be made to ensure that the employees’ wages can be paid. Depending on the number of hours of hiring per year and which licences are applied for, the deposit can be up to CHF 250’000. The licences are valid for hiring of services and permanent placements within Switzerland.
The application for the placement and hiring of services licences has to be made to the competent cantonal authorities. The licence is not limited in time; it’s in the name of the business and also stipulates the responsible person and any changes have to be announced to the authorities and require an amendment. Every branch in another canton needs a separate licence. If the licences have been obtained by the use of misleading information or the concealment of important facts, or if the company breaches the law repeatedly or seriously, the licences can be withdrawn.
The law on Employment Services and the Hiring of Services has been put in place to protect the interests of temporary workers and has therefore closed the Swiss market down to non-compliant structures.
It is absolutely forbidden for a foreign labour hire company to hire out their employees directly to companies in Switzerland.
These laws also cover one man or contractor-owned limited companies. If the sole owner and director of a limited company purports to provide independent services in Switzerland, but in fact fulfills certain criteria including but not limited to; taking direction from the Swiss client, being integrated within the Swiss company and not taking responsibility for any defects in the execution of his work, he or she is considered to be an employee of that Swiss company and therefore, has hired him or herself out illegally.
For more information on conducting business in Switzerland please feel free to get in touch.