Companies of all sizes continue to expand internationally, generating significant growth in skilled worker mobility. The number of service providers offering Global PEO services including Employer of Record (EOR) has also increased significantly.
Search Google for “Global EOR Services” and 626’000 results are returned. These service providers aim to provide a “one stop shop” for all HR services globally. They are often funded by start-up investors motivated by scalability and rapid market expansion. Competition has become intense, leading to “loss-leader” pricing and unverifiable service claims which are designed to acquire clients rapidly. Rapid global presence is typically achieved by operating purely as an intermediary by partnering with local providers who provide the actual service in a given country.
Is it prudent for international companies that are expanding operations to work with one global PEO provider for all their HR Services?
Should local, legal and cultural expertise be procured when workers are to work in a new country?
Risks when working with a non-reputable PEO may include:
- Accreditation and security/privacy issues with the vendor’s system.
- Lack of control over essential processes and employee paperwork.
- Resistance from (and ultimately loss of) employees due to lack of ongoing support from the PEO.
- Payroll issues such as tax liabilities, incorrect, or late payment.
- Non-fulfilment of agreed services due to various factors including cash-flow issues by the PEO.
Which services does the Professional Employer Organisation in Switzerland typically need to offer, to meet clients’ requirements?
While most countries within the EU offer reasonably seamless mobility for EU citizens, local employment and tax laws can lead to unexpected employer risk when operating cross border employment. Although Switzerland is outside the EU it allows similar access to EU citizens wanting to work there. Switzerland’s employment laws are notoriously complex and payroll and tax rules vary across its 26 cantons. This complexity is compounded by several different regional languages and cultures, making the interaction of an HR Service provider with local authorities and organisations challenging. Local knowledge and accreditation to national associations also play a key role for the compliant PEO provider in Switzerland.
In Switzerland as in other jurisdictions, there are different levels of PEO service. Some providers focus purely on payroll services – for example invoicing work completed by freelancers for their clients, while others employ contract workers in Employer of Record (EOR) status and manage all their back-office HR requirements including monthly payroll. The more experienced and holistic service providers, are compatible with the generally accepted international definition of a PEO, of being an outsourced solutions partner for a company’s HR, payroll, benefits, workers’ compensation, and compliance – allowing the employer to focus on core work, while the PEO handles many of the company’s HR administrative tasks.
In Switzerland reputable PEO’s will need to:
- be licensed by the State Secretariat for Economic Affairs (SECO) and adhere to strict SECO rules. Regular auditing of the PEO by SECO takes place.
- be able to communicate in the local language of the cantons in which they operate (French, German, Italian and in some cases Romansch). Due to the nationality of many contract workers, other foreign language capabilities may also be desirable.
- be able to offer support for foreign workers obtaining health and accident insurances and work permits. They will often have an established network of contacts in local government and insurance brokerages as a result.
- have clear demonstrable processes and transparent pricing. They will also have documented data security and a plan for unusual events such as the recent pandemic.
Swiss labour costs are significantly higher than in most other European jurisdictions. While most Swiss PEO’s believe that pricing offers should generally be negotiable, below market-standard pricing by some providers could also be a sign of a lack of financial stability, or inadequate service. Buyer beware!
The cost of the local PEO vendor’s labour and the time required to complete the required tasks will determine their pricing. Below market pricing for PEO services in Switzerland should be seen as questionable, as this could be a precursor to additional costs being charged subsequently for the service, or an inadequate service altogether. It pays to read the fine print and research/vet the provider.
Local expertise and presence is typically required by the PEO regarding:
- work Permits: does the worker already have a work permit in place for Switzerland or is administrative support required? This can be influenced by:
- the worker not being an EU/EFTA or Swiss national.
- certain roles now have to be advertised first before they can be offered to a worker.
- the proposed salary level – as GAV or Collective Labour Agreements often enforce minimum wages.
- professional qualifications for some roles can require detailed applications or examinations.
- accommodation: does the worker need support finding suitable accommodation?
- on-going support: will the worker require support at local level to deal with questions that are sure to arise.
For the reasons highlighted, most International / Global PEO’s work at least in part, with local market service providers as their local partners.
When a company with international staffing support requirements selects a Global PEO as their partner, there is a strong possibility that, at least in some jurisdictions, the Global PEO will work with an in-market PEO partner to fulfil their clients’ service needs locally. This seamless service offer, when conducted professionally and managed in the spirit of business fairness is of benefit to all parties. However it is important that local work conditions and pricing be observed to ensure compliance. As Winston Churchill famously said: “The price of greatness is responsibility”. And that comes at a cost.
As Switzerland’s most trusted payroll provider, Accurity GmbH has over 20 years’ experience in changing times, providing clients with the best advice about their payroll, pensions, social security and living options – to ensure they make the right decisions. We work with corporate clients, recruitment agents, contractors and international PEOs. If you would like to speak with one of our team of experts, simply contact us now to see how we can make Switzerland easy for you!