Whether as part of an international business expansion strategy, or in support of a current employee’s desire to be based near family, engaging skilled workers under EOR or “Employer Of Record” is a simple way to set up and manage a worker’s payroll. What is EOR exactly? How and when can it be used in Switzerland?
From a company perspective, Employer Of Record enables your business to engage a skilled worker in a particular jurisdiction without having the need to set up a legal entity in that jurisdiction to employ them directly. This is ideal for companies looking to expand rapidly into new markets, or for those businesses chasing workers with rare skills for a project or assignment. For the company, EOR means:
- An uncomplicated employment set up with fixed contractual timelines which can be extended.
- No HR administration or salary tasks, but with complete control over day-to-day management of the contractor.
- Employment is legally compliant and workers are insured for health, accident and all obligatory social payments as part of the EOR agreement.
From a contractor’s perspective, the EOR solution offers a number of advantages compared to either full time employment, or to setting up as a freelancer to invoice for work:
- Freedom of contract duration, rates, conditions.
- Focus on work and no distractions or risks with unfamiliar administration.
- Compliance with Swiss legislation and taxes.
- Security and the benefits of being employed, with the freedom of flexibility.
In order to act as an employer of record in Switzerland, both the company and the contractor need to work with a SECO-licensed employment services company. If a recruiter is involved, they may need to provide their service through a licensed Swiss intermediary. Accurity GmbH is a professional employer organisation licensed to offer EOR and other payroll services to companies, contractors and recruitment agencies. For EOR, the process works in the following way:
- The company (company client) has a job opportunity open and the contractor applies for the role – either directly or via a recruitment agent.
- The company client and the contractor agree terms, rates and duration of the work and the contractor looks for, or is recommended a SECO-licensed employment services company such as Accurity GmbH. These manage the EOR services.
- The contractor signs an employment contract with the employment services company, which in turn signs a supply agreement with the client company to provide the contractor’s services at the agreed rates and duration. This is referred to as “labour leasing“.
- Each month the contractor completes a time sheet for hours worked. The employment services company calculates the salary and then invoices the client company for the hours worked (by the contractor) and makes the net salary payment to the contractor (minus all obligatory taxes and social deductions).
When can EOR be used? Here are some examples:
- A contractor secures a job role in Switzerland for a given time period at an agreed rate with a company client. They need to engage an employment services company and sign an EOR agreement. The contractor then has a Swiss work contract and pays into the Swiss tax and social funds system.
- A (client) company in Switzerland has a major IT project that is planned to last 2 years but could be longer. They need expert IT managers and quickly, for a limited time period but with flexibility. The company recruits a number of IT contractors (either directly or via a recruitment agency). The contractors then sign an EOR agreement with an employment services company and get paid monthly by the employment services company, usually when they receive payment from the client company. In Accurity’s case, we pay the contractor on the agreed day each month, guaranteed.
- A (client) company in a foreign country wants to engage a manager based in Switzerland as part of an international expansion strategy. They find a contractor who is willing to work under EOR status. The engagement process is the same as for a national Swiss based company. This allows the foreign company to expand into Switzerland without having to set up a legal entity.
- In all the above cases, EU/EFTA and Swiss nationals will generally not have any work permit issues. Nationals from so called 3rd countries on the other hand, are subject to stringent checks, and restrictions may apply.
EOR has advantages for both client companies and contractors. International recruitment agencies can also benefit, especially in the case of international workers. The employment services partner is an important key to the whole process. Finding a trustworthy, reliable and compliant EOR partner is important to mission success. As remote and nomad working becomes more accepted, flexibility in staffing by companies is increasingly important for their long term success.
As Switzerland’s most trusted payroll provider, Accurity GmbH has over 20 years’ experience providing specialists, contractors, clients and recruiters from all industry sectors, with the best advice and EOR solutions thereby ensuring they make the right decisions in an innovative and changing world.
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!