Several recent key trends influencing international business expansion include digital transformation, the growth of e-commerce, emerging markets, joint ventures & partnerships. As global expansion continues, established markets such as Switzerland, still remain attractive because of the stability, moderate taxation, and transparent political system.
One key factor affecting how companies expand internationally is the digital revolution. With social media now serving as a virtual gateway for product, market and customer testing, companies are starting to look more closely at how they are going to expand and not only only when.
The question of how not only refers to the type of product and customer facing strategies companies develop to expand, but more specifically, with regard to understanding the political and regulatory boundaries that exist in each country which can significantly slow down, even impede expansion efforts without the right expertise and know-how.
While many Fortune 500 companies prefer to work with a one-shoe-size-fits-all approach when selecting a HR/BPO partner for multi-country business expansion, the question remains: what is the right approach for start-ups, SME’s or other entrepreneurial scenarios when a more tailored & individual approach could be more appropriate?
The EU & Switzerland
The 27 countries of the EU have 24 official languages and a total population of 448 million. This compared to North America, i.e. USA & Canada, with approximately 369 million people and 2 official languages.
Expanding to “Europe” has definitely become easier since the EU was founded, but the fact remains that business styles, cultures, languages, political nuances and many other details, differ from country to country within the EU.
Switzerland is a land-locked country and although it works closely with the EU, is not a member state. Almost a quarter of the country’s workforce is employed or engaged with multinational companies. In 2021, more than 35’000 companies with a total of nearly 1.5 million jobs and sales close to CHF 2’000 billion belonged to the multinational group. This according to statistics from the Federal Statistical Office (FSO).
What is sometimes surprising for those new to Switzerland, is that over 99% of Swiss based companies are classified as SME’s and these include a plethora of start-ups from all industry sectors, many of them sponsored or nurtured from two of the best Universities in the world – the ETH in Zurich and the EPFL in Lausanne.
Surrounded by Germany, Austria, France, Italy and Liechtenstein – there are 4 official languages in Switzerland (not including English) and the 26 cantons are the constituent elements of the Swiss Confederation. This means they possess a wide range of powers and have their own cantonal taxes, and to a certain extent employment laws.
Switzerland is regarded by companies expanding internationally as a safe bet from a political, economic, educational and business-friendly perspective, where English is widely understood in major towns and cities. But buyer beware, English is not an official language and dealing with cantonal authorities require native level language capability, as well as expert knowledge of the nuances and laws of each canton.
The above highlights just one of the possible challenges of expanding business operations to Switzerland and those companies evaluating the risks and advantages of moving their operations here, (even if only from a remote worker perspective) need to be fully aware of the nuances and requirements before making any final decision.
Engaging remote workers based in Switzerland – FAQ’s
- Assuming your company has already identified a person that they would like to engage with based in Switzerland, the first question to ask is: do they have a valid permit?
Being in possession of a valid permit is key. Simply put, without a permit, the worker can’t work. Unless that is they are a Swiss national. Organising or supporting a worker in obtaining a permit requires local language skills and know-how on how “the system” operates. Most towns in each of the 26 cantons of Switzerland have their own social security offices. These sometimes will speak English, but mostly will revert to the local language for any legally binding issues (German, French, Italian or Romansch). - The second most critical question is does your company wish to employ the worker directly or engage them as a contractor through an employment services company?
There are different engagement models available when engaging a remote worker in Switzerland. The standard contractor model sometimes referred to as “EOR” or Employer of Record is one that many of the larger global support partners offer their clients. But what if the worker has signatory rights or share options and complex bonus scheme payments and need to be employed by your company? There is another model available for these types of scenarios. Local language and system process expertise and know-how is critical. - With regards to on and off-boarding of workers: this can sometimes fall under the category of “how long is a piece of string”. How would your company expect this to be done?
When engaging a new worker, especially a senior manager or skilled specialist, one way of making the person feel “part of the family” and “valued ” is to ensure a smooth on, as well as off-boarding process. Does the HR service provider you are working with offer key account support for your worker? What communication channels do they use? What languages do they speak? What hours are they available? And the 64 million dollar question: How much do they charge? These are all critical considerations when engaging a remote worker in Switzerland. - What type of ongoing HR support services does your company expect from a local partner? Receiving a call at 3 am from a worker in Switzerland asking about Swiss tax laws is not really a scenario your HR can probably be expected to answer or be knowledgable about. Having a trusted HR/PEO partner in market and expert with regards to local employment rules, tax regulations and legal parameters is key to running a smooth remote operation. Given that Switzerland has 26 cantons each with different rules and regulations and 4 official languages, expert knowledge and cultural awareness and experience is key.
- How can you manage remote worker payroll including salary payments ?
Tax in Switzerland is collected at local, cantonal and federal level. Salary deductions and payments depend on where the worker lives, their age and marital status, number and age of the dependents, even if they are a regular church goer, and more! This means that each scenario is potentially different and there is no one-shoe-size-fits-all approach possible. Any disputes or questions from the remote worker must be handled expertly and quickly. Making payments on time and navigating bank charges and rates of exchange is also something important to consider. Nothing annoys workers more than receiving their salary late or not in full! - PEO and “other” solutions: What is standard? What can your company expect? What will it cost?
If your worker is moving to Switzerland for the first time, they may need guidance on accommodation, transport services, rules & regulations, setting up a bank account etc. The list is almost endless. It is important to know what your HR/PEO service partner can provide and how much additional services costs can be.
Summary
When considering international business expansion, there are many questions and challenges a company should consider. In this post we have looked at just some of the questions your company might think about when engaging a remote worker in Switzerland. The list of FAQ’s is really just a sample and in reality will probably be a lot longer. Engaging a local expert partner with an international outlook and with simplified business processes and expertise in a wide range of PEO services is key. The importance of a good network of contacts at local and cantonal level can also not be understated. Taken from the “Think global act local” addage GLOCAL services present a strong argument against the one-size-fits-all approach.
Accurity is a SECO licensed, provider of payroll and HR management services in Switzerland for companies of all sizes from multi national corporations to SME’s and start-ups. We also advise on flexible and remote work and rates of pay. Please feel free to contact our team to find out more about the services we offer companies, contract staff and recruiters, and see how we can help you! We make Switzerland easy for you!
Michael is a celebrated strategic Marketing and Business development expert with decades of experience and achievements under his belt. He has extensive commercial knowledge in the relocation and travel industry and has specialised in highly individual customer facing services.
As a Swiss national Michael has a broad experience of Switzerland.
