The work landscape has seen significant change in recent years. This has been accelerated by technological advancements, as well as the recent COVID-19 pandemic. There are now various engagement models which allow companies to legally employ workers in a foreign country, without needing to establish a legal entity in that country. The most common engagement model used is the Employer of Record or “EOR”.
EOR is useful in countries with complex labor laws or where establishing a business presence is costly or time-consuming such as Switzerland. Here we look at global work trends and EOR as it pertains to Switzerland.
Global Work Trends
Remote Work
The ability to work from anywhere is now considered as normal for many industries. Initially driven by necessity during Covid, remote work has now become a preferred option for many employees and employers alike.
- In Switzerland approximately 17% of the workforce is engaged as an independent freelancer and many work remotely.
- Companies offer fully remote positions or flexible arrangements where employees can work from home on a certain number of days each week.
Hybrid Work
In Switzerland many roles are now offered whereby employees may come to the office for collaborative tasks while working from home for individual tasks. This model provides flexibility while maintaining a level of in-person interaction.
Digital Nomadism
Currently, 66 countries worldwide offer digital nomad visas. Although Switzerland does not offer this type of Visa, EU/EFTA nationals, can usually get a permit to live and work in Switzerland.
The Role of Technology in Remote Work
There are many digital tools used today that have now become essential for facilitating communication, collaboration, and project management in remote environments. However, cybersecurity has become a critical focus, as remote work increases the risk of data breaches and cyberattacks. Switzerland has strict rules in place, some of which can be reviewed here.
Future of Remote Work
Some companies are now adopting remote-first policies. This allows employees to work remotely, indefinitely. This trend is particularly strong in tech, finance, and creative industries.
Global Talent Acquisition
Remote work allows companies to source talent from anywhere in the world, breaking down geographical barriers. This has led to more diverse and inclusive teams. The EOR engagement model is particularly helpful for this type of scenario.
As mentioned, Employer of Record (EOR) is particularly useful in places with complex labor laws or where establishing a business presence is costly or time-consuming. Here’s how it works in the context of Switzerland:
Employer of Record in Switzerland
Legal and Administrative Compliance
- Switzerland has stringent labor laws and regulations concerning employment, taxation, and social security. A SECO-licensed EOR with a registered address in Switzerland will ensures compliance with all Swiss labour laws, including work permits, employment contracts, payroll taxes, and employee benefits.
- For example, Swiss law mandates that employees are entitled to certain benefits such as pension contributions (through the Swiss social security system, AHV/AVS), accident insurance, and at least four weeks of paid vacation per year. The EOR takes responsibility for managing these benefits.
Employment Contracts
- The EOR serves as the legal employer for the employee, issuing employment contracts that comply with Swiss labour regulations. This includes ensuring that contracts are in the appropriate language (typically German, French, or Italian, depending on the region) and these also include all mandatory terms like notice periods, working hours, and salary details.
- Even though the EOR is the official employer, the day-to-day work and responsibilities are directed by the client company (the company hiring the EOR’s services).
Payroll Management
- The EOR handles all payroll functions, ensuring that employees are paid correctly and on time, in accordance with Swiss regulations. This includes calculating and withholding income taxes, social security contributions, and any other mandatory deductions.
- Swiss taxes can be complex, with different rates depending on the canton (county or state) and the employee’s personal situation (e.g., marital status, number and age of dependents etc.). The EOR manages this complexity. A high level of service and trust is required here and unlike other parts of the EOR operation which can be digitalised, contacting cantonal individuals responsible, can still require manual actions on a case-by-case basis.
Work Permits and Immigration:
- Switzerland has specific requirements for work permits, particularly for non-EU/EFTA nationals. The EOR assists in advising on the necessary work permits and visas for employees, ensuring they can legally work in Switzerland if possible.
- The EOR also manages permit renewals.
Employee Benefits and Insurance
- In Switzerland, employers must provide specific benefits such as health insurance contributions, accident insurance, and pension schemes (through the Swiss occupational benefits plan, BVG/LPP). The EOR takes care of these requirements, ensuring employees receive the benefits they are entitled to under Swiss law.
- This also includes additional benefits like maternity/paternity leave, sick leave, and unemployment insurance contributions.
Termination and Legal Issues
- If an employee needs to be terminated, the EOR handles the process in accordance with Swiss employment law, which can be complex, especially regarding severance pay and notice periods.
- The EOR also provides legal support if any employment disputes arise, ensuring that the client company is shielded from legal risks.
Why Use an EOR in Switzerland?
- Cost-Efficiency – Setting up a legal entity in Switzerland can be expensive and time-consuming, especially given the country’s strict regulatory environment. An EOR allows companies to avoid these costs while still accessing the Swiss labour market.
- Speed – Engaging an EOR allows companies to hire employees quickly, often within a few weeks, compared to the months it might take to establish a legal entity.
- Compliance and Risk Management – Switzerland’s labor laws are complex and vary by canton. An EOR mitigates the risks of non-compliance by managing all local regulations on the company’s behalf.
Example Scenario
A U.S.-based tech company wants to hire a software developer based in Zurich, Switzerland, but doesn’t have a Swiss subsidiary. The company can use an EOR service to employ the developer. The EOR will handle everything from drafting the employment contract in compliance with Swiss law to managing payroll, taxes, and social contributions, while the developer works on projects for the U.S. company. This approach allows the U.S. company to expand its talent pool to Switzerland without the need for a local entity, ensuring full compliance with Swiss employment regulations.
Summary
The work landscape has changed driven in part by the recent Covid pandemic. Remote work is now an accepted norm, as is global hiring of skilled talent. The EOR or Employer of Record engagement model allows foreign companies to engage workers based in Switzerland, legally and efficiently. Companies can achieve full compliance working with a SECO-licensed Swiss based EOR. Although technology has in part facilitated the growth of the EOR engagement model, trust and personal service from the local Switzerland based EOR also plays a key role in the successful and seamless hiring of remote workers based in Switzerland.
Accurity is a SECO licensed employment services company with over 25 years’ experience in supporting companies of all sizes, from start-ups, to SME’s to multi national corporations. We are Swiss owned with local know-how and expertise. We advise on remote work, EOR, ANobAG, contractor payroll management as well as company outsourced payroll management, consulting and more. Please feel free to contact our team to find out more about the services we can offer your company, contract or permanent staff , 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.
