Switzerland is a preferred location for many international companies. This is partly due to the outstanding economic framework. This includes a well-educated and flexible workforce, a stable and efficient government and moderate taxes. These combined, form the basis for the country’s reputation of quality and prosperity.
Currently more than 1’200 international companies have their head office or other centralised function located in Switzerland. However, other companies may prefer to first engage remote workers based in Switzerland, before establishing their own entity. Correspondingly, international workforce management without having an own entity in-market can bring challenges, as well as opportunities. In this post we highlight the typical scenarios with regards to setting up and managing international workers based in Switzerland, when the hiring company is located in a foreign jurisdiction.
Employment laws
Switzerland’s flexible employment laws permit international companies to engage contractors or hire employees based in Switzerland, even without their own registered entity in the country. The two main hiring models that can be used usually depend on the requirements of both the worker as well as the hiring company.
Employer of Record for Contractors
A contractor is a skilled worker hired to do a specific job or task for a client company. These are not employees of the client company. However, some contractors complete work for multiple clients at the same time, and in this case, are referred to as “Freelancers”. Overall, the process of engaging a contractor based in Switzerland is as follows:
- The client or hiring company works with a Swiss based recruitment company. Alternatively, international recruiters that work in tandem with a licensed Swiss recruitment partner can be used.
- Once the final selection is made, terms and rates of pay are agreed between the contractor and the hiring company. The contractor will need to identify a SECO licensed employer of record (EOR) based in Switzerland for their payroll management.
- The EOR is the legal employer of the contractor in Switzerland and signs a supplier agreement with the client company to lease the contractor to these, at the terms and rates agreed. This is otherwise referred to as labour leasing.
- The EOR charges a percentage fee each month for their employment services. This reflects the risk they enter into as the legal employer for the contractor.
- The EOR ensures that all compliance and compensation issues including insurances, social payments and pension fund deductions are correctly set up and managed each month. Compensation guidelines differ from country to country and Switzerland has its own set of unique rules that all businesses must comply with. This is where the know-how and support of the local EOR is invaluable.
Managing the Contractor
The EOR supports the contractor with ongoing HR questions as well as local advice. However, it is the client company hiring the contractor that sets the goals, tasks and measurement for the contractor. Albeit, the EOR guides both parties as to what is permitted by Swiss employment law. In a nutshell, the process is as follows:
- Monthly Payroll management is managed by the EOR. Accordingly, the contractor is required to complete a timesheet for hours worked each month and once that is submitted and approved by the client company, the EOR can calculate the exact salary.
- The EOR then invoices the client company and pays the contractor directly into their bank account. Additional points to note are: currency rates, payment schedules, local laws on work hours, public holidays, vacation, and other time-off requirements.
- Time differences and work cultures are also a key consideration for foreign companies engaging Swiss or EU/EFTA nationals as contractors. Just because all parties can communicate in one common language, doesn’t necessarily mean they always understand each other!
Benefits of hiring a contractor in Switzerland
There are several benefits for both the hiring company and the contractor:
- Agile :The set up process for a contractor to work in Switzerland is relatively straightforward. Once operational, they can focus totally on their work objectives.
- Flexible: engaging a contractor is a recognised way to hire skilled talent for a unique project or for a limited time period.
- Specialist skills: Contractors typically have specialist skills outside of what regular employees might have. This is ideal for one-off projects.
- Low Risk: engaging a contractor is a low-risk way of hiring for short or stipulated time-periods. There is usually little training required as the contractor hired has the required skills for the project they are hired for.
ANobAG for Employees
The Swiss ANobAG model is designed for Swiss resident employees of foreign companies that have no presence in Switzerland. This model allows the employee to come under the Swiss social system. The word ANobAG is an acronym and equates to the employee being responsible for setting up and ensuring payment of all social funds, insurances and pension payments are made each month. This is usually done in agreement with the client company.
An employee is hired by the client company either directly or through a recruitment agency. The reasons for selecting this model versus the contractor-route, are generally due to one of the below:
- The employee already works for the company in another jurisdiction and is initiating a move to Switzerland themselves based on a family reunification. They want to retain their position at the company and also keep their seniority at the company.
- The company is hiring a senior worker to work remotely from Switzerland. The worker has signatory rights and/or shares in the business or a complex benefits package, best managed through the ANobAG model
Set up of the ANobAG model
The client company and the ANobAG worker agree compensation levels including salary and a bonus payment model.
- The worker is advised to locate an employment services company offering set up and management services for ANobAG’s.
- The first step thereafter is for the worker to register at their local social security office as an ANobAG worker.
- To do this they will need to show the employment contract and a valid permit for Switzerland. Although the contract does not have to be a Swiss employment contract, this is one of the tasks that the ANobAG service partner would complete for compliance before the registration process begins.
- Once approval is given by the social security office, the task of setting up the health and accident insurances, pension fund, and other social fund payments can begin. This is where support from the ANobAG service partner with their local language skills, knowledge and professional networks is invaluable.
- Once all the funds and insurances are set up, the ANobAG worker is ready to commence work. Timesheets and salary payments are handled in much the same way as with the EOR model. Bonuses are usually more complex, but in the hands of a professional ANobAG service support partner, this should not be an issue.
Managing the Employee
The ANobAG worker is directly managed by the client company.
- The local support partner is akin to an outsourced HR partner and there to answer salary, bonus and general employment questions.
- The fees charged for the ANobAG service can vary, but are usually transparent and set as a fixed fee for set up and monthly management tasks, with any additional non-core services charged for on an hourly basis at pre-agreed rates.
Benefits of hiring an employee based in Switzerland
There are several benefits for both company and employee when hiring an employee. The main ones being:
- Continuous employment for existing employees.
- Company required an employee to represent them and not a contractor.
- Signatory rights of employee.
- Suited for bonuses and share schemes.
Summary
As the trend for remote work and global hiring continues to grow, and international business expansion gathers ever more momentum, it is considered normal business practice for companies to hire remote workers outside of the company HQ jurisdiction. This includes skilled workers living in Switzerland. Remote workers based in Switzerland are able to choose from different options when engaging in work for a foreign based company. EOR or employer of record is designed for contractors for specific projects or remits, while ANobAG is targeted to the client company actually hiring the employees themselves. Both models are now widely accepted and used 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.
