In Switzerland, independent workers providing their skills and services to a client company, can do this under various engagement models. Understanding the options available, and then agreeing which one fits the business relationship best, is crucial for all parties. And workers should have a very clear understanding of all the legal and financial commitments they are agreeing to first, before signing a contract.
Step 1: Who am I?
- The first thing the worker and the client company need to consider is whether the worker should be employed by the client company directly, or engaged as a temporary employee through a labour leasing company.
- The second point to understand is: what the various engagement model options are. The table below explains.
|Admin and Tax
|“Employer of Record” where the worker is employed by a SECO licensed EOR and then leased to the client company as an employee at agreed terms & rates.
|All permit holders except C, will have tax deducted at source. All social deductions, pension plan payments, insurances will be presented, deducted and paid via the EOR.
|Regarding Tax – C Permit holders are treated in the same way as Swiss nationals and so, are responsible for submitting yearly tax return.
|German Acronym meaning “employee without a contributory employer”
|The worker is responsible for set up and management of all admin., insurance, pension and tax payments for this model.
|The set up and monthly management tasks can be outsourced e.g. to Swissroll. No minimum salary requirements.
|Freelancer or Consultant
|Will need to register their own company in Switzerland. Differs from canton to canton. Sole Proprietorship is most common legal form.
|Must be a Swiss resident. Freelancer is responsible for set up and management of all admin., insurance, pension and tax payments.
|Generally, not insured against unemployment in Switzerland. Proof worker already has some business knowledge and is able to work for themselves.
Step 2: Which engagement model?
It can be, that the client company wanting to engage a worker for a specific role, already knows which engagement model they would like to use. They will then communicate this to either the recruiter, or the worker or both.
In the instances where the client company does not understand the models fully or the potential implications (for example a foreign based company looking to engage a remote worker to be based in Switzerland) typically a 3-way conversation takes place between the employment services company, the client company and the worker. The subject of the discussion is the various engagement models below:
a. EOR or Employer of Record
In Switzerland, employment service providers offering EOR services have to be licensed by the State Secretariat for Economic Affairs or SECO. They are then permitted to employ skilled workers and lease these as contractors to the client company that has already agreed terms with them already.
STATUS: The contractor is engaged by the client company (manages day-to-day tasks), and employed by the EOR who manages payroll and associated admin for the contractor.
- This Tri-partite relationship is governed by:
- a supply contract between the EOR and the client company.
- an employment contract between the EOR and the contractor/consultant.
- The contractor thereby has a Swiss employment contract (with the EOR) and pays into all the Swiss social funds, insurances and pension plans, the same as any other Swiss employee.
- The contractor completes a time-sheet for hours worked each month and once checked by the employer, this is then forwarded to the client company with the monthly invoice.
- The EOR handles payment and deducts and pays all the administrative funds on the payslip as part of their fee
- The net salary is then paid into the employee’s bank account by the EOR.
- This model also allows for bonus payments to be made to the employee
This German acronym (Arbeitnehmende ohne beitragspflichtigen Arbeitgeber or employee without a contributory employer) stands for an engagement model that differs in several ways to the EOR.
STATUS: The worker is employed by the client company and is solely responsible for setting up and managing all administration tasks and payments related to the ANobAG status.
- The model is tailored to remote workers with a permit and based in Switzerland while working for a foreign based company.
- A permit and a work contract is required for the worker to register as an ANobAG worker at the local social security office where they live.
- The worker is employed by the foreign company and is responsible for setting up and managing and paying all the social fund payments, sickness and accident insurance contracts as well as second pillar pension plans. The employee pays all elements including those that would traditionally be taken up be the employer
- Unlike the EOR model, there are no minimum salary guidelines, nor do positions need to be advertised locally.
- Setting up and managing monthly payments to social funds, pension plans, insurance providers etc., is not for the faint hearted and can eat up a lot of precious time for the worker. Swissroll offers an a la carte ANobAG service offer to take care of both these tasks.
c. Setting up an Own Company
Many workers in Switzerland class themselves as freelancers. A lot of these have set up an own company to handle invoicing to clients. Those who choose to become self-employed may require multiple clients, and must also take care of his/her own admin, social fund payments, insurances, pensions and taxes. Workers who are engaged in full time work for one dedicated client – even if it is a remote client, are not considered to be freelancers but temporary employees.
A skilled worker looking to engage in work for a specific client company for an agreed period of time and at stipulated rates – whether they call themselves a temporary employee or a self employed freelancer or a consultant – must engage with the client in either the EOR or ANobAG model as an employee or have their own company set up as a consultant or a self-employed person.
Swissroll GmbH was founded over 20 years ago. During this time our team of experts has worked with hundreds of companies and literally thousands of contractors. Also cross border workers. Beyond our core function of payroll management, we offer advice to workers about which engagement model best suits theirs, and the clients needs. This includes giving advice in French, German and English and on social security and tax. Call or contact us now on: firstname.lastname@example.org