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Insights Employer of Record in Switzerland

Employer of Record in Switzerland

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​​​​​​​​​​​​​​​​​​​​​​​published on 9 April 2024 | reading time approx. 3 minutes

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With only one Employer of Record (EoR), the entire Swiss labour market can be tapped into. But it is still important to receive good and targeted consulting ​



Is the concept of EoR known in your country? Is the concept of EoR regulated by law in your country?

Switzerland offers a presumably large market for Employer of Record (EoR). Since the entry into force of the Agreement on the Free Movement of Persons (2002), many skilled workers have moved to Switzerland and taken up residence here. Not least due to the increasing mobility of workers and new technical framework conditions for remote working relationships, many employees are (once again) becoming attractive to foreign employers – with the difference that they can now remain resident in Switzerland.

First and foremost, EoR are mandated by foreign companies in order to offer domestic employees the usual protection (employment law, social security and local payroll accounting) and to ensure that local compliance obligations are met.

Special features of the activity within the framework of the EoR concept or temporary employment

In Switzerland, the concept of an EoR is based on staff leasing. The EoR hires the employee and lends them directly to the client (hirer). In Switzerland, it is mandatory to obtain a cantonal permit for national hiring out and, in addition, a federal permit for cross-border hiring out. The legal basis for this is the “Arbeits­vermitt­lungs­ge­setz” (AVG) with its various ordinances. Foreign clients (hirers) do not require a permit. However, staff leasing from abroad to Switzerland by a foreign company is not permitted. 

Only domestic companies that lend persons must meet certain requirements. Among other things, they must have a corresponding statutory purpose that is also entered in the commercial register. A deposit of between CHF 50,000 and CHF 150,000 must be paid to the cantonal licencing authority as security for possible wage claims. In addition, a person responsible for the business must be appointed and entered in the commercial register (with individual or collective signing authority). This person must be able to guarantee professional rental and be of good repute as well. 

Once a licence has been issued, it is generally valid for an unlimited period. However, all licencing requirements must be met at all times. It can be withdrawn at any time if the requirements are no longer met or if false or misleading information is provided or material facts are concealed. The licencing authority can initiate inspec­tions and impose fines for violations at any time.
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A generally binding collective employment agreement for staff leasing (“ave GAV-PV”) has been in force in Switzerland since 2012. Even if other collective employment contracts apply in individual cases, the GAV-PV is still valid. Above all, it defines minimum wage and working time provisions that must be complied with. It is not intended that the leased employees can claim the same employment conditions as permanent employees of the hirer.

What are the special tax features of the EoR concept in your country?

Swiss tax law is not explicitly familiar with the concept of an EoR – with the minor exception that the wage-paying employer is also the mandatory debtor of the withholding tax (wage tax) and (here) the economic / de facto employment relationships are not decisive. Furthermore, there are no exceptions or special regulations for staff leasing, neither in national tax law nor in international tax law. The individual case must therefore always be classified under tax law. In principle, local tax law gives greater weight to economic circumstances than to civil law circumstances. As a result, the risks of establishing a permanent establishment in particular cannot always be avoided.

How do you anticipate the concept of EoR evolving in your country from your perspective?

It can be assumed that the concept of an EoR will be further developed by the various market participants, accompanied by any case law. Only in the event of harmful distortions on the labour market can it be expected that the legislator will intervene to (further) restrict it.​

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