This applies to any Swiss or foreign company employing staff in the Cantons with a legal minimum wage or where the minimum wage is provided for in a collective labour contract (CCT) or standard labour contract (CTT) for certain types of employee and economic sectors.
Any Swiss or foreign company employing staff in these cantons is therefore obliged to respect the legal minimum wage. What’s more, even if the employment contract makes no mention of it, employees have the right to claim what they are owed, and the authorities can impose fines on companies that fail to meet this obligation. It is therefore essential to comply with the regulations in force to avoid damaging financial and reputational consequences.
Minimum wage legislation in Switzerland is a matter for the cantons, and there is currently no minimum wage set by federal law. However, five cantons have introduced a statutory minimum wage for all types of employees working on their territory: Geneva, Neuchâtel, Jura, Ticino and Basel-Stadt.
Human resources, both internal and external to the company, play a crucial role in drawing up employment contracts and handling employee complaints. Private individuals who employ household staff are also concerned, provided that these employees can be classified as employees rather than self-employed.
Main legal rules
The minimum wage applicable in Switzerland is governed by the following rules:
The absence of a federal minimum wage: As mentioned above, each canton reserves its own minimum wage legislation.
Exceptions: Certain types of employees, such as minors, apprentices, volunteers and trainees in vocational training, are not covered by the minimum wage obligation.
Elements included in the determining salary : In addition to the normal salary, all economic benefits or benefits in kind received by the employee must be taken into account. These include residence allowances, bonuses, seniority gifts, tips, service charges and many others.
Bonus point: What constitutes a decisive salary?
In addition to the normal salary, the following elements must be taken into account:
Any economic benefit or benefit in kind received by the employee, including residence allowances, gratuities, seniority gifts, tips or service charges, etc.
13th salary.
Holiday pay for hourly-paid staff.
However, amounts paid as salary supplements, such as compensation for night work, Sunday work, overtime or extra pay for overtime, are not taken into account.
Recommendations
If you hire low-paid staff
Consult the website of the Canton in which the employee must work regularly if that Canton has a legal minimum wage.
You can also consult the UNIA website to find out whether there is a CLA providing for a minimum wage by sector:https://www.service-cct.ch/
If possible, opt for a remote employment contract for a cross-border employee or an employee who lives in another canton that does not have a statutory minimum wage.
Under Swiss employment law, any Swiss or foreign company employing staff in Switzerland must draw up an employment contract with the employee, for the following two reasons:
Because the rules of employment law are stricter and provide more protection for an employee against his employer than for a self-employed person against his client.
Because the substance of the contract prevails, and a freelance, subcontract, consultancy or other contract can be requalified as an employment contract, regardless of whether the signed contract states otherwise.
Please note: A frequently inserted clause “this contract shall not be construed as an employment, partnership or corporate relationship…” is of no use in the circumstances of a particular case.
Because not only the employee can intervene to claim his rights, but also the competent authorities responsible for monitoring working conditions, associations or trade unions.
Because it is primarily the employer’s responsibility to collect social security contributions on the employee’s gross salary and pay them to the relevant authorities.
Private individuals who employ household staff are also affected, provided that these employees can be described as salaried rather than self-employed.
Main legal rules
General cases
The situation must be interpreted on a case-by-case basis, taking into account all the objective circumstances, even if this means ignoring the clear clauses of the signed contract (principle of substance over form).
To qualify as an employee, here are the different criteria to consider:
Having only one or very few customers.
Not employing any staff.
Not acting in one’s own name.
Not having proper premises.
Absence of business investments.
Not assuming the risk of default or loss.
Not determining freely the terms of working and being subject to instructions of others.
Not freely fixing the working schedule.
Please note: these criteria are not cumulative, and each criterion may carry more weight than the others, depending on the individual situation.
Particular cases
In addition to the cases mentioned above, there are also special cases in which you can qualify as an employee. These are as follows:
A non-executive director of a company or business is considered an employee, even if he or she is the owner or shareholder of the business at the same time.
A sole proprietor cannot be an employee even if he pays himself a salary through his business. This is simply a deduction from the profit.
An artist, sportsperson or lecturer is in principle self-employed rather than an employee.
You may have employee status in relation to your employer, and self-employed status in relation to other customers. The two statuses can then be combined.
Tutoring at home is more of a self-employed activity, but tutoring at school is an employed activity.
Cleaning or gardening work with own equipment for several households is the self-employed activity, but cleaning in the same household is more of an employed activity.
Childminding in one’s own household is more of a self-employed activity, but is more of a paid activity if in the child’s parents’ household.
Recommendations
If you feel that the person hired is more of a freelancer
Check whether he is registered as a sole trader in the commercial register. This is a good indication that he is self-employed.
Check whether he is registered as a VAT taxpayer. Also a good indication that he is self-employed.
Check whether it has a website for placing orders, open to all potential customers.
Make sure it has several customers. Does it have references, customer reviews, etc.?
Include a clause in the freelance contract requiring the freelancer to inform us regularly if their status changes.
Include a clause in the freelancer’s contract that passes on any social security charges or taxes due, if any, to their salary, so that you can take action against them if it turns out that they have employee status from the point of view of the relevant authorities.
