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Differentiating between an employee and a self-employed

Know the difference between an employee and a self-employed, and what are the consequences in Swiss contract law.
The distinction between employee and self-employed status
21.05.2024

The distinction between employee and self-employed status 

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: 

  1. Having only one or very few customers. 
  2. Not employing any staff. 
  3. Not acting in one’s own name. 
  4. Not having proper premises. 
  5. Absence of business investments. 
  6. Not assuming the risk of default or loss. 
  7. Not determining freely the terms of working and being subject to instructions of others. 
  8. 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. 
Freelancer agreement
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If you are concerned that employee status may apply 

  • Draw up an employment contract that best suits your needs and complies with all relevant legislation. 
  • Take advantage of our various employment contract templates: 
    • Adapt the contract to the type of work and the employee. Information boxes explain which contract should be used in which case. 
    • Navigate the rules of employment law with our information boxes for guidance and advice. 
    • Choose from the comprehensive options we offer to maximise your rights while staying within the law. 
Standard employment agreement
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