Foreign Employee Wages in Switzerland

Tuesday, March 31, 2015 | Published by

According to Switzerland’s Federal Act on Assignments (Entsendegesetz), non-Swiss companies providing services in Switzerland must compensate employees temporarily working in Switzerland at a level which, at a minimum, equals a Swiss reference salary for the relevant industry, profession, and geographic area in question.

Apart from generally binding collective agreements providing minimum wages for certain industries, there is no statutory minimum wage in Switzerland Therefore, the salary level estimate is set on a case-by-case basis, using criteria such as; job grade, qualification level, weekly work hours, age, responsibilities while working in Switzerland, etc.

Following the Swiss National Bank’s recent decision to end the three-year cap of 1.20 Swiss francs per Euro, Switzerland’s currency strengthened considerably against the Euro and the US Dollar. As a consequence, salaries paid in Euros or US Dollars to employees temporarily working in Switzerland may not meet the aforementioned criteria anymore.

To monitor compliance with the law, the labor inspection authorities perform random checks of foreign workers. If, through the inspection, it is acertained that the salaries paid to foreign workers (non-Swiss employees) are too low, the employer may be sanctioned for infringing Swiss immigration law. Apart from economic fines resulting from these actions, the company will have to issue back pay to compensate the workers. In this context, the competent immigration authorities will apply the official currency exchange of the FTA of the day on which they process the work permit application, if the compensation is paid in a foreign currency.

To avoid these possible sanctions during the working period in Switzerland, the most important step employers have to take to ensure that they abide by the law, is to assess the salary against Swiss reference salary requirements on a monthly basis. In this regard, if necessary, the salary will increase to fulfil the minimum requirements of the Federal Act on Assigments (Entsendegesetz; EntsG). On the other hand, this may be considered a salary increase and thus may lead to an entitlement on the part of the employee, even if the exchange rate shifts in the opposite direction (i.e. in case of a weakened Swiss Franc).

In view of the above and prior to the assignment, an employer should determine that a written agreement is made with the employee which specifies that, in the event of currency exchange rate movements, adjustments to the assignment allowances being paid to the employee for the sole reason of bringing compensation in line with Swiss refence salaries, may be made at any time and without the employee’s consent.

Image Credit: Säntis Swiss, from Wikimedia Commons. This file is licensed under the Creative Commons Attribution 3.0 Unported license.