practice area articles
By Thomas Kälin
Back to International Employment Law
KEY DEVELOPMENTS FOR 2020
Requirement to register job vacancies
As of 1 July 2018, employers are legally required to register job vacancies with the regional employment centre (RAV) in professions where the national unemployment rate is at least 8%. Job vacancies are also subject to the registration requirement if recruitment is carried out through an employment agency or head hunter.
This reporting obligation intends to better utilise the potential of the domestic workforce. Once a job vacancy has been registered, it must be exclusively published for five working days on an online job portal that is only accessible to jobseekers registered with the RAV before it can be advertised elsewhere. This is to allow the jobseekers registered with the RAV to be the first ones to be informed about vacancies in occupations with high unemployment. It also enables the RAV to provide employers with a list of suitable candidates.
The State Secretariat for Economic Affairs (SECO) has issued an initial report on compliance with this requirement, which shows that employers have been performing their duties conscientiously. The report indicates that the number of registered jobs has increased dramatically and has stabilised at a high level since the job registration requirement was introduced.
As of 1 January 2020, the occupation-specific unemployment rate threshold for job vacancy reporting obligations has been lowered from 8% to 5%. In addition, the Federal Council has revised the scope of the professions and refined the list of the types of professions concerned, which in turn has led to greater clarity for employers.
Obligation to conduct an equal pay analysis
In order to eliminate the existing gender pay gap, the Federal Act on Gender Equality of 24 March 1995 ("GEA") has recently been amended to include a new section containing additional Government measures to enforce the right for male and female employees to be paid equally. The amendment to the GEA came into force on 1 July 2020 and will be valid until 30 June 2032.
In light of the amendment to the GEA, employers with 100 or more employees (including part-time and fixed-term employees, but excluding apprentices) are obliged to conduct an internal equal pay analysis. The analysis must be carried out according to a scientifically and legally compliant method.
The first equal pay analysis is due by 30 June 2021 and employers are required to inform their employees in writing of the result of the equal pay analysis within one year of completion of the review. Companies listed on a stock exchange are obliged to publish the result of the analysis in the notes to their annual report and accounts.
The amendment to the GEA does not provide for any sanctions or mandatory measures in the event of a breach of the obligation to analyse wage equality, or if a gender-specific pay gap is established - the employer is only obliged to carry out the equal pay analysis again after four years.
Increase to Social Security contribution rates
The Swiss Social Security system is based on three pillars that support the old-age, survivors and invalidity pension scheme:
- The first pillar - old age, survivors, and invalidity insurance - is a general compulsory insurance which aims to cover basic living costs.
- The second pillar is the occupational benefit plan, which, together with the first pillar, aims to ensure that individuals who are insured can maintain their previous standard of living.
- The third pillar consists of voluntary individual provident measures.
The benefits paid out by the different social security funds are primarily financed by contributions levied on income.
As the Federal Tax Reform and Social Security Financing Act (STAF) came into force on 1 January 2020, old age and survivor's contributions under the first pillar have been increased for the first time in more than 40 years. As employers and employees continue to share the contributions equally, employers are allowed to deduct the employees' shares from the gross salary payments.
KEY DEVELOPMENTS FOR 2019
Job registration requirement
Since 1 July 2018, employers are legally required to register job vacancies with the regional employment centre (“RAV”) in professions where the national unemployment rate is at least 8%. On 1 January 2020, this threshold will be lowered to 5%.
Job vacancies are also subject to the registration requirement if recruitment is carried out through an employment agency or head-hunter. After registration, the relevant job has to be exclusively published for five working days on an online job portal that is accessible only to jobseekers registered with the RAV before it can be advertised elsewhere.
This should enable jobseekers registered with the RAV to be informed first about vacancies in occupations with high unemployment.
Bonus case law
The Federal Supreme Court dealt with many bonus claims in 2018 and took this as an opportunity to clarify the differentiation between bonuses as voluntary gratification payments and (involuntary) actual salary components.
While a basically discretionary gratification can be re-qualified as a salary component for employees with a low or middle/high income, if such bonus is not an accessory to the base salary, there is no such requalification for employees with a very high income. This is justified by the fact that an employee with a lower income needs more protection than an employee who already earns five times the median salary.
It is expected that this case law will be consolidated or also re-considered in the future on the basis of further cases. In 2019 and beyond, Swiss courts will be dealing with the distinction between employees and self-employed persons (or contractors) and create more clarity in this regard.
Revision of Swiss Federal Act on data protection
Swiss federal and cantonal law on data protection is currently under revision. The European General Data Protection Regulation (“GDPR”) will be autonomously implemented into Swiss law. The proposed amendment to the Swiss Federal Act on Data Protection will demand greater transparency in data processing and control mechanisms and heavier sanctions for non-compliance. The proposed amendment is currently with Parliament and is expected to be enacted in 2020.
KEY DEVELOPMENTS FOR 2018
Mass Immigration Initiative
From July 2018, employers are obliged to notify public unemployment agencies of job vacancies in professions with a Swiss-wide unemployment rate of more than 8% (as from 2020: 5%). The unemployment agencies can then provide employers with the C.V. of job seekers, who have to be invited for an interview provided they are suitable for the job. The new provision introduces a form of “priority” for people registered with public unemployment agencies over foreigners. It remains to be seen, however, whether the new regime will prevail.
International Assignments within Groups of Companies
The Swiss Federal State Secretariat for Economic Affairs (“SECO”) has tightened the practice of leasing personnel between companies of a group. Intragroup personnel leasing now requires a license issued by the State.
Data Protection / GDPR
On 25 May 2018, the new EU General Data Protection Regulation (“GDPR”) will enter into force. Although Switzerland is not in the EU, the GDPR may directly apply to Swiss companies with affiliates or branches in an EU country due to the extraterritorial reach of the GDPR. The provisions may also apply to Swiss companies that provide employment related services to companies in the EU (e.g. HR-related IT applications).
The Swiss Data Protection Act is currently under revision and the many provisions of the GDPR will likely be implemented into the new Swiss Data Protection Act.
KEY DEVELOPMENTS FOR 2017
Mass Immigration Initiative
In February 2014, Switzerland adopted the so-called “mass immigration initiative”, obliging Swiss parliament and government to implement stricter rules on immigration into Switzerland. The limitations imposed by the initiative are generally considered to be inconsistent with the free movement of persons between Switzerland and the EU. The initiative sets a deadline of three years for its implementation, meaning that it should be implemented by February 2017. The Swiss parliament is currently debating proposals as to how the initiative can be achieved, e.g. priority of Swiss nationals or residents when new vacancies are filled. It remains to be seen whether a political consensus can be achieved and what effect such solution will have on the relationship between Switzerland and the EU. A further vote regarding the abolishment of the limitations imposed by the “mass immigration initiative” in 2014 is, however, anticipated.
KEY DEVELOPMENTS FOR 2016
New exceptions to avoid / simplify the record keeping obligation
Since 1 January 2016, new exceptions allow employers in certain cases to avoid or simplify employee record keeping obligations in relation to employees who have the ability to schedule their own working hours. However, there are strict additional conditions which must be met for these reduced obligations to apply.
Protection of older employees against dismissal
Under Swiss law, an employer is generally free to make employees redundant without having a specific reason (“freedom to give notice”). However, terminating an employment relationship for abusive reasons (which are defined narrowly), can result in compensation payments. Recent case law shows a tendency to better protect older employees who have significant periods of service. In these cases, before such employees are made redundant, an employer has to check whether a notice of termination can be avoided, e.g., by reassigning the employee to a new position within the organisation. If the employer fails to do so, the notice of termination is likely to be deemed ‘abusive’, potentially resulting in a compensatory penalty of up to six months’ pay.
Increase in the maximum salary covered under the accident insurance scheme
As of 2016, the maximum salary insured under the accident insurance scheme has been increased from CHF 126,000 to CHF 148,200. That figure is not only important in accident insurance itself, but serves also as an important benchmark in other social insurances (such as unemployment insurance) and under certain employment law provisions (e.g., regarding the hiring out of employees). Under Swiss law, many relevant social insurances (accident and unemployment insurance as well as old age and survivors’ insurance and occupational pension plans etc.) are linked to the employment relationship. It is the employer’s duty to deduct the employee’s share of the respective contributions and to transfer such share with its own contributions to the respective authorities and insurance institutions.
Improved coverage of short-time work
If an employer is not able to fully occupy all employees for economic reasons for a limited period of time, employees may apply for short-time work benefits from the unemployment insurance. Taking into consideration economic difficulties (especially for export businesses), the Swiss government has decided to implement an improved coverage of short-time work.
New bonus-related leading cases
There are no specific provisions applicable to bonus payments under Swiss statutory employment law. Depending on the circumstances of the specific case, a bonus may either be qualified as salary or ‘gratification’ (which is discretionary). This distinction has numerous legal implications, and in the course of 2016, the Swiss Supreme Court decided several cases which addressed whether and to what extent very high bonus agreements may be qualified as a discretionary gratification. However, there remains ambiguity which is likely to be the subject of further litigation and clarification by the courts.