Effective Swiss wage protective
Inspections were once again performed rigorously in 2018. As part of measures to combat illegal employment, the number of companies and persons controlled increased compared to the previous year. This is highlighted in reports published by the State Secretariat for Economic Affairs (SECO) on the implementation of accompanying measures on the free movement of persons between Switzerland and the EU and the enforcement of the Federal Act on Illegal Employment.
Accompanying measures on the Free Movement of Persons
The accompanying measures came into force 15 years ago to counter fears that opening up the Swiss labour market would put pressure on wages. On the one hand, they effectively protect gainfully employed persons from abusive undercutting of Swiss wage and working conditions and, on the other, they safeguard fair competitive conditions for Swiss and European companies.
Compliance with the mandatory regulations is controlled by cantonal labour market inspectors, either by correspondence or on site. For this purpose, each executive body is obliged by SECO to achieve certain annual control objectives.
Implementation of the accompanying measures is enforced by the cantonal tripartite committees (for sectors without collective labour agreements) and by the cantonal joint commissions (for sectors with collective labour agreements, ‘GAV’).
Results of accompanying measures in brief:
- 173,000 persons and around 42,000 companies were controlled by the cantonal joint and tripartite committees
- 8% of all Swiss employers, 35% of all posted workers and 31% of self-employed service providers from the EU/EFTA were inspected
- The inspection volume fell slightly compared to the previous year
- Inspections revealed a stable rate (13%) of wage undercutting by Swiss employers
- There was a slight decrease in wage undercutting (-1%) and breaches of minimum wages (-4%) in posting companies subject to controls
- More than 70% of all wage undercutting occurred in the cantons of Zurich, Ticino and Geneva
- 3,148 fines and 1,114 service bans were imposed
Combating illegal employment in Switzerland
The Federal Act on Illegal Employment protects the interests of employees and combats distortion of competition between companies. Employers, employees and self-employed persons are monitored for compliance with reporting and authorisation requirements under social security law, the Federal Act on Foreign Nationals and Integration (FNIA) and withholding tax law.
SECO is the federal supervisory authority responsible for enforcing the Federal Act on Illegal Employment. Inspections are carried out by cantonal bodies, which also coordinate with other competent special authorities. For example, violations or suspected breaches may need to be forwarded to the social security or tax authorities for detailed clarification.
2018 saw a significant increase in feedback received. This development almost certainly reflects the entry into force of the revised Federal Act on Illegal Employment as of 1 January 2018. The administrative and judicial authorities and the public prosecutor's office are now obliged to pass on legally binding decisions and judgments to the controlling bodies involved in clarification of facts.
Results of the inspections on illegal employment in brief:
- The number of company inspections increased slightly to 12,023
- Checks on persons increased by 2.9% to 37,111
- Controls were mainly made in the main construction and ancillary construction trades, hotel and restaurant industry and in retail
- Overall suspected illegal employment was down 18% fewer suspicions
- 36% increase in feedback from special authorities on measures taken and sanctions imposed on cantonal control bodies
o Social security law: 915 cases (+55%)
o FNIA: 2,439 cases (+27%)
o Withholding tax law: 780 cases (+49%)
- The cantons received CHF 1.2 million in fees and fines