Different forms of staff leasing
There are three forms of staff leasing:
- temporary work,
- loaned labour and
- the occasional assignment of workers to third-party businesses.
In the case of temporary work, a framework contract is first concluded between the temporary employment agency and the employee, which regulates the most important aspects of the cooperation. The temporary employment agency then offers the employee work assignments in various third-party companies. Only when a work assignment is accepted, an individual assignment contract is concluded on the basis of the framework contract for the period of the assignment.
In loaned labour, an employment contract is concluded between an employer and an employee, which mainly provides for the assignment of the employee to third-party companies. In contrast to temporary work, the duration of the employment contract does not depend on individual assignments to such third-party companies. The employer bears the risk of wage payment for the entire duration of the employment contract and is therefore responsible for obtaining a sufficient number of assignments.
It is referred to as an occasional assignment of an employee if the purpose of the employment contract is that the employee works mainly under the authority of the employer (and not of the company to which the employee is occasionally assigned), the employee is assigned to a third-party company only in exceptional cases and the duration of the employment contract is independent of any assignments to third-party companies. This involves a rare, short-term, not specifically planned assignment of employees.
Requirement of permit
Staff leasing is subject to authorization only in the cases of commercial temporary work and commercial loaned labour. Staff leasing is considered commercial if it is carried out by anyone who regularly hires out employees to companies for profit – whereas regularity is affirmed if they conclude more than ten staff leasing contracts within 12 months – or by anyone who achieves an annual turnover of at least CHF 100,000 with the staff leasing activity.
The operating license for staff leasing in Switzerland is generally granted by the competent cantonal office for employment and the economy if the staff leasing agency, among other things, is registered with the Swiss Commercial Register, has a suitable place of business, and does not operate any other business that could jeopardise the interests of workers or of the companies they are assigned to. In addition, the person responsible for the management of the staff leasing agency must be a Swiss citizen or a foreigner with a permanent residence permit, must guarantee the professionality of the staff leasing activities and must be of good repute.
The staff leasing agency is also required to deposit a security deposit to secure wage claims. The deposit shall amount to at least CHF 50,000 and at most CHF 1,000,000 for a head office and its branches.
Additional licensing requirements apply to Swiss staff leasing agencies wishing to hire out employees to companies abroad. If employees are hired out abroad, a permit from the State Secretariat for Economic Affairs (SECO) is also required.
Employment contract provisions
In the context of temporary work, there are certain mandatory legal provisions that must be complied with. For example, an employment contract must be concluded in writing between the company hiring out the worker and the company leasing the worker, and the contract of employment between the employer and the worker must be concluded in writing and have a minimum contractual content prescribed by law.
It is important to note that all licensed staff leasing employment agencies in Switzerland are subject to a collective employment agreement that is generally binding (GAV PV). If the company employing the worker is also subject to another collective employment agreement which is generally binding, the company leasing out the employee must also comply with these provisions.
Any provisions in employment contracts that require the employee to pay fees, make financial advance payments or allow withholding wages are not permitted by law and are null and void. In practice, one often encounters clauses that make it difficult or impossible for a worker to transfer to the company of assignment after the expiry of the employment contract. Such clauses are not permitted by law and are also null and void.
Staff leasing companies that do not comply with the legal provisions may have their licence revoked and, depending on the severity of the violation, may even be subject to a waiting period of up to two years before a new licence application can be submitted. Anyone who hires out personnel without a permit in the area requiring a licence can be fined up to CHF 100,000. A violation of the applicable legal provisions may be punished with a fine of up to CHF 40,000. Employing companies that knowingly use the services of an unauthorised hiring company may also be fined.
If a licence is obtained by providing false or misleading information or by concealing material facts, this may be punished by a custodial sentence of up to three years or a monetary penalty.