Freelance employment is an increasingly popular arrangement in Switzerland. It offers a compelling option for independent workers who want the benefits of salaried employment while retaining some autonomy. It also provides companies with a way to engage freelancers without managing administrative tasks.
Freelance employment involves a tripartite collaboration between a freelancer, a freelance employment company, and a client. In this setup, the freelance employment company acts as the employer for the freelancer. The freelancer is paid a salary, while the freelance employment company invoices the client for the services rendered.
Originally established in France, the freelance employment model is gaining traction in Switzerland. However, using this model to misrepresent freelancers as employees for social insurance purposes is not compliant with Swiss law. This practice can lead to freelancers being denied certain social insurance benefits despite their contributions.
Benefits of freelance employment
Freelance employment offers numerous advantages for freelancers. Typically, freelancers cannot access unemployment insurance and are not required to contribute to occupational pension plans or mandatory accident insurance. While they can voluntarily contribute to pension plans and accident insurance, no voluntary unemployment insurance exists for them.
Here, the freelance employment model becomes valuable. The freelance employment company acts as a nominal employer, enabling freelancers to access unemployment insurance, occupational pensions, and accident insurance. By handling social insurance contributions on behalf of freelancers, the company converts their fees into salaries and manages regular administrative tasks like client invoicing. This arrangement provides freelancers with the social security necessary to conduct their business with peace of mind.
Freelance employment thus allows freelancers to enjoy employee benefits such as social security, paid leave, and health insurance. It also enhances their visibility and credibility with clients and provides professional liability coverage.
For companies, freelance employment facilitates engaging freelancers without the hassle of direct employment administration. It allows businesses to outsource tasks and manage human resources more flexibly.
Compliance with the law
In Switzerland, although the freelance employment model is accepted in France, it is not recognized as a legitimate form of employment under Swiss social insurance law. Consequently, freelancers engaged in this model risk being denied unemployment or accident benefits. Legal issues may also arise regarding occupational pensions.
It is crucial to understand that using freelance employment in Switzerland can lead to legal risks for freelancers, including the denial of social insurance benefits like unemployment or accident compensation and complications with occupational pensions. Therefore, it is advisable to explore legal options available in Switzerland and verify whether a bookkeeping firm is a fiduciary company, a service leasing company, or a freelance employment company.
Operation of freelance employment in Switzerland
Service leasing, also known as payrolling, is permitted in Switzerland. In this model, a service lessor assumes employer responsibilities, such as salary payments, social insurance contributions, and declarations to tax and migration authorities for foreign employees. The service lessor leases a person’s services to a hiring company and transfers employer authority to that company. Companies using this model in Switzerland must obtain the necessary authorization.
Unlike freelance employment, service leasing is allowed in Switzerland and provides freelancers with related social benefits. However, as with any employment contract, it is important to ensure legal and contractual provisions are met to avoid legal or financial risks.
The Federal Social Insurance Office (OFAS) has issued an information sheet to raise awareness of the risks associated with “fictitious employment.” It is recommended to verify whether a bookkeeping firm is a fiduciary company, a service leasing company, or a freelance employment company (the latter being unauthorized in Switzerland).
