A legislative amendment to the Swiss ordinance on admission, residence and gainful employment (OASA) scheduled to take effect on 1 April 2020 will bring about an important change in employers’ obligations toward long-term assignees.
The issue at stake
More than 100,000 foreign assignees and cross‑border service providers gain a foothold in Switzerland’s highly‑coveted labor market each year. The current rules allow foreign nationals on assignment to obtain access to the Swiss labor market if the compensation packages offered are equivalent to those prevailing in the prospective assignee’s specific sector and profession in the pertinent region of Switzerland. In addition to a potential salary upgrade, assignees’ job‑related expenses for travel, food and accommodation presently must be covered by their employers.
However, the Swiss ordinance on admission, residence and gainful employment is scheduled to be amended on 1 April 2020, which will affect the obligation of employers to cover the expenses of long‑term assignees beyond a period of 12 months. With regard to long-term assignments that constitute an operational transfer or cross-border services, the employer will no longer be required by law to provide compensation for job‑related food and accommodation expenses beyond an initial period of 12 consecutive months spent in Switzerland. However, exceptions to this legislative change are established for industries with binding collective bargaining agreements in place, which includes Switzerland’s mandatory minimum wages (construction work, etc.).
This amendment will therefore release employers from the legal requirement to provide food and accommodation allowances to assignees after the first 12 months of a long-term assignment. As the Swiss authorities generally deem monthly expenses of CHF 1,000 for food and CHF 2,000 for accommodation to be reasonable, the amendment will enable employers to save CHF 36,000 per year for each of their long-term assignees in Switzerland on assignment for more than 12 months. In light of this, the costs of employing long-term assignees in Switzerland will undoubtedly exhibit a considerable reduction.
It should be emphasized that the reasoning behind this amendment is that long-term assignees residing in Switzerland for upward of 12 consecutive months are assumed to have relocated their primary place of residence to Switzerland and are counted in Switzerland’s permanent resident population. It would therefore be unwarranted to continue providing these assignees with food and accommodation allowances for longer than 12 months. In light of this rule change, long‑term assignees will be required to cover their own living expenses (in the same way that regular residents of Switzerland are required to do) after 12 months unless of course the assignees’ employers elect to voluntarily provide continued compensation for living expenses beyond the initial 12‑month period.
The Swiss authorities’ practical implementation of the revised rules is not yet entirely clear. A number of different employment authorities have informed us of the current ongoing discussions concerning proposals to modify the wording of assignment letters. We learned that assignment letters from 1 April 2020 onward may be required to include a clause specifying employers’ legal obligation to cover assignees’ food and accommodation expenses solely for the first 12 months of assignments. Another option involves the Swiss authorities requesting an assignment letter for the first 12 months and then later requesting a new assignment letter that would be needed for the purpose of extending the assignment and/or renewing the assignee’s Swiss residency permit.
In a nutshell, the legal requirement incumbent upon employers to provide compensation for long‑term assignees’ food and accommodation expenses is set to be amended with the aim of limiting this obligation to the first 12 consecutive months of an assignment in industries without a binding collective bargaining agreement in place. Additionally, any salary upgrades must apply throughout the entire assignment period.
Please note that we are closely monitoring all developments surrounding the amendment’s practical implementation by the Swiss authorities and will provide updates on this blog whenever new information becomes available.