SWITZERLAND - Swiss Wage Protection - Results of the 2018 control activity

July 2019

Intensive wage controls were performed during 2018 as part of the measures to act against illegal employment. The number of company and persons controls increased compared to the previous year.

Accompanying measures on the Free Movement of Persons

The accompanying measures came into force in 2004 to counter the fear of wage pressure due to the opening of the Swiss labour market. These measures effectively protect employed persons from undercutting the Swiss wage and working conditions and guarantee fair competitive conditions for Swiss and European companies.

Compliance with the mandatory regulations are decentralised and controlled by cantonal labour market inspectors either in writing or on site. For this purpose, each executive body is obliged by the State Secretariat for Economic Affairs (SECO) to achieve certain annual control objectives.

The implementation of the accompanying measures is enforced by the cantonal tripartite commissions for sectors without collective labour agreements and by the cantonal joint commissions for sectors with collective labour agreements GAV.

The results of the accompanying measures in brief:

173,000 persons and around 42,000 companies were controlled by the cantonal joint and tripartite commissions
8% of all Swiss employers, 35% of all posted workers and 31% of self-employed service providers from the EU/EFTA were inspected
A slight decrease in control volume compared to previous year
Stable rate (13%) of wage undercutting detected by controlled Swiss employers
A slight decrease in wage undercutting (-1%) and breaches of minimum wages (-4%) in controlled posting companies
More than 70% of all wage undercutting in the cantons of Zurich, Ticino and Geneva
3,148 fines and 1,114 service bans imposed

Combating illegal employment in Switzerland

The Federal Law against undeclared work protects the interests of employees and combats distortion of competition between companies. As part of the measures against illegal employment; employers, employees and self-employed persons are monitored for compliance with the reporting and authorisation requirements of social security, aliens act and withholding tax law.

SECO is the federal supervisory authority responsible for implementing the Federal Law against undeclared work. The inspections are carried out by cantonal inspection bodies. In addition to carrying out controls, the cantonal inspection bodies also perform coordination tasks. Any violations and suspected cases reported to the control body are forwarded to the competent special authorities, such as the social security or tax authorities for detailed clarification.

In 2018, there was a significant increase in feedback. The increase is likely to be largely attributable to the revision of the Federal Law against undeclared work which came into force on 1 January 2018. The administrative and judicial authorities and the public prosecutor's office are now obliged to inform the controlling bodies involved in the clarification of the facts of the case of legally binding decisions and judgments.

The results of the controls on undeclared work in brief:

A slight increase of company controls to 12,023 controls
Checks on persons increased by 2.9% to 37,111
Controls were mainly made in the main construction and ancillary construction trades, in the hotel and restaurant industry and in the retail trade
Overall in Switzerland, 18% fewer suspicions of illegal employment work were reported
36% increase in feedback from special authorities on measures taken and sanctions imposed on cantonal control bodies
- Social security law 915 cases (+55%)
- Aliens Act 2,439 cases (+27%)
- Withholding tax law 780 cases (+49%)
The cantons received CHF 1.2 million in fees and fines

BDO comment

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Stephanie Müller
stephanie.mueller@bdo.ch