07 April 2016

This could prove expensive

Higher fines to prevent wage dumping on foreign postings

When a foreign company posts workers to Switzerland, the local pay and working conditions must be respected.

Violations of the minimum wage and working conditions are sanctionable with administrative and criminal penalties. In minor cases, currently fines of up to CHF 5'000 can be pronounced. On 29 February 2016 the National Council approved a change of the Posted Workers Act: raising the maximum fine for violations of the minimum wage and working conditions to CHF 30'000.

Violations of minimum wage provisions in collective and standard employment contracts may, already under the current provisions, in severe cases result in a prohibition to carry out business of up to five years and a fine of up to CHF 1,000,000. It is therefore strongly advisable to accurately clarify the basis for calculating the industry standard wages in individual cases and discuss them in advance with the cantonal authorities.

The competent cantonal authorities check the working conditions and wages - but only summarily. Their decision cannot be enforced against the Joint Commission during an inspection. The calculation of the customary local and industry wages is unexpectedly complex. In Swit-zerland there is no statutory minimum wage and if no collective or standard employment contracts exist in a field, the compensation has to correspond with the location, professional or industry standards for the job.

In premature obedience, with a view to the implementation of the mass immigration initiative, the cantonal authorities are regularly tightening their practice with regard to compliance with the pay and working conditions requirements. With regard to the planned increase in the fines, a careful examination is recommended in individual cases, taking into account the specific cantonal requirements- otherwise it could prove to be very expensive.

Author: Moritz Jäggy

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