Lease Of Personnel And Outsourcing Within A Group Of Companies

 
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The Swiss Federal State Secretariat for Economic Affairs (SECO) has specified the conditions for the assignment of employees between group companies in a published internal directive dated 20 June 2017.

In future, the lease of personnel between companies of a group requires a licence. Exempt from the licence requirement is a lease of personnel (i) for the purpose of enabling the employee to acquire experience in the profession, language or otherwise, (ii) for the purpose of know-how transfer between group companies, and (iii) on an occasional basis as set out in the Federal Recruitment Act (RecA). Within the limits of those exceptions, cross-border lease of personnel from foreign group companies to Swiss companies is also permitted.

This largely unknown specification or clarification in the Internal Directive is, in essence, in line with the more recent view of SECO and with the practice of the competent authority of the cantons (AWA; e.g. AWA of the Canton of Zurich). However, these specifications de facto amend the SECO guidelines (SECO Guidelines) as the wording of the SECO Guidelines, in principle, entirely exempts intragroup leasing of personnel from licence requirements.

BACKGROUND

To respond to the challenges and developments in the business and industry and to increase the efficiency of resources, companies need flexibility in the assignment of their personnel between group companies, particularly in connection with the transfer of know-how. Such allocation of personnel resources may be achieved by various means such as leasing of personnel or outsourcing.

This briefing aims to provide a brief overview of the regulations on lease of personnel and the current practice of the competent authorities. The topic of work and resident permit requirements for non-Swiss employees is not discussed here.

LEASE OF PERSONNEL AND OUTSOURCING OF EMPLOYEES

Definition of Lease of Personnel

Under the RecA, a lease of personnel is defined as the leasing out by a Swiss employer (the Leasing Employer) of an employee to a third party (the Third Party) for the Third Party's business. The formal legal employment relationship remains between the Leasing Employer and the employee. However, the employer's right to direct and instruct the employee as well as to receive his/her workforce is assigned to the Third Party.

Distinction between Leased Employees and Outsourcing

Given the statutory law restrictions on the lease of personnel, the distinction between lease of personnel (Personalverleih) and outsourcing (Auslagerung) is important. Employees in an outsourcing set-up carry out work on behalf of their actual employer (Out- sourcing Employer) for the benefit of a third party, but without being integrated in the organizational struc- tures or directly subject to the instructions in a...

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