Practical case: De facto employee during a project assignment in Switzerland 
The Italian company "MegliodiTutti" takes care of restorations of theater stages and is known for their affinity to art and the quality of their work. The company was commissioned by a Swiss community to restore the theater stage of their small village.
For this job, the "MegliodiTutti" needs more staff, so they hired self-employed workers from Italy as well as electricians from the neighboring country Slovenia. These people are also known to be long-time subcontractors of the Italian company. They work as individual contractors and have about 3 to 4 orders per year from various customers. They are primarily electricians, fitters, and painters.
The HR manager of the Italian company has, thus, notified online 10 persons for the next assignment in Männedorf (Canton Zurich) by means of the online notification procedure. All of them were registered as self-employed service providers on behalf of the Italian company.
In the context of a labor market control from the joint commission for the electrical industry, some service providers received the request to provide certain documents concerning their self-employment. Among others, these are the A1 certificate, the project contract with the Swiss customer, customer invoices, VAT invoices, etc. In the form concerning the proof of self-employment, the following questions were the most relevant:
- Data about the own company - name, registration, homepage
- Number of regular orders for different clients in one’s own name and for one’s own account
- Registration in the telephone directory
- Advertising for the self-employed activity or the company
- Disposal of own company/business premises or own vehicle
- Who provides material, machines, and tools for the work assignment?
- Existence of bookkeeping
- Scope of decision-making for the assignment
- Organization of the accommodation
The Joint Commission acts as a control and enforcement institution of the collective labor agreement - in our case for the electrician professions. Electrician is a protected profession. Therefore, the GAV (collective labor agreement) serves as a basis for the observance of working and wage conditions. The Joint Commission is entitled and, in the event of an inspection, obliged to verify the self-employment of all notified electricians, in our case from Slovenia.
Article 1a of the Swiss Posted Workers Act states that foreign service providers who claim to be self-employed must prove this to the competent supervisory institutions, i.e. the Joint Commission, upon request. The concept of self-employment is defined by Swiss law.
The service provider must present the following documents to the inspection institution in the event of an on-site inspection:
- Copy of the registration confirmation or copy of the issued permit if the pursuit of gainful employment in Switzerland is subject to the registration procedure (online notification procedure) or the permit procedure under the legislation on foreign nationals;
- Certificate in accordance with Article 19(2) of Regulation (EU) No 987/2009 (Form A1);
- Copy of the contract with the client or the customer; if there is no written contract, a written confirmation from the client or the customer for the order or work contract to be carried out in Switzerland; the documents must be submitted in an official language.
The Joint Commission assessed the specific case based on the de facto labor situation in Switzerland. The persons inspected had submitted the required documents. In view of the situation and the nature of the project execution, the Joint Commission made its decision based on the following aspects:
- Lack of decision-making leeway / work on instruction - the work organization is carried out after consultation with the team.
- The reported persons did not work alone but in teams on site.
- The material is provided by third parties.
- Accommodation was organized by the client.
In this sense, the reported persons were not qualified as self-employed, but as dependent employees in a de-facto employee situation. The fact that they were registered as self-employed in their home country was irrelevant.
The Joint Commission forwarded the decision regarding self-employment to the cantonal labor market authority, which then contacted the Italian company by letter. It informed the Italian company that the seconded service providers should not have been registered online as self-employed but as dependent employees of the Italian company. The fact that the employees were falsely registered as self-employed service providers instead of as posted employees constituted a breach of the registration requirements of the Posted Workers Act. A fine of up to CHF 5,000 was envisaged in accordance with Art. 9 (2) (a) of the Posted Workers Act. The decision of the authority is still pending.
It is irrelevant what is stated on the certificates. If you employ a person for a specific project in Switzerland, the competent authority can decide that the person is not considered self-employed but rather as a de facto employee or assistant.
Decisive are the further aspects, to what extent the employee can decide on the execution of the order himself, i.e. can make independent decisions on time, material and execution of the work. Furthermore, it is very important to be able to prove that, as a self-employed person, you have several, different clients per year, that you keep accounts, that you have a certain scope for decision-making in the project.
If these main aspects cannot be proven or are not present, we recommend that in case of doubt, the person should be registered as a dependent employee. As a consequence, the working and wage conditions according to the Posted Workers Act or the corresponding sectoral collective labor agreements of the protected professions must be observed.