Does your organization want to hire a French photographer to take pictures at an event you are organizing in the south of France? Do you want to mandate an independent interpreter in Nigeria for mediation? Can you trust the good faith of the person you are appointing who claims to be independent and that it is sufficient to send you a bill after the service?
This issue is very common in NGOs, and is also found in companies, yet the law is often poorly known. As an employer in Switzerland, you are responsible for checking the status of the consultant in the eyes of the Swiss social insurance. The risk can be financially significant because if the consultant is not considered as such, they must be considered as an employee.
On June 18th 2019, our HR manager, Alexandre CHINCARINI, spoke at the CAGI (International Geneva Welcome Center) about Consultants - independent or employed – and how to anticipate and what to consider when hiring consultants. We summarize the important elements of this presentation in this article.
A consultant can have different forms of status. As an employer, your legal obligations will depend on this status.
They can be :
It is up to the compensation funds and, in some cases, the Suva, to decide whether someone has the status of independent within the meaning of the Swiss social insurance law. Recognition is based on a number of criteria arising from the retirement and survivors insurance (LAVS) and the case law of the Federal Insurance Court (TFA), to which the insured must satisfy.
Within the meaning of the AVS, an independent is a person who works on their own behalf, assumes all the economic risks of their activity and is hierarchically independent from their client. An independent must work for several clients. If they worked for one, they would not be considered independent from the point of view of the Swiss authorities. The person must be Swiss or citizen of the EU or a C, G or B permit holder.
The fact that the insured undertakes their activity as principal or secondary has no effect on the qualification of the latter.
According to the conditions of the country of origin, a person may be considered as independent there, but not in Switzerland. This is why the company needs to ask for a copy of the independent form issued to the consultant by the AVS fund OR an equivalent from their country.
However, this form does not exempt the employer from having their own AVS compensation fund examine the independent nature of the activity.
▶️ If AVS recognizes the consultant as independent, because they can provide the certificate of affiliation to the AVS, A1 form or its equivalent, the consultant will therefore their client and contract their own social insurances
During a control, there is no impact on the company as long as it can provide the documents proving the good implementation of the legislation.
▶️ Si pour l’AVS la personne n’est pas considérée comme indépendante, l’entreprise qui l’embauche doit alors faire comme si c’était un employé, lui faire une fiche de paie et prendre en charge les assurances sociales, le couvrir contre les risques d’invalidité, décès et vieillesse et payer les vacances.
▶️ If AVS does not recognizes the consultant as independent, the company will need to consider them as employee, put them on the payroll and provide a payslip, provide insurance coverage and pay holiday.
In case of control, there might be an adjustment on contributions according to compulsory social insurance, extra cost (unplanned) in the budget, problem of insurance coverage in case of illness/accident according to labor law, obligation to pay days off according to labor law, adjustment on a possible source tax and potential fines.
The Canton of Geneva is often put forward for its exemplarity and its productivity in the control of the labor market. Because of the free movement of people, the Canton is keen to avoid underpayment of wages or breaches of other regulations. A new supervisory body, IPE (Inspection Paritaire des Entreprises) has emerged in 2016, to increase the number of compliance controls in companies alongside joint committees and the OCIRT (Cantonal Office Inspection and Labor Relations).
For information, here are the latest statistics of these controls:
Controls carried out by the OCIRT among foreign companies seconding staff in Geneva and among foreign self-employed persons
Controls carried out by the IPE among Swiss companies