SWITZERLAND Trends and Developments Contributed by: Philippe Nordmann, Irène Suter-Sieber, Jonas Knechtl and Gustaf Heintz, Walder Wyss
Federal Challenge to Cantonal Minimum Wages While Switzerland has so far not introduced a nation- wide minimum wage, several Swiss cantons (ie, Neu - châtel, Jura, Ticino, Basel-City and Geneva) as well as the cities of Zurich and Winterthur have all passed laws to implement such minimum wages. These mini - mum wages currently range from CHF20.00 (Ticino) to CHF24.48 (Geneva) per hour. While such minimum wages have been the topic of many legal discussions and ongoing legal challenges, one of the Swiss chambers of parliament has recently voted to approve a proposal that aims at limiting the applicability of such minimum wages by promoting a law that would allow employers to pay wages below the cantonal/municipal minimum wages if such lower wages are based on an applicable collective bargain - ing agreement. Given the fierce opposition by social - ist parties and workers’ unions, it currently remains unclear whether the Swiss legislature will pass such a law and, should this be the case, if such a law would be challenged by the Swiss people through means of a national referendum. Meanwhile, the minimum wages in the cities of Zurich and Winterthur have still not been implemented. After the people of Zurich and Winterthur had voted on 18 June 2023 to implement such minimum wages, a sub - sequent appeal was approved by the Zurich Adminis - trative Court. The decision of the Zurich Administrative Court has since been appealed to the SFSC, where the case is still pending. New Legal Framework for Telework In part due to the mix of expensive living costs and attractive working conditions as well as its geographi - cal location in the heart of Europe, more than 400,000 persons regularly commute to Switzerland under the cross-border regime. This regime allows such workers to work for an employer based in Switzerland while maintaining their primary residence in another country. Switzerland generally profits from this set-up as it can tax cross-border workers’ salaries through the with - holding tax regime. Thereunder, Swiss-based employ - ers are responsible for ensuring that withholding tax is handled correctly, deducted from the respective salary in accordance with the applicable rates and paid to the locally competent Swiss tax authority. However,
in the case of cross-border workers working remotely from their homes outside of Switzerland, Switzerland has historically not been entitled to tax such income earned abroad, given that tax jurisdiction under Swit - zerland’s double taxation treaties generally falls to the country in which the work is physically performed. In recent years, Switzerland has been focused on resolving this issue by concluding respective tax agreements with both Italy and France. These agree - ments stipulate that if cross-border workers do not perform telework above certain thresholds from their respective primary residences abroad (ie, 40% in case of France and 25% in case of Italy), Switzerland remains entitled to tax such work even though it has not been physically performed in Switzerland. Against this background, Switzerland has now enacted new legislation allowing for such a regime change in regard to its five neighbouring countries (ie, France, Italy, Austria, Liechtenstein and Germany) and is looking to enact further legislation to allow for an automatic exchange of salary data with such countries in light thereof. While this regime change is expected to increase Swiss tax revenue, it has also significantly increased regulations for Swiss employers employing cross-bor - der workers. Swiss employers now have an obligation to certify and report the number of working days their cross-border workers have spent working from their primary residence abroad. In addition, Swiss employ - ers will have to closely monitor how many days their cross-border workers are working from their primary residence abroad with the aim of ensuring that the applicable, country-specific limits are not surpassed in order to avoid related tax and social security con - sequences. Domestically, Switzerland is also aiming to amend its legal framework to better account for the needs and challenges surrounding telework. The Swiss legisla - ture is currently discussing a proposal by the Swiss Federal Council to amend both Swiss public and con - tractual employment law given that the current legal framework is often perceived to be too restrictive in terms of achieving an optimal work-life balance and employees’ wish to reconcile family obligations with their professional lives. The proposal intends to enable
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