Intragroup Lending of Employees - New Practice

The lending of Employees requires that the competent authorities grant a permit. Even though lending employees from abroad is forbidden, according to the guidelines of the State Secretariat for Economic Affairs, lending employees within a group of companies was allowed (see the State Secretariat of Economic Affairs’ Guidelines, published in 2003, page 147):

 

“The lending of employees within a group of companies, i.e. between the parent entity and a subsidiary or between two subsidiaries or branches does not require any permit, even in cases where the employees are lent from one independent legal entity to another. The reason for this is that lending employees within a group of companies does not trigger the typical dangers inherent with the lending of employees. These employees are generally not seen as “external”; therefore they are expected to be treated no worse than the regular employees. Also, the lending of employees within a group of companies often serves to collect experiences abroad, which also excludes the dangers of a typical lending business.”

 

On June 20, 2017 the State Secretariat of Economic Affairs issued a new guideline in which the above mentioned very broad exception is now significantly narrowed as follows:

 

  • Basically the general rules apply to the lending of employees
  • Within a group of companies, no permit for lending employees is needed if the lending is carried out only in specific cases, on an occasional basis and in case there is a know-how transfer within the group, or if the lending serves to collect professional, language or other expertise.

Under these conditions, the State Secretariat for Economic Affairs still grants an exception from the general prohibition to lend employees from abroad.

 

There are many groups of companies who lend employees within their group without being in possession of a permit based on the so far very broad guidelines of the State Secretariat for Economic Affairs. These Companies now have to immediately adapt their practice, i.e. they have to apply for a permit or limit the lending of employees to the few exceptions described above. Subject to these few exceptions, they have to stop lending employees from abroad. Otherwise, these companies face a fine of up to CHF 100’000 (Art. 39 AVG).

 

You find the Wording of the new Guideline (in German) here:  New guideline concerning the lending of employees

 

For more information, please contact:  michele.stutz[at]mme.ch

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