Staff leasing

You lease staff out to another company on a temporary basis?

Staff leasing is subject to various legal provisions. If you lease staff out to other companies, you must take account of these requirements since non-compliance can lead to heavy fines and other consequences. Here, you’ll find legal information and statutory provisions on staff leasing. The legal basis for staff leasing is formed by the Federal Act on Recruitment and the Hiring of Services (Recruitment Act). 

What is staff leasing?

Staff leasing describes when an employee (staff loaned) is loaned by the employer to another company (assignment company) on a temporary basis. The employment relationship continues with the original employer, but the work is performed at the assignment company. 

How do you recognize whether the employment relationship is staff leasing and not another service relationship?

In practice, it is sometimes difficult to assess whether the relationship is staff leasing or an employee who is carrying out a task or works contract with a third-party company. For this reason, their are certain aspects that indicate staff leasing: 

• Integration into the work organization of the assignment company: It can generally be classified as staff leasing if the staff loaned are included in the work organization of the assignment company when it comes to the person, organization, subject, and time.  The employer assigns authority to issue instructions to the assignment company, in other words the latter issues the leased staff instructions regarding, for example, place of work, working hours, or the performance of tasks. 
• Provision of tools and aids: In the case of staff leasing, the loaned staff typically work with the tools, materials, or devices of the assignment company and do not take them with them from the employer. For example, the loaned staff work on a computer of the assignment company and, in some cases, receive an email address of that company. 
• Risk distribution: If the employer promises the assignment company a certain level of performance for the work of the loaned staff, and in the event this is not completed, for example, the work must be rectified, then this is not deemed to be staff leasing. And if the employer is liable toward the assignment company for adherence to deadlines, this is an indication that the relationship is not staff leasing. The more the risk of concrete completion of work lies with the assignment company, the more likely it is that the relationship is staff leasing. 

Are there different types of staff leasing?

There is temporary work, subcontracting, and occasional consignment of employees to assignment companies. 

1. Temporary work: This is the case if the purpose and duration of the employment contract between the employer and the loaned staff is limited to a single assignment at the assignment company. Once the assignment is over, the employment relationship with the employer also ends.
2. Subcontracting: Subcontracting is when the purpose of the employment contract between the employer and the loaned staff is primarily the transfer of the loaned staff to assignment companies and the term of the employment contract does not depend on individual assignments at assignment companies. In this form, the loaned staff are leased repeatedly to one or several assignment companies. 
3. Occasional consignment: This type of staff leasing is when the purpose of the employment contract between the employer and the loaned staff is such that the latter works mainly upon the instruction of the employer, are only consigned to the assignment company in exceptional cases, and the duration of the employment does not depend on any assignments at assignment companies. For this form, the loan activity is not the standard offer of company lending the staff, and instead only occurs in exceptional cases. The main motivation for the consignment of proprietary staff to assignment companies is generally not to achieve a profit from the loan activity, but rather to support a customer in the event of capacity bottlenecks or to bridge own employment gaps. Accordingly, there are no special provisions in the employment contract with the loaned employees regarding assignments at third-party companies.

Does staff leasing have to be approved?

Offering temporary work professionally and commercial staff leasing require approval. Professionally means: 

• If a company leases staff to assignment companies for ten or more assignments within 12 months and has the intention of doing so to make a profit (i.e. not just for goodwill)
• or if annual turnover of at least CHF 100,000 is achieved with staff leasing. 

Who is responsible for issuing approval?

The approval is issued by the responsible cantonal office where the leasing company has its registered office. If staff are leased abroad, additional approval from SECO is required. 

What needs to be considered for the approval? 

Among other things, a sample employment and leasing contract must be reviewed and a deposit must be made for wage claims arising from the staff leasing. More information on the exact requirements for receiving approval can obtained from SECO or the relevant cantonal authority (usually the Office for Economy and Labor). 

What does the employment contract have to include?

The employment contract is the agreement between the leasing entity and the loaned staff. It must be concluded in writing and include the minimum information and notice periods as set out by the Recruitment Act. If the assignment company is subject to a generally binding collective employment agreement, then the corresponding working hours and wage provisions must be upheld. It cannot be made difficult for the loaned staff to switch to the assignment company after expiration of the employment contract. 

What does the staff leasing contract have to include?

A staff leasing contract is an agreement between the leasing company and the assignment company. This must also be concluded in writing and it cannot be made difficult for the assignment company to hire the loaned staff when the assignment ends. An exception is made if the assignment lasts less than three months and loaned staff transfer to the assignment company within three months after the assignment ends. In this case, compensation can be agreed between the leasing company and the assignment company. However, the compensation may not be higher than the remuneration for a three-month assignment plus administrative costs and profit.