In most cases, exemption from the social security obligation is possible for foreign employees during the temporary duration of a secondment. It is recommended that the legal basis for social security coordination between Switzerland and the posting country be examined in detail in order to ensure compliance with the regulations and to avoid contribution gaps for employees during their work abroad.
What does secondment mean?
A secondment means that an employee is sent by his employer to a foreign country for a certain period of time, i.e. temporarily, to perform his work there. This is the case, for example, if the employee is sent to work in a branch or a company in Switzerland that belongs to the employer's group of companies (cf. Art. 1 let. b Swiss Posted Workers Act).
In the case of secondments, it is often possible for the secondee to continue to be insured in their home country for the duration of the secondment. The prerequisite for this is that a corresponding social security agreement exists between the home country and the host country. If this is the case, the social security legislation of the home country continues to apply to the employee for the duration of the secondment, in all branches of social security. In Switzerland, the social insurances include:
- old-age, survivors' and disability insurance (three-pillar system);
- protection against the consequences of illness and accidents;
- income compensation for those in military, civil protection or alternative civilian service and in the event of maternity;
- unemployment insurance;
- family allowance.
Legal basis of international social security coordination for EU/EFTA citizens
For EU/EFTA citizens, Regulation (EC) No. 883/2004 regulates the coordination of social security systems on the basis of the Agreement on the Free Movement of Persons ("FMPA") between Switzerland and the EU. The coordination also includes the EFTA member states, so that the same coordination rules apply in the relationship between Switzerland and the EFTA member states.
According to Art. 11 para. 1 in conjunction with 11 para. 3(a) of Regulation (EC) No. 883/2004, the principle applies that the legislation of the employer state applies (so-called "place of employment principle" or "subordination principle"). This means that workers are generally subject to the social security system of the country where they are employed. For secondees, however, the above-mentioned regulation provides for a special provision that allows secondees to remain insured in their home country in the case of a temporary secondment (Art. 11 para. 3 of Regulation (EC) No. 883/2004).
Specifically, in the case of a secondment, the employer must apply to the social security authority in the home country for uninterrupted coverage under that social security system using the A1 form ("certificate of secondment").
During the period of the secondment, all rights and obligations of the country of origin remain applicable. The secondee and their employer are therefore exempt from the obligation to contribute to the Swiss old-age and survivors' insurance ("AHV"), the invalidity insurance ("IV"), the income compensation insurance ("Erwerbsersatzordnung"), the unemployment and accident insurance ("Unfallversicherung"), the occupational benefit scheme ("berufliche Vorsorge") and the family allowance scheme ("Familienzulagen"). The secondee and their non-employed family members are also exempt from compulsory Swiss health insurance (although it should be noted that spouses and children over the age of 20 who accompany a seconded person to Switzerland and take up residence here are in principle subject to AHV/IV contributions).
Legal basis of international social security coordination for non-EU/EFTA nationals
For secondments to Switzerland from countries outside the EU/EFTA area, it must first be checked whether Switzerland has concluded a corresponding social security agreement with the country in question.
a) Contracting states
Outside the EU and EFTA member states, Switzerland has concluded bilateral social security agreements with 20 states (Australia, Bosnia-Herzegovina, Brazil, Canada, Chile, China, India, Israel, Japan, Kosovo, Montenegro, Northern Macedonia, Philippines, Republic of San Marino, Serbia, South Korea, Turkey, United Kingdom incl. Channel Islands and Isle of Man, Uruguay and USA). As with EU/EFTA secondments, the subordination principle applies, i.e. the insurance obligation is generally based on the legal provisions of the contracting state in which the gainful activity is carried out (place of employment principle).
The seconded person is then not obliged to contribute to the social insurance schemes of the host country if the social insurance scheme in question is covered by the respective agreement. However, most state treaties do not specifically regulate health and unemployment insurance. The foreign state therefore does not have to exempt the seconded worker from compulsory insurance and the payment of contributions for the social insurance in question.
b) Non-contracting states
In the case of secondment to Switzerland from a non-contracting state, i.e. a state with which Switzerland has not concluded a social security agreement, and where the secondment lasts longer than three consecutive months, a foreign employee is in principle subject to Swiss social insurance. This means they are personally liable to pay the contributions in full, since the employer is not liable to pay contributions in Switzerland. However, if the employee is also subject to compulsory insurance under the law of their home country and if being subject to the Swiss social security system would impose an unreasonable additional burden, such secondee may be exempted from compulsory AHV, IV and EO insurance. An application for exemption can be made to the compensation office.
Kindly note that this article only provides a general overview. Individual cases must be carefully assessed with reference to the applicable legal provisions and international treaties. If you have any questions or feedback, please do not hesitate to contact the VISCHER Immigration Team.