Remote working - the challenges in practice
In recent years in particular, remote working has increased significantly in many companies. In practice, however, there are some challenges that need to be considered and overcome. Employing employees with a permanent workplace in a country other than the country in which the company is based is certainly not one of the easiest employment options and not only harbours some risks, but also requires several additional administrative steps.
Practical example
Marie Pernod is French and lives in Paris (France). She has been offered a position as an internal controller at BAS Pharma AG in Switzerland. However, moving to Switzerland is out of the question for her as she has two children, aged 14 and 16, who are due to finish school in France. BAS Pharma AG is keen to employ Mrs Pernod and offers her the compromise that she only must come to Switzerland once a month for 2 days and can otherwise work from her home office in Paris (France).
Among other things, the company must pay particular attention to the following topics and points in this context:
Labour contract
Since Ms Pernod's place of work is not only in Switzerland, but also in France, the employment contract must take into account not only Swiss labour law, but also French labour law. Issues such as working hours, public holidays, holiday entitlement and continued payment of wages in the event of an accident or illness, etc. must be taken into account.
Work permit
Mrs Pernod needs a work permit for every day she works in Switzerland. In order to obtain a cross-border commuter permit, she works slightly too few days in Switzerland, which means that the individual working days in Switzerland must be reported as part of the registration procedure.
Operating site
Since Ms Pernod carries out her activities in France for the Swiss company, there is a fundamental risk that France will regard the performance of these activities as the establishment of a permanent establishment. However, due to Mrs Pernod's position as an internal controller, a possible permanent establishment risk is generally low. Nevertheless, this is an issue that should always be clarified in advance.
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Remuneration
One of the relevant mandatory legal provisions stipulates that the wage level in France must be observed. As the salary level in Switzerland is generally higher than in France, this does not usually pose a problem in this context. However, it must be checked in France whether there are certain types of remuneration such as Christmas bonuses, holiday pay and 13th month's pay. If this is the case, this would have to be considered when determining Mrs Pernod's remuneration.
The travel and accommodation costs in Switzerland for the working days in Switzerland must also be regulated. These costs cannot be regarded as travelling expenses and the reimbursement of costs by the employer is taxable in Switzerland.
Taxes
Since Mrs Pernod works more than 40% of her working hours in France and does not qualify as a cross-border commuter, all non-Swiss working days are taxable in France. The Swiss working days, however, are subject to Swiss withholding tax. BAS Pharma AG would have to settle the effective Swiss working days with the withholding tax office monthly.
Social security
As Mrs Pernod performs more than 49.9% of her work in France, which is Mrs Pernod's country of residence, she is subject to French social security contributions. The insurance coverage includes all branches of insurance as well as the entire earned income at BAS Pharma AG. In accordance with French law, the contributions are divided between the employee and the employer.
Social insurance also includes accident insurance and health insurance. Accordingly, the continued payment of wages in the event of an accident or illness must also be regulated in accordance with French law.
Payroll
A shadow payroll is required in France for the settlement of French social security contributions and possibly also French tax. The information from the shadow payroll must then also be incorporated into the Swiss payroll, which can also be referred to as the "main payroll". Payment to Mrs Pernod will be made via the payslip created from the Swiss payroll after the French social security contributions and taxes as well as the Swiss taxes have been deducted from the gross remuneration.
Conclusion
As can be easily seen in this practical example, there are several aspects to be considered in this type of employment. However, with good planning and the right set-up, this is definitely a viable option for companies to hire qualified employees who may otherwise be impossible to find.