Self-Employment or Employee status? A Critical Choice

Self-Employment or Employee status?
A Critical Choice

A Small Guide for Professionals Aspiring to Professional Autonomy

In the current job market, the attraction towards professional independence is palpable. We are encouraged towards entrepreneurship, driven by success stories that praise the freedom and personal control over one’s professional destiny. However, the transition from employee to self-employed can be misleading, especially without a complete understanding of the responsibilities, complications, risks, and restrictions that apply to this status.

To avoid problems, it is advisable to question your current professional situation and career plan to ensure that the transition to self-employment is the most suitable solution. In fact, not everyone knows that to be recognized as self-employed in Switzerland, there are specific legal criteria. The question to ask, therefore, is: does your current professional situation objectively meet the legal criteria of independence?

The Call of Independence: Between Dream and Reality

Definition of Self-Employment

In Switzerland, the status of the self-employed worker is clearly defined by law, outlining a work path that is distinctly different from paid employment. In summary, a self-employed worker is a professional who does not have economic dependencies – and therefore bears financial risk – nor any subordination ties with third entities. In other words, the self-employed worker faces:

  • Economic Risks and Income Fluctuation: One of the major risks for a self-employed worker is the fluctuation of income. Unlike an employee, who receives a regular salary and is insured in case of its loss (unemployment, injury, illness…), the self-employed must actively seek clients and projects, with periods that can be more or less profitable, and insurance for loss of income is minimal or nonexistent. Moreover, if the service does not meet the client’s expectations, the latter can request additional changes at the self-employed worker’s expense.
  • Management Costs: Being self-employed also involves directly facing the management costs of one’s business, including work tools, professional licenses, taxes, insurance, and social security contributions. These costs, in the absence of adequate planning, can significantly eat away profits.
  • Administrative and Bureaucratic Burden: The administrative burden is another aspect to consider. The self-employed worker must manage all the bureaucracy that was previously the employer’s responsibility: from invoicing and collection to tax and social insurance management. This requires either time and a deep knowledge of current regulations or financial resources to entrust all this to specialists (trustee, accountant, auditor…).

In fact, even if you decide to undertake this path, the decision alone is not enough. It is indeed your professional situation and project, not just the desire, that counts to obtain the status of a “self-employed worker.” And to objectively evaluate, only one body has the competence to thoroughly examine your professional situation: the AVS fund of your canton.

AVS Criteria

The AVS assesses your situation and your entrepreneurial project through various criteria that measure the worker’s actual autonomy, such as the absence of dependence on a single client and the ability to freely manage their own activity. For example, collaborators and/or contractors used can be an indicator, as well as the ability to autonomously acquire mandates, invest, incur losses, face collection risks, use own premises, etc.

Each AVS fund sets, with greater or lesser severity, the level of these different criteria. A rigorous AVS fund does not aim to prevent you from working but to limit the unpleasant surprises of the risks associated with the self-employed status – a possibility that may never have been considered.

The Challenge of Information

Many aspiring self-employed are not fully aware of the bureaucratic and administrative challenges, nor the financial implications of such a choice. In fact, the hype of independence or an opportunity at a moment’s notice often prompts professionals to jump on the bandwagon without taking the time to do any research.

To defend them though, it’s not easy to find a clear source of information on what to do based on the characteristics of your situation, resulting in a non-optimal or unsuitable choice. Indeed, while starting self-employment may be suitable for offering various services to multiple private clients, it is not if, for example, consulting services are offered to one or a few companies simultaneously. In the second instance, you don’t meet the criteria for self-employment, and it would be advisable to look at alternatives such as wage portage.

What to Do if You Do Not Meet the Criteria for Self-Employment?

There is no reason to worry! The job market has undergone enormous revolutions in recent years. Today there are numerous companies that can act as a bridge between you and the company offering the mandate. These companies have cantonal and federal authorizations that ensure a legal framework for all parties involved. In other words, you retain employee status and the client company receives an invoice for your services. This is called Staff Leasing.

Wage Portage and Payrolling as Advantageous Alternatives

Wage portage and payrolling are solutions rooted in Staff Leasing. They are designed for those seeking greater flexibility in work organization. This flexibility may be desired both by the worker – for example, ensuring the ability to work 100% remotely or taking advantage of opportunities in their network when they arise – and by the company offering the mandate – for example, benefiting from shorter termination times or labor not included in the HR budget.

To be more precise, wage portage and payrolling allow you to work as an employee on varied missions, while maintaining a high degree of autonomy. This work mode offers the flexibility to directly negotiate project details, including tasks and physical presence directives in the company, allowing you to tailor the work to your needs and preferences.

Notwithstanding this degree of freedom, you enjoy all the benefits of being an employee: you receive a regular salary, with a payslip detailing all deductions for social insurance and contributions. This means that neither you nor the company offering the mission have to worry about administrative and tax management, as it is all handled by the wage portage/payrolling company. This allows you to fully concentrate on your work, with the peace of mind knowing that all legal and bureaucratic aspects are managed by professionals.

The Staff Leasing ensure a secure work environment because a company offering wage portage or payrolling services must hold all the necessary cantonal certifications and authorizations to operate in Switzerland, and federal ones to operate abroad. In addition, these companies are under the careful supervision of cantonal and federal control bodies, ensuring that the employer complies with all regulations and obligations prescribed by the Staff Leasing Law (LSE) and the Collective Agreement (CBA) on Staff Leasing.

Advantages of Salary Porting with Opsys360

We differentiate our wage portage service from other Staff Leasing services by the attention we give to professionals carrying out the mission. We understand the evolving mentality in the relationship between employee and employer and, for this reason, we offer complete transparency on all aspects of the relationship with the client company. This balanced relationship between the consultant, employer, and client company is designed to protect the professional on one side, but without removing any of the flexibility required by the client company for the work commission.

Wage portage with Opsys360 is also an opportunity to understand the challenges of managing different clients, costs related to one’s remuneration, and the risks of working on mandate. We thus ensure a safe work environment until you meet all the conditions to be independent and take on, among other things, the risk of stand on its own two feet.

Advantages of Payrolling with Opsys360

Unlike wage portage, payrolling is a service primarily aimed at companies. Thus, discussions mainly take place between the client company and Opsys360, without bothering the professional with administrative discussions.

Payrolling with Opsys360 offers the great advantage of being able to use a Staff Leasing service (in other words, the outsourcing not only of payroll but of the entire management of an employee) at a completely reasonable cost. Our operation is always based on flexibility to arrive at a total cost appropriate to the size of your company and your needs.

Conclusion: An Informed Choice with Opsys360

At Opsys360, we believe it is essential that every professional makes an informed and conscious choice regarding their work status. We encourage deep reflection and detailed analysis of the implications of each status to ensure optimal decisions.

The goal is to establish a balanced and advantageous professional relationship for all interested parties, supporting a smooth transition and compliance with current regulations. Opsys360 is committed to providing all necessary information and support to navigate these complex choices, ensuring that each collaboration is fruitful and meets the expectations of all parties involved.

In our experience, business is best when those involved are committed to it. If you have any doubts about your own situation or that of the consultant you wish to mandate, do not hesitate to contact our HR experts to develop a people-centred HR approach.