HR and tax alert | January 2017

Switzerland adopts new immigration provisions for foreign nationals and extends free movement of people to Croatia

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Executive summary

On 16 December 2016, the Swiss Parliament adopted new legal provisions further to the “Stop Mass Immigration” initiative. Entering into force in 2017, the new provisions require employers to notify the public employment office of certain vacancies and to interview candidates put forward by the office. They are seen as a “light touch” implementation of the initiative, compared to provisions which provided for a more restrictive system with quotas for foreign nationals (includingEU/EFTA nationals).

Additionally, Switzerland has also ratified the protocol extending the free movement of people to Croatian nationals which progressively grants access to the Swiss labor market for Croatian nationals.

Key points

Implementation of a euro compatible new admission system for foreign nationals

On 9 February 2014, Switzerland voted for the ‘Stop Mass Immigration’ initiative in a national referendum. Under the new constitutional provisions entered into force by this referendum, the Federal Council and Parliament had three years to introduce a new admission system for foreign nationals that allows Switzerland to control and limit immigration while protecting its general economic interests.

Following this, the Swiss Parliament opted for a ‘euro compatible’ solution which did not impose quotas on EU nationals, as initially envisaged by the text of the initiative. The new law adopted on 16 December aims to limit immigration through a better management of the local workforce available in the country. In particular new legal provisions provide for a reporting obligation for employers to notify job vacancies to the public employment offices under certain conditions.

Such reporting obligations will only apply to certain professions, industries and regions affected by an unemployment rate above the average, and will be limited in time. Employers will have to interview potential candidates proposed by the public employment offices, but the requirement to justify the rejection of any such applicants has been waived. Should an employer not comply with their obligation of notifying job vacancies or undertaking interviews, it could be subject to a fine up to CHF 40,000.

If these measures do not have the expected result of limiting immigration by managing the local workforce, the Federal Council will have to propose additional measures to Parliament. Any such measures will have to comply with the international treaties that Switzerland has entered into, even if this is not expressly set out in the law.

It is worth noting that no quota will apply to foreign nationals not working in Switzerland (such as students or annuitants). However, the current system of quotas for non-EU/EFTA citizens working in Switzerland will remain in place.

Additionally, the new legal provisions provide that neither foreign job seekers nor their family staying in Switzerland will be entitled to access the Swiss social welfare system, and EU/EFTA citizens who lose their jobs during their first year of stay in Switzerland will have to leave the country within a six months period.

In practice, the changes to the law are unlikely to result in significant changes to the current market of the global workforce in Switzerland. The admission criteria will remain the same with the exception of the reporting obligation, which will only affect a minority of recruitment processes.

Extension of the free movement of people to Croatia

The Swiss Parliament also approved the protocol extending the free movement of people to Croatia on 17 June 2016 (hereinafter ‘Protocol III’). Protocol III entered into force on 1 January 2017. The Federal Ordinance on free movement of people was modified on 21 December 2016 to implement the transitional provisions provided for in Protocol III. Under these, Switzerland will progressively grant access to its labor market to Croatian nationals and will for the next ten years be able to limit the immigration of Croatian workers through the use of quotas.

Next steps

Employers will need to ensure that they meet the reporting and interviewing obligations in respect of new roles when seeking to engage non-Swiss nationals in Switzerland.

Employers seeking to engage Croatian nationals should note the transitional provisions that will apply to such individuals.

EYG no. 00188-173Gbl

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