04.05 Difference between employment and freelancing

04 International Labour Law

To understand the problem with clickworkers in particular, it is necessary to know the difference between an employment relationship according to law and freelancing, i.e. working as a self-employed person.

According to Swiss law and Swiss case law, someone is an employee if he or she is integrated into the employer’s work structure. One cannot judge this point on the basis of individual circumstances, but only on the basis of the overall circumstances. In particular, the following elements, at least partly in combination, indicate an employee relationship: Employer’s right to issue instructions (most important criterion), fixed place of work (does not necessarily have to be given), fixed working hours (does not necessarily have to be given), prescribed means of work, regular salary. Mandatory and dispositive labour law as well as Swiss social security law apply to employees.

A freelancer (self-employed person) is «free» insofar as he or she is not integrated into a work structure. He or she receives an order from his or her employer (usually a contract for work or service, for the fulfilment of which he or she is completely free to choose the working conditions and the means of work. As a rule, the only requirement is the delivery of the agreed work in the agreed time. In a recent decision (s. BGE 9C_308/2017 vom 17.05.2018 in NZZ 06.06.2018 Sieg für Ausgleichskasse) the Swiss Federal Supreme Court comes to the conclusion that the entrepreneurial risk also indicates a self-employed activity. As a rule, freelancing is typified as a contract for work (owed is a success) or service (owed is a careful execution).

The most important effect of the distinction between employment and freelancing is the fact that an employer does not have to insure a freelancer socially and does not have to pay social security contributions for him or her. However, this is also the greatest risk for an employer. This is because the social insurance funds can regularly claim back social insurance contributions from employers of supposed freelancers, i.e. legally effective employees, e.g. in Switzerland for up to five years. This can lead to a heavy financial burden for employers, especially if an employer has several such cases. The question therefore arises as to how employers can be sure of the legal relationship of their employees to them. There are no watertight solutions in the legal field, but in my opinion one possibility is to contact the relevant social security authority and have it confirmed whether the person in question is employed or self-employed in the opinion of the authority.

04 International Labour Law