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Most of these companies focus on the financial market sector offering payment services, investment management, banking infrastructure, deposit and lending, insurance, distributed ledger technology and contextual analytics, creating new partnerships with traditional players within the financial industry. The common ground of those companies is the disruptive nature of their innovative (digital) business models.

Employment in Fintech

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Known for its political stability and traditional banking industry, Switzerland has evolved to a hotbed for FinTech companies.

Most of these companies focus on the financial market sector offering payment services, investment management, banking infrastructure, deposit and lending, insurance, distributed ledger technology and contextual analytics, creating new partnerships with traditional players within the financial industry. The common ground of those companies is the disruptive nature of their innovative (digital) business models. The Swiss authorities did recognize this trend early on and strives since 2015 to create a regulatory-friendly environment in order to stimulate and foster the industry, which is still in its infancy. In 2018, a total of CHF 685 million was invested in ICT and Fintech startups.  

Employment in Switzerland

According to the IFZ Fintech study of 2018, Zurich is ranked within the top 2 Fintech Hubs globally. The 21st Mercer Quality report confirms the previous observations and underlines that Switzerland (with Zurich ranked in the top 2 cities worldwide) is an attractive location to live, work and do business. Beside of the homegrown talent, Switzerland remains attractive for highly skilled foreign citizens. About 26% of the population is foreign in Zurich, which is higher than the national average. A deep dive into the Swiss workforce statistic shows us that in many industries, the share of foreigners contributing to the Swiss economy, and in specific industries such as FINTECH, is even higher than 25%. The employment in Fintech is knowledge-rich. The industry manages to attract world class talent. The highly global mobility is enabled through a tight fabric of bilateral agreements, which govern social security, tax and immigration.

The bilateral agreements on social security between Switzerland and various countries / regions are very specific about the type of insurance coverage. They provide answers to concrete questions such as: to which social security system individuals must contribute if they’re gainfully employed in one or more countries. The ongoing negotiations between the EU and Switzerland and the recent outcome of the referendum on the corporate tax – and social security reform add an additional layer of clarity to the existing Swiss and international social security framework.

The upcoming statutory changes will impact the employer’s options to hire local staff or foreign citizens in Switzerland. The chosen type of employment and resulting coverage will determine the ultimate compensation and benefit package of the staff. The latter has an immediate impact on the net remuneration of the staff. A salary survey of Robert Walters outlines that remuneration and benefit is still considered as one of the top four factors which determine job satisfaction according to the Swiss respondents. In an environment of shortage of skilled workers, it is in the employer’s best interest to have those four factors in check and thus, to remunerate properly.

The employer is responsible for the accurate setup of the payroll and for the assurance of statutory compliance. Whether these remuneration - or payroll related processes are done in-house or outsourced, is irrelevant. Assuring compliance is probably the most challenging part in a fluid and dynamic environment where there is no room for inefficiency and loss of time. A thorough assessment of the capability is therefore recommended in order to mitigate the financial risk, because employer and employee may both be affected.

Recommendations RSM

  1. Assess statutory implications whenever hiring foreign staff
  2. Evaluate “internal” capability to meet the statutory requirements
  3. Explore alternative scenarios and resources to meet statutory obligations
  4. Choose best fit for your organization

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