With the entry into force of the Agreement on the Free Movement of Persons (AFMP) and the opening of borders, more and more people from the EU and EFTA countries are working in Switzerland. Employers sometimes take advantage of this to offer them unfavorable working conditions or lower salaries than the market rate. This is wage dumping.
In the long run, this also affects Swiss workers, as it leads to unfair competition and lower wages overall.
Freedom of pay
In principle, employers and employees are free to negotiate and decide on wages. The employer is free to offer a lower salary than the market and the employee is free to accept it.
However, there is a risk that the employer deliberately offers a lower salary to the employee because of his nationality or place of residence. Such behavior constitutes wage undercutting, also known as wage dumping. To avoid such abuses, the AFMP and Swiss legislation set limits and sometimes impose equal pay.
Agreement on the Free Movement of Persons
The AFMP is an international agreement between Switzerland and the European Union. It provides that nationals of these countries are free, under certain conditions, to live and work in Switzerland. These nationals must not be treated unfavorably, particularly in terms of salary, because of their nationality. Nationals of EFTA countries have the same rights as EU nationals.
In principle, due to the freedom of movement, Switzerland does not control the working conditions and wages of employees from EU or EFTA countries. This lack of control increases the risk of abuse and wage undercutting. Corrective measures have been taken to fight against this phenomenon. An employer who does not respect certain minimum working and salary conditions risks a fine of several tens of thousands of francs.