Salary in euros

Agreement on the Free Movement of Persons (AFMP)

Since 2002, Switzerland has been bound by the Agreement on the Free Movement of Persons with the European Community. The purpose of this agreement is to facilitate the movement of persons, including employees.

The lack of monitoring of contracts and working conditions has led to an increased risk of wage dumping. For this reason, the AFMP provides for a ban on discrimination against workers. The employer cannot pay less for his frontier workers because of their nationality.

Strong Franc Crisis

During the Strong Franc Crisis, some employers were forced to take measures to ensure the economic prosperity of their business. Among these, the payment of wages in euros to frontier employees appeared to be a good solution for companies.

Payment of salary in euros

In principle, payment of wages is made in the ordinary currency of the workplace. However, as a general rule, the parties are free to provide that the salary will be paid in euros, even if the employee works in Switzerland. However, the payment of wages in euros to frontier employees at an unfavorable rate is likely to lead to a significant reduction in wages. This raises many questions. The AFMP provides that it is forbidden to discriminate against an employee because of his nationality. Can the employer claim that it is not based on the nationality of the worker but on his place of residence?

A difference in salary may be justified on objective grounds. In such a case, it is not wage discrimination prohibited by the AFMP. Can the employer argue that frontier workers have fewer burdens or that the cost of living in neighboring countries is lower? In any case, an employer who wishes to pay an employee's salary in euros must obtain the employee's agreement or go through a modification-leave. In addition, exchange rate fluctuations are part of the business risk that the employer must assume alone. As a result, paying an employee's salary in euros based on the applicable exchange rate is very risky, regardless of whether the employee is a cross-border commuter or lives in Switzerland.

Abuse of rights

A company in great economic difficulty due to the strong franc crisis decided to pay the salaries of cross-border workers in euros, based on an unfavorable exchange rate, in order to save their jobs. The employees agreed.

The employees challenged the payment of the salary in euros years later, at the end of the employment relationship. In very specific circumstances, the Federal Court considered that this was an abuse of rights and rejected the employees' claims.