I INTRODUCTION TO THE IMMIGRATION FRAMEWORK

i Legislation and policy

As a general rule, national and international legislation governs immigration law in Switzerland.

The main relevant national legislation is the Federal Act on Foreign Nationals of 16 December 2005, as amended (FAFN), the Ordinance on Admission, Residence and Gainful Employment of 24 October 2007, as amended (OARG) and the Ordinance on the Agreement on Free Movement of Persons of 22 May 2002, as amended. Moreover, the Directives of the State Secretariat for Migration (SEM), as amended, are an important source for interpreting Swiss immigration law, even if they are not legally binding.

Besides this national legislation, the main international legislation includes the Agreement on Free Movement of Persons (AFMP) between the European Union (EU) and Switzerland of 1 June 2002 as amended, the European Free Trade Association Convention of 4 January 1960 as amended, the Schengen Agreement of 12 December 2008 as amended and the General Agreement on Trade in Services, as amended (GATS).

ii The immigration authorities

As Switzerland is a federal state, immigration authorities exist on two levels: the cantonal level and the federal level.

At the cantonal level, each canton determines its organisation autonomously, including the administration of its immigration authorities, which thus vary from one canton to another.

For example, in the canton of Geneva, there are two main competent authorities for immigration, the Cantonal Office of Population and Migration (OCPM) and the Cantonal Office of the Inspectorate of Labour Relations (OCIRT). The OCPM is the deciding authority for all permit applications not subject to local market testing (see Section IV.i), as well as for permit applications without gainful activity. The OCPM is mainly in charge of registering applications, especially those regarding work permits. The OCIRT is competent for employment-related aspects of immigration, such as verifying compliance with local market testing, in particular, the salary conditions, the candidate’s diplomas, whether the candidate is highly skilled and whether the job announcement has been published on a local website (see Section IV.ii).

As another example, in the canton of Zurich, the OCPM is the deciding authority for all permit applications not subject to local market testing (see Section IV.i), as well as for permit applications without gainful activity. The OCPM is mainly in charge of registering applications, especially those regarding work permits. The OCIRT is competent for employment-related aspects of immigration, such as verifying the respect of the local market testing (see Section IV.i).

At the federal level, the competent authority for all matters covered by legislation on foreign nationals is the SEM. The SEM specifically regulates the conditions to be met for foreign nationals to reside and work in Switzerland. In addition, it verifies that the cantonal immigration authorities comply with these conditions when deciding to issue a permit in favour of a foreign national. In this context, the SEM acts as a supervisory authority that usually must approve the decisions rendered by the competent cantonal immigration authorities.

In addition to the above-mentioned competent cantonal and federal immigration authorities, the Swiss authorities’ representation (e.g., embassies or consulates) around the world are also active in the immigration field. In particular, they are the issuing authorities for all authorisations (i.e., visas) to enter the Swiss territory for a maximum period of 90 days in any 180-day period.

iii Exemptions and favoured industries

As a general rule, Swiss immigration law does not provide for exemptions or favoured industries. However, Swiss immigration authorities may be more lenient when reviewing the work permit applications filed in relation to specific sectors where there is a labour shortage. In some cantons, this has notably been the case in the medical sector and the IT sector.

II INTERNATIONAL TREATY OBLIGATIONS

i The bilateral agreement on the free movement of persons

Switzerland is a party to the AFMP with the EU. The AFMP gives nationals of Member States the right to work and to establish themselves (and, as the case may be, with their family) within the territories of other Member States. As a general rule, EU nationals are entitled to reside and work in Switzerland and thus, to obtain the relevant permits in this respect.

Taking into account EU nationals’ entitlement to reside and work in Switzerland, the authorities allow EU nationals to work in Switzerland as soon as a complete permit application is filed with the competent immigration authorities. As a consequence, EU nationals do not have to wait until the issuance of their permit to start their gainful activity within the Swiss territory.

Note, however, that nationals from Croatia, despite being part of the EU, are still subject to the specific restrictions applicable to non-EU nationals. In particular, the domestic workforce can be given precedence over Croatian nationals (see Section IV.ii).

ii Schengen Agreement

Switzerland is part of the Schengen Agreement, which in principle allows Member State nationals to freely circulate within the Schengen Area without a visa. In this context, Schengen nationals are entitled to enter Swiss territory without having to obtain a visa. That said, Schengen nationals may not stay in Switzerland for more than 90 days in any 180-day period without a residence or work permit.

iii GATS

Switzerland is part of the GATS. With respect to the GATS, Switzerland has committed itself to respect the principle of equality of treatment in the context of an intra-company transfer to Switzerland of executives, senior managers or highly qualified specialists of foreign companies that provide services and maintain an establishment in Switzerland.

III THE YEAR IN REVIEW

i Initiative ‘against mass immigration’

On 9 February 2014, Swiss citizens narrowly approved, by just 50.3 per cent, the initiative against mass immigration, which provides for a new Article 121(a) in the Swiss Federal Constitution (SFC). Article 121(a) SFC imposes limits on the number of foreign nationals allowed into the country and may lead to the end of the AFMP. In particular, it provides for the introduction of work-permit quotas for EU nationals, and for the prioritisation of Swiss nationals.

The initiative against mass immigration gave the Swiss government and parliament three years to introduce implementing legislation necessary to apply the initiative’s restrictions on immigration. Between February 2014 and December 2016, the Swiss government held talks with the EU. The aim of these discussions was not to terminate the AFMP, but instead to renegotiate it for the AFMP to be consistent with Article 121(a) SFC.

In this context, on 16 December 2016, the Swiss parliament adopted a law on the implementation of Article 121(a) SFC, which respects the AFMP, although it is arguable whether it is still fully in line with the initial objective of the initiative. In particular, it does not include any system of work-permit quotas. On 8 December 2017, the Swiss government decided how this law will be implemented. To limit European immigration and prioritise the recruitment of unemployed persons, from 1 July 2018, employers in economic regions or sectors that have ‘high rates of unemployment’ (defined as 8 per cent unemployment until 1 January 2020 and then 5 per cent) will have to announce vacant positions through regional placement offices before hiring EU nationals from abroad. Within three days, the regional placement offices must transmit potential files to employers. Employers then may interview candidates they consider appropriate for their vacant positions. Furthermore, under the reporting obligation vacant positions may only be publicly advertised five days after they have been announced to the regional placement offices at the earliest. In addition, the outcome of the interviews must be reported to the regional placement offices. That being said, employers do not need to justify any refusal of a particular candidate. A penalty of up to 40,000 Swiss francs can be imposed for non-compliance with these rules. This can also have a negative impact on pending work-permit applications.

ii Signature of Protocol III linked to the AFMP

On 4 March 2016, the Swiss government and the EU signed the Protocol III linked to the AFMP. According to this protocol, Croatia became a party to the AFMP on 1 January 2017 and thus is allowed to benefit from this agreement.

IV EMPLOYER SPONSORSHIP

i Work permits

Under Swiss law, there are three main types of work permits.

The first type of work permit is a short duration work permit referred to as an L permit. The purpose of this permit is to allow a foreign national to perform a short mission in Switzerland. The validity of an L permit is limited to a period of one year but it may be extended for another one-year period. Furthermore, in cases where the secondment exceeds two years, the L permit may be extended each year for a one-year period until the end of the mission.

Depending on the duration of the mission in Switzerland, different types of L permits may be applied for: an L permit for 12 consecutive months; an L permit for four consecutive months; or an L permit for 120 days per 12-month period, which allows the holder to work in Switzerland for a maximum of 120 days within a 12-month period.

In addition, pursuant to the AFMP, EU nationals taking up employment, providing services or being seconded to Switzerland for a maximum period of 90 days – as well as non-EU nationals seconded to Switzerland for a maximum period of 90 days by EU companies and for which those non-EU nationals have worked for at least one year before coming to Switzerland – do not need L permits. They can instead benefit from an online registration procedure (the 90-day online registration).

In accordance with the 90-day online registration, companies need only inform the immigration authorities of the employment, or the secondment, by completing an online form.2

In cases of employment in Switzerland, companies need to complete this form at least one day before the beginning of the activity, while in cases of secondment in Switzerland, companies need to complete it at least eight days before the beginning of the secondment.

In any case, as soon as the competent immigration authorities issue their confirmation, the foreign employee is allowed to work in Switzerland for a maximum period of 90 days.

Note that the 90-day online registration in principle does not apply if the employment does not exceed eight days per civil year (except for construction, hospitality, cleaning and security services as well as itinerant workers where the registration is always compulsory).

The second type of work permit is a long duration work permit referred to as a B permit. The purpose of this permit is to allow a foreign national to reside and work in Switzerland for more than one year. Unless it is subject to specific conditions (e.g., restriction to a specific employer, achievement of certain targets), the renewal of the B permit is in principle a formality.

The third type of work permit is a cross-border commuter work permit referred to as a G permit. The purpose of this permit is to allow EU nationals to work in Switzerland while residing in an EU country. Non-EU nationals can also benefit from a G permit provided that certain conditions are met; in particular they must reside near the Swiss border in an EU country for at least six months. As for the B permit, the renewal of the G permit is usually also a formality.

The issuance of the above-mentioned types of work permits in principle requires obtaining the approval of the cantonal and, for non-EU nationals, federal authorities.

ii New hires

EU nationals are in principle entitled to work in Switzerland. On the other hand, non-EU nationals may work in the country only under strict conditions.

As a general rule, all non-EU nationals must be highly skilled to obtain a Swiss work permit. In this context, when employers wish to hire non-EU nationals in Switzerland, they must demonstrate beforehand that there were no suitable candidates on the local market to fill the position.

Employers can prove adequate testing has been conducted by publishing job announcements on specialised websites and by sending the job description to the local authorities, which advertise for candidates. Once the local market test has been completed and if no suitable candidate has been found, employers may file a work permit application (Article 21 FAFN).

It is important to note that the Swiss Federal Council sets yearly quotas for the different kinds of work permits to be issued in favour of non-EU nationals (excluding the L permits for four consecutive months and the 120-day work permits, which are in principle not subject to quotas). For 2018, the quotas are 4,500 for L permits and 3,500 for B permits (Article 19 OARG) (i.e., 500 more permits than in 2017).

In this context, before deciding whether to issue a work permit in favour of a non-EU national, the competent immigration authorities verify that the non-EU candidate is highly skilled and that quotas are available.

In addition, the hiring of a non-EU national in Switzerland must serve the economic interests of the country and comply with the work and salary conditions applicable in Switzerland. In this context, the competent immigration authorities also verify that these conditions are fulfilled before issuing a work permit in favour of a non-EU national.

The issuance of work permits for non-EU nationals usually takes about 10 to 12 weeks after filing. Non-EU nationals are not allowed to work until they have received their work permit.

Regarding the hiring of EU nationals, they are not subject to local market testing as these nationals are in principle entitled to work in Switzerland based on the AFMP, except for seconded workers (Article 21 FAFN) and Croatian nationals.

Furthermore, no yearly quotas apply to the hiring of EU nationals. However, specific quotas are applicable for Croatian nationals. For Croatian nationals, the quotas are 748 for L permits and 78 for B permits between 1 January 2018 and 31 December 2018.

The issuance of work permits for EU nationals usually takes about eight weeks after the work permit application is filed. That being said, EU nationals who are not seconded are in principle able to start working from the moment they have filed a complete work permit application.

When taking their decision on work permit applications, the competent immigration authorities render a formal decision. Should this be a decision of refusal, an appeal may be filed with the competent authorities or courts to contest it.

The procedure varies depending on whether the refusal decision is rendered by the cantonal or the federal immigration authorities.

Should a refusal decision be rendered by the cantonal immigration authorities, an appeal may in principle be filed with the competent cantonal authorities or courts. In this context, as each canton autonomously determines its organisation, in particular the administration of its authorities or courts, the procedure varies from one canton to another. For example, in the canton of Geneva, there are second instance appeal courts: the Administrative Tribunal of First Instance and the Administrative Chamber of the Court of Justice at second instance.

Should a refusal decision be rendered by the federal immigration authorities (i.e., the SEM) an appeal may in principle be filed with the Federal Administrative Court (FAC).

Depending on the circumstances, the Swiss Federal Supreme Court may constitute the final appeal court to review the decisions issued by the final cantonal instance appeal court and the decisions issued by the FAC.

iii Intra-company transfers

In Switzerland, an intra-company transfer may be allowed under the GATS or under national legislation.

In both cases, the local market test condition is not applicable. The employing company must qualify as part of a group of companies. According to the SEM, a legal entity abroad must have a legal entity or a branch in Switzerland to qualify as part of a group of companies.

Under the GATS, intra-company transfers of non-EU nationals are possible for executives and senior managers, as well as highly qualified specialists. The SEM considers that the executive and senior managers are the people whose essential task is to manage the company or one of its departments. They only answer to the company’s board members or shareholders. Also, highly qualified specialists are the people who are indispensable when providing a determined service by their specific knowledge and experience regarding services, research equipment, technical skills or firm management.

According to the GATS, international groups of companies can transfer non-EU nationals to Switzerland for up to four years, provided that (1) the employee is an executive, a senior manager or a highly qualified specialist (as described above), (2) the employee has worked for the group of companies, outside Switzerland, during at least the whole year preceding the filing of the Swiss work permit application, (3) the hiring of the employee complies with the work and salary conditions applicable in Switzerland, and (4) quotas are available.

Under the national legislation, intra-company transfers of non-EU nationals are possible for executives and senior managers, as well as indispensable specialists (Article 46 OARG). According to the SEM, these executives and senior managers are people with a right to make decisions within the company. In addition, indispensable specialists are highly qualified people in economics or research working for international companies or research institutes.

In this context, work permits can be granted to executives or senior managers and indispensable specialists (as described above) provided that (1) the transfer serves the economic interests of Switzerland (Article 18 FAFN), (2) the employer has filed a request (Article 18 FAFN), (3) quotas are respected (Article 20 FAFN), (4) the applicable minimum wages set by collective labour agreements, Swiss law or local customs are complied with (Article 22 FAFN), and (5) employees have adequate housing (Article 24 FAFN).

Notwithstanding the above, EU nationals are entitled to work in Switzerland based on the AFMP. Therefore, in principle, the rules set out above do not apply except in cases of secondment.

The timeline for issuance of work permits for EU and non-EU nationals based on an intra-company transfer after filing does not differ from the timeline that applies for new hires. Moreover, the same conditions apply regarding the possibility to file an appeal against a formal refusal decision rendered by the competent immigration authorities (see above).

iv Labour market regulation

Switzerland has implemented several rules on the prevention of illegal working. In particular, the main sources governing illegal work in Switzerland are the FAFN, the Federal Act on Illegal Work of 17 June 2005, as amended (FAIW), the OARG, the Federal Act on Employment Services of 6 October 1989, as amended, the Federal Act on Posted Workers of 8 October 1999, as amended (FAPW) and the Federal Labour Act of 13 March 1964, as amended.

The cantons are responsible for ensuring that the illegal work rules are complied with (Article 4 FAIW). In this context, each canton independently determines its organisation, in particular the administration of its authorities that ensure compliance with these rules. For example, in the cantons of Geneva and Zurich, the OCIRT is the competent authority.

Employers are especially responsible for declaring their employees for the purposes of social security and unemployment insurance. Employers must also comply with Swiss law, collective labour agreements and local customs such as the minimum wage, holidays, a certain amount of working hours, security, hygiene and health standards and providing lodging for posted workers (Articles 2 to 4 FAPW).

As a general rule, the cantonal authorities do not operate a system of compliance inspections of employers who regularly employ foreign nationals. However, cantonal immigration authorities have inspectors who ensure that foreign nationals working in their canton have the proper immigration status and documents.

That being said, there are no routine inspections of employers who employ foreign nationals in Switzerland. Indeed, Swiss authorities operate mainly through either denunciations of potentially illegal situations or random inspections.

Should cantonal immigration authorities find an employer is employing foreign nationals without permission to work, the employer may incur criminal penalties. The penalties usually range from fines to a one-year jail sentence. In more serious cases, jail sentences can reach three years. If a jail sentence is ordered, it is combined with a fine (Article 117 FAFN).

v Rights and duties of sponsored employees

As a general rule, the holders of an L or B permit have the obligation to announce their arrival to the competent authorities of their place of residence in Switzerland (these authorities vary in each canton).

Moreover, within three months of their arrival in the country, non-EU L or B permit holders must in principle provide the competent cantonal authorities with a criminal record check from their country of origin.

The immigration authorities may also decide to grant to non-EU nationals B permits, subject to conditions. As the case may be, the granting of a B permit to non-EU nationals may in particular be restricted to a specific employer or to the achievement of certain targets. Non-EU nationals may also be hired under the condition of having to achieve certain objectives or results set at the beginning of their employment contract. In this context, non-EU nationals must meet the conditions linked to the granting of their B permits for the immigration authorities to renew them.

Rights given to the permit holders depend on the type of the granted permit. In this context, the permit holders have the right to reside and work in Switzerland for a specific period. Furthermore, they may be entitled to renew their permits.

As a general rule, B permit holders (EU and non-EU nationals) may apply for a permanent residence permit (referred to as a C permit) in Switzerland if they comply with the rules set in the FAFN. In this context, they may apply for a C permit provided that they have resided in Switzerland for a minimum of 10 years, including the previous five years without interruption with a valid B permit (Article 34 FAFN). However, nationals of countries that have concluded a residence agreement or that offer reciprocity with Switzerland (such as Canada, France, Germany, the United Kingdom and the United States) may apply for a C permit after a regular and uninterrupted stay of five years in Switzerland.

Moreover, work permit holders can obtain a C permit provided that (1) they have resided five years uninterrupted with a valid B permit in Switzerland, (2) they have adapted themselves to the Swiss way of life (e.g., by taking part in local events, buying property, sending their children to local schools, etc.), and (3) they have mastered the place of residence’s national language to a certain level (Article 34 FAFN).

In any case, a C permit will not be issued if (1) the work permit holder or his or her legal representative has given false information or hidden important facts during the work permit issuance procedure, (2) the work permit holder threatens or endangers the internal or external security of Switzerland or public order, from inside or outside Switzerland, (3) the work permit holder does not comply with the conditions set by a work permit issuance decision, or (4) the work permit holder or one of his or her dependants (e.g., spouse or children under 18) is relying on social assistance support (Article 62 FAFN). In these situations, the work permit holder may also lose his or her work permit.

V INVESTORS, SKILLED MIGRANTS AND ENTREPRENEURS

As a general rule, all non-EU nationals must be highly skilled to obtain work permits in Switzerland (Article 23 FAFN). Consequently, there is no specific immigration category for highly skilled non-EU nationals. That being said, Swiss immigration authorities may be more lenient when reviewing work permit applications filed in relation to specific sectors where there is a labour shortage (see Section I.iii).

Moreover, there are in principle no specific work permits based on investment in a particular sector in Switzerland. However, the immigration authorities may highlight some sectors in which investments could serve the economic interests of the country and thus be more tolerant when reviewing work permit applications filed in relation to these sectors.

Furthermore, according to the FAFN, non-EU nationals may apply for self-employed work permits, which are granted if the Swiss authorities can determine that, among other things, the self-employed activity may lead to ‘substantial investments’ in favour of the Swiss economy; that the applicant possesses sufficient financial means to conduct business; and that such a business would create new jobs in the country.

Regarding EU nationals, as they are in principle entitled to work in Switzerland, based on the AFMP (except for seconded workers), they may apply for a self-employment work permit should they carry on a self-employed activity. EU nationals are usually required to evidence that they perform such an activity (e.g., business plans, financial statements).

VI OUTLOOK AND CONCLUSIONS

Following the entry into force of the AFMP in 2002, the Swiss immigration authorities have become stricter with non-EU nationals. Indeed, as EU nationals have since then been entitled to reside and work in Switzerland, the Swiss immigration authorities have been able to use discretionary power to limit immigration into the country only while reviewing permit applications in favour of non-EU nationals.

That being said, over the past few years, it seems also that the Swiss immigration authorities have become less flexible towards EU nationals who do not (yet) fully benefit from the AFMP, such as Croatian nationals, as well as EU nationals seconded to Switzerland. The same inflexibility has been observed in relation to EU nationals applying for Swiss residence permits without gainful activity (there is notably a more conservative examination as to whether applicants have sufficient financial means to support their stay in the country). In our view, this new protective trend is linked to the current political climate in Switzerland that has followed the adoption on 9 February 2014 by the Swiss population of the initiative against mass immigration.

The option chosen by the Swiss government (see Section III.i) seems to be a good compromise that respects the AFMP and the Swiss citizens’ will, even if one may question whether it is still fully in line with the initial objective of the initiative. That being said, the UDC, the political party that launched the initiative against mass immigration, frustrated by its implementation, announced in January 2018 the launch of a new initiative ‘for moderate immigration’. The goal of this initiative is the nullification of the AFMP within 12 months of the approval of the initiative by Swiss citizens. The party has 18 months to collect the 100,000 signatures necessary for this initiative to be submitted to Swiss citizens for approval.

The Swiss government is against this new initiative. It remains fully committed to maintaining excellent relations with the EU and will ensure that Swiss citizens are aware of the very negative consequences that this initiative may have if it is approved.

1 Rayan Houdrouge is a partner at Lenz & Staehelin.