Switzerland Update: Basel-Stadt introduces a statutory minimum wage

UPDATE:

The Government Council has put the Basel-City Minimum Wage Act and the associated ordinance into force on 1 July 2022. From this date, employers will have to pay their employees a minimum wage of CHF 21 per hour plus a holiday supplement. The implementation and any additional wage payment must take place by 31 December 2022. From 1 January 2023, the minimum wage will be due on time, with regular checks to be carried out by the Office for Economic Affairs and Labour (AWA) from then on.

The starting point for the minimum wage is the usual place of work, regardless of the seat of the employer. If the usual place of work is in the canton of Basel-Stadt, the minimum wage is due. Employees who work outside the canton and only occasionally work in the canton of Basel-Stadt are not covered by the Minimum Wage Act. The situation is different for posted foreign workers. Since they are covered by the Posting of Workers Act, which provides for a salary customary in the local and industry, the cantonal minimum wage applies to them if they work in the canton of Basel-Stadt – even if their usual place of work is outside.

It is true that the Government Council was given the power in the Minimum Wage Act to provide for exceptions to the minimum wage other than those defined in the Act. However, he has not (yet) made use of this competence. The Regulation confines itself to the definition of the relevant legal terms.

On 13 June 2021, Basel voters approved a cantonal minimum wage with 53.77 percent and a turnout of 60.81 percent. What specific legal provisions do you have now? What does this mean for employers and employees? Does this mean that Basel-Stadt is legally at odds with the landscape? How are the provisions to be classified in relation to the situation throughout Switzerland?

The new Basel minimum wage at a glance

Among other things, the cantonal initiative “No wage under 23.-” and the counter-proposal of the Grand Council of 13 January 2021 were presented to the electorate. The counter-proposal was adopted, which is less far-reaching than the initiative. For example, the minimum wage is set at a lower CHF 21 and the list of exceptions is more comprehensive.

The adoption of the counter-proposal means in concrete terms the adoption of the Act on the Cantonal Minimum Wage (Minimum Wage Act, MiLoG). The aim of the Minimum Wage Act is to improve the living conditions of employees. In particular, it is intended to protect them from in-work poverty and a minimum wage is set for this purpose.

A minimum wage of CHF 21 (gross) per hour worked now applies to all employees in the Canton of Basel-Stadt, unless they are subject to an exception. In addition, the statutory holiday supplement is due.

In addition to the exceptions already provided for in the initiative itself for internships under 18-year-olds in holiday jobs, apprentices and family businesses, the catalogue of exceptions also includes work in sectors that are subject to a generally binding total or a standard employment contract with minimum wage (see below), au pairs, work on demand (up to 70 hours per calendar year), programs for professional integration and professional activities wholly or predominantly abroad. The Government Council may also issue further exceptions.

Control and penal provisions are also provided. For example, employers must, upon request, send the supervisory body all documents proving compliance with the minimum wage. If the necessary documents are not or no longer available, the employer must prove compliance with the statutory provisions. They must also grant the supervisory body free access to the workplace and the administrative premises at all times. The control costs are calculated in accordance with the cantonal ordinance to the Federal Act on Posted Workers to Switzerland and can be imposed in whole or in part on the fallible company. If the provisions of the Act and its implementing provisions are violated, fines of up to CHF 30,000 may be imposed.

Coming into force

The Government Council decides on the date of entry into force and also issues the implementing provisions necessary for the implementation of the law. According to the government, the timing should be chosen in such a way that the employers concerned can prepare for it.

The minimum wage is due from the entry into force of the law. Employers then have six months to adjust existing employment relationships. Any differences to the minimum wage are to be remunerated retroactively to the date of entry into force of the act.

Swiss minimum wage?

There is no general minimum wage regulation in Switzerland. A corresponding popular initiative was clearly rejected in 2014 with 76.3 percent and by all stands. Consequently, no changes are expected throughout Switzerland in the foreseeable future.

At the cantonal level, the cantons of Neuchâtel, Jura, Ticino and Geneva have so far had corresponding regulations. In this respect, the Basel minimum wage can certainly be described as a special feature. It remains to be seen whether other cantons will also follow such a model. The concrete political environment at cantonal level and the special conditions on the ground seem to be decisive. Nevertheless, the regulations remain controversial, which is also reflected in the fact of the counter-proposal and the relatively close voting result.

In addition to the statutory minimum wages mentioned above, minimum wages can also result from collective employment agreements (CLA). The majority of these are association contracts, i.e. sector-specific parity instruments that are negotiated between employers’ and employees’ associations. In principle, minimum wages provided for in the CLA only apply to members of the contracting associations. If CLA are declared to be generally binding, any minimum wage provisions contained therein then apply to all employers and the corresponding work in an area for which the CLA has been declared generally binding. The declaration of general applicability can be made cantonally, supra-cantonally or throughout Switzerland. In connection with the free movement of persons, binding minimum wages can also be provided for in standard employment contracts (NAV) as an outflow of the accompanying measures. Corresponding overviews can be found on the website of the State Secretariat for Economic Affairs.

Recommendations

In the canton of Basel-Stadt, the cantonal minimum wage regulations mentioned above must now be observed when setting wages. In the case of existing employment relationships, the adjustment period of six months must be observed, whereby the minimum wage is due from the entry into force of the law.

Compliance with the cantonal minimum wage regulations must be documented in order to prevent difficulties of proof during any inspections and to avoid sensitive fines.

For the sake of clarity, employees and employers should bear in mind the comprehensive list of exceptions, which could also be extended by the Government Council. Industry-specific NAV and generally binding CLA must continue to be consulted, especially since these are not subject to the statutory minimum requirements in the Canton of Basel-Stadt as an exception, even in the sense of contractual freedom among social partners.

Finally, the other limits regarding the free wage structure, which result from the principle of equal pay between men and women (Art. 8 para. 3 Federal Constitution), the right to equal pay for homeworkers (Art. 4 para. 1 of the Homework Act), the minimum wage regulations for posted foreign workers (cf. Art. 22 of the Aliens Act) and provisions in the right of submission must be observed.

Our employment law team will be happy to answer any questions you may have.

By Anela Lucic, Nicolai Bleskie, Vischer, Switzerland, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact switzerland@transatlanticlaw.com

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