Currency used for salary payments: What are the employee’s rights? How can it be changed?

For both the company and the employee, the process of paying a monthly salary becomes more complicated when the salary is to be paid in a foreign currency. Converting the amount from Swiss francs to another currency often involves complications in terms of both cost and procedure.

Without further ado, here are the rights you have and the options available to you in such a situation.

Current situation regarding salary payments

Choice of payment currency

In Switzerland, wages are generally paid to employees in the national currency.

However, there are certain circumstances in which an employer may pay wages in a foreign currency. This is a situation that frequently arises when a foreign worker (such as a cross-border worker) is employed by a Swiss company.

To ensure that payments in a currency other than the Swiss franc are processed, it is recommended that the following conditions are met:

• the explicit or implicit agreement of both parties (employer and employee);
• the prohibition of discrimination (as set out in the Agreement on the Free Movement of Persons between Switzerland and the EU);
• any applicable collective labour agreement and cantonal legislation;
• any other provision designed to protect the employee from arbitrary action by the employer.

Payment terms

In addition to the choice of currency for payment, there is the question of how wages are paid. Indeed, Article 323b(1) of the Swiss Code of Obligations stipulates that payment must be made in cash, at the workplace and during working hours; however, this is generally not the case at present, as bank transfers are now the norm.

This method is permitted provided the employee gives their consent. By providing the employer with the details of the bank account of their choice, it is assumed that the employee has given their tacit consent to the bank transfer option.

Obligations of the parties

Restrictions on international bank transfers

Unless otherwise agreed, the employer is subject to a number of obligations when agreeing to make a payment by bank transfer involving the conversion of its currency (Swiss francs) into the currency specified by the employee:

• Interbank transfer fees. Whether the transfer is international or not, the costs of paying salaries by bank transfer are borne by the employer;

• Currency conversion fees. Although most banks offer multi-currency accounts and currency conversion services, hefty fees are often added on top of the exchange rate;

• Employee access to their pay. The employer is responsible for ensuring that the employee receives their pay before the end of the month. This deadline is not only the right thing to do, but it is also standard practice and, in some cases, even mandatory.

Please note: As a general rule, any delays and/or additional costs attributable to the employee’s bank cannot be charged to the employer.

Restrictions on domestic bank transfers

Conversely, opening a Swiss bank account can be problematic for the employee: time-consuming, involving administrative costs, and requiring a minimum deposit… 

For this reason, it is generally accepted that an employer cannot compel an employee to open an account in the national currency within Switzerland. Indeed, given its unilateral nature, the use of coercion would undermine the principle of mutual agreement between the two parties.

Faced with this deadlock, and in order to avoid any inconvenience, there are ways to bring the two parties together and find common ground that will pave the way for a more harmonious working relationship.

The b-sharpe solution

Concept and operation

Instead of a bank account, the employee may give their tacit consent to receive payment from their employer by providing details of an external service provider’s account. Once the salary has been paid into that account, it can then be transferred to the employee. This procedure remains in line with section 323b(1) referred to above.

This is the basis of the b-sharpe concept: once registered on the online platform, the worker receives a document containing their client code and the information the employer needs to make the payments.

This account works in two simple steps:

1. Funds are automatically converted into the currency specified by the customer. This process takes place in real time and uses the current exchange rate, with a lower margin than standard bank charges;

2. Funds are transferred to the customer’s bank account within 24 hours, or on the next working day following receipt. There are no currency conversion issues here, as this has already been taken care of beforehand.

As a regulated financial intermediary, b-sharpe is authorised to facilitate this fast and cost-effective transfer between the employer’s payment of wages and their receipt in the employee’s bank account.

Benefits for both parties

The solution offered by b-sharpe means that employees do not have to open a bank account in Switzerland. The ease with which this intermediary account can be opened stands in stark contrast to the administrative and financial burdens involved in opening an account with a Swiss bank.

From the employer’s perspective, there are two grounds on which they may refuse to pay wages into an external service provider’s account:

• the existence of a clear contractual basis;
• evidence of a tangible disadvantage to him or to the employee.

However, the implementation of the b-sharpe solution actually reduces the financial burden on the employer. Unless, therefore, the company’s accounting processes are adversely affected by the introduction of such a procedure, it cannot use this as a reason to reject the employee’s request.

Please note: Furthermore, when the accounting software used by the employer is provided by their accountancy firm (as is often the case in small organisations), the company is not affected by the change in procedure and therefore has no reason to reject the employee’s request.

The decision on how to pay an employee’s wages in a foreign currency should be based on a thorough analysis of all the options available to the employer.

With this in mind, b-sharpe provides you with all the information you need about its services, its platform and the registration process.