Industry-wide standards

In Switzerland, private sector recruitment and the hiring of services is subject to licence, and under the act governing it, agencies established outside of the country are not authorised to recruit for jobs there. In this respect, the country is joined by the other banking hotspots Hong Kong and Singapore, but differs from the UK among many others.

Switzerland regulates the industry because, according to the State Secretariat, it is the best way to protect job-seekers who work with search agencies. Also, with the Alpine state being such an important international financial centre, the issue of inter-country movement means there are complex migration and tax issues that need to be considered, a headhunter licensed in Switzerland told WealthBriefing.

“The idea of having a regulatory body governing the business, and an approval process for new business licences is a good idea and a step in the right direction. The fact that the search business is unregulated in most parts of the world does make it very easy for unqualified and unethical persons to participate in the business, and this in turn can contribute to giving the sector a bad image," says Daniel Aghdami, a director at Dart Talent & Executive Search, which is based in Zurich.

And on whether this actually protects candidates, Aghdami says there are “less candidate ‘horror stories’ with search firms in Switzerland versus other countries”. However, he acknowledges this could be due to a host of factors aside from the regulatory environment, including the small size of the market which means participants need to maintain an unblemished reputation, because “news travels fast”.

International access

Recruitment agencies outside of Switzerland can access the market, but must do so either by working in conjunction with a Swiss firm which has the necessary licences or by setting up a base in Switzerland.

Setting up a base means any commission doesn’t have to be shared, but comes with a host of requirements. Firstly, companies must register with the Swiss Commercial Registry and procure the necessary cantonal and federal licences. They must also have a physical presence in Switzerland, with an office and personnel, and be fully-compliant with all Swiss laws. Those responsible for management must be Swiss citizens or foreigners with a resident permit, except in the case of EU/EFTA citizens. They must also have either professional training in placement or hiring services, or at least three years of experience in one of the following fields: placement, the hiring of services, personnel, organisation or business consultancy, or personnel management.

According to Swiss legislation, a person is providing a placement service if he or she introduces job-seekers and hirers, with the purpose of concluding a contract. Furthermore, the term “introduction” is defined extremely broadly in the legislation, including offering job-seekers the opportunity to advertise their details, or offering hirers the opportunity to advertise positions, including by way of an internet search engine.

“However, in practice it appears that some firms based in other countries do work with Swiss banks, and bill their services through Swiss-based search firms. In essence the Swiss search firm has simply outsourced its search to another firm,” says Aghdami.

This highlights issues surrounding enforcement: companies are global, and how are the rules enforced when decisions and contracts are made and signed outside of the jurisdiction? According to a lawyer for the State Secretariat, the defining criterion is with whom the employment contract will be concluded. Therefore, when the job seeker concludes his employment contract with the Swiss office of a firm, the regulatory requirements must be maintained.

One case recently came to light of an agency being contacted by the authority for breaching the regulations, after having been asked by the London office of an international firm to place someone in the Swiss office. But a spokesperson for the relevant authority in Switzerland says it has not become any stricter in applying the law lately. Rather, the spokesperson suggested that the activities of UK-based agents had increased in Switzerland in recent months, which might have prompted more complaints.

“In essence I think that regulating the industry is a great idea and has the ability to contribute to greater quality across the business,” says Aghdami, adding that it can create a better image for the industry as a whole.

However, he adds that with the globalisation of the industry the Swiss regulations are possibly due for a review: “With the lifting of borders across the EU, and the greater amount of cross-border hiring necessary to secure the best talent, the current regulations probably require some revision to ensure the market in Switzerland is best served in the interest of the employers and candidates alike.”