“When a company grows, there are always times with an increased workload. So it makes sense to get reinforcements with a freelancer. But there is a lot to be considered in the area of social security contributions and lowest contributions.”

1. What is a freelancer?

A freelancer performs assignments for a company, personally, without being hired in the company. "Freelancers" or "self-employed people" are often used as synonyms. Graphic designers, programmers or photographers often choose the freelance model and work with the company for a specific time, e.g. project-based. This system provides the highest degree of flexibility for all parties, as an employer you only pay as part of an assignment and the freelancer works in an independent position and is their own boss. No salary is paid to a freelancer but they send an invoice in their name. The employment law with notice periods, wage increases and social insurance law does not even apply.

Freelancers are ready to fly high. (pic: pixabay.com)

2. The legal framework of cooperation

As an employer you can quickly get problems when you work with someone who is not a real freelancer. If you are officially a freelancer, you have a written acknowledgment of the relevant AHV compensation fund. If they do not have it, they are not regarded as self-employed in the eyes of social insurance. In addition, a freelancer places the invoice under their own name, has a VAT number, carries their own work materials and has their own office. Whether an insured person is self-employed in the meaning of the AHV, is assessed by the compensation fund in the individual case, for the remuneration of the respective activity. Freelancers carry the entrepreneurial risk themselves. In other words, as a client, you can not permanently integrate the freelancer into the work organization; otherwise, a re-qualification to an employment relationship with all legal consequences could take place. For further information see here.

3. The contract

It is essential to make a contract that covers the essential aspects of the freelance project management. Important components are task and scope, remuneration and invoicing, labor law, secrecy, liability and jurisdiction. For freelancers, either the "Auftragsrecht", the "Werkvertrag" or the "Agenturvertrag" applies.

4. Social insurance contributions for freelancers?

As a client, you do not have to pay social insurance contributions for self-employed people. The freelancer has to take care of social insurance such as AHV, UVG or BVG, because of his self-employment, and settle these with the individual institutions.

Freelancers are ready to rock your project. And self-employed.

5. Freelance hourly rates

The hourly rate of a freelancer can not be compared with the hourly wage of an employee. As a rule, it is many times higher, since, in addition to the actual wage, taxes have to be calculated:

  • Social insurance
  • Initial and continuing education
  • Infrastructure
  • Administration and informatics
  • Advertising
  • Unforeseen issues
  • Depreciation
  • Interest and charges
  • Control
  • Dividend

Then, individual factors such as cost of living, workload, training and complexity of the work of a freelancer must be taken into account. For the determination of the hourly rate, the fee calculator can be a first point of reference.

6. What is a AHV-check?

In AHV controls, freelancer relationships are specifically investigated. If a freelancer is not clearly classified as a self-employed person in such a control, you will be threatened with high follow-up fees by AHV etc, as an employer. Furthermore, penal consequences may follow if the wrong freelancer has not settled any social insurance. It is advisable to clarify these questions before placing orders and, if necessary, contractually agree to cover any additional costs incurred by the freelancer.

7. Alternatives to the freelancer

Freelancers can also set up an AG or a GmbH and hire themselves. The legal framework is clearly regulated and there is normally no risk of a retroactive change in the status of the client. Depending on the task to be performed, a temporary employment contract can also be concluded as an alternative.

8. Non-Swiss freelancers

For a foreign freelancer, it is more difficult to know the status of social insurance. This results in the risk that the freelancer in the corresponding country does not settle correctly and the Swiss client has to pay and then the customer is asked to pay. In addition, VAT must be taken into account in order to recognize the services of a foreign freelancer in Switzerland as a service import, and that has to be declared under "Bezugssteuer" at VAT.

Before working with a martian, check their social insurance status. (pic: pixabay.com)

9. Note: Employees vs. Self-employed person

Self-employed people ("Selbstständigerwerbende") are real freelancers and receive a fee; They pay the social insurance contributions in their own responsibility and the orders are basically always revocable. On the other hand, they receive wages as employees (not free employees). Employers and employees share the social insurance contributions according to the statutory provisions and the employer publishes an annual salary statement. In the case of unclear contract conditions, a systematic proof is required that the contractor is awarded an AHV-compensation fund just for this very activity, as the self-employed person settles. In case of doubt, the own compensation fund issues a binding response. Therefore, the legal certainty is largely ensured. You can find a possible pattern for a freelance contract under Freelancer-Schweiz.ch

Still got questions? I am glad to help you with advice and deeds.