Bogus self-employment: who decides status

We see this set-up with almost every client we take on. A company needs support, the workload falls short of a permanent post, and the person wants to stay flexible anyway. Everyone settles on freelance work. There is a contract headed "mandate", there are monthly invoices, perhaps even with VAT, and both sides are content.

For the AHV, Switzerland's state pension and social insurance scheme, none of that settles the question. Social insurance status is determined by the competent AHV compensation office, the body that collects contributions and keeps the individual accounts, and it judges each case on the economic reality of the working relationship. The classification checklist published by SVA Zurich, the cantonal compensation office of Zurich, puts the principle in a single line: the assessment is governed exclusively by the economic circumstances. The label the parties agreed on carries no weight of its own.

When that assessment turns out differently from what both sides assumed, the correction is expensive and it reaches back into past years.

Status applies to each assignment separately

This is the point that gets misread most often, and it is the most important one. Recognition as self-employed applies to one particular activity for one particular client. SVA Zurich states it plainly: the same person can be classified as self-employed for one activity and as employed for another.

That has an uncomfortable consequence in practice. When someone shows you a confirmation from a compensation office, the document proves self-employment for the activity examined there. It says nothing about the work the person does for you. A graphic designer who works as a self-employed professional for twelve clients can count as employed for the thirteenth, the one whose office they work in four days a week, whose equipment they use and whose instructions they follow.

What the compensation office looks at

The assessment turns on two questions. Does the person carry an entrepreneurial risk of their own? And are they integrated into someone else's working organisation?

SVA Zurich keeps two lists for this. These features point towards self-employment:

• Business premises of their own, with the fittings and machinery customary in the industry. An office in the person's own home is generally not enough
• Substantial operating assets, owned or rented, such as tools, machines and commercial vehicles
• Materials bought on their own account
• Invoicing clients directly in their own name, carrying the risk of unpaid invoices
• Employing staff of their own
• Freedom from instructions, no duty to report, their own decision-making powers
• Large personal investments in vehicles, machines or office space
• Acquiring assignments independently

And these point towards employed status:

• A relationship of subordination with considerable subjection to instructions in personal, organisational and time-related terms
• Integration into someone else's working organisation, usually with an allocated workstation
• An obligation to be available for work, on which the client draws heavily
• Acting in the client's name and for the client's account, remuneration through commission
• Work equipment and materials provided by the client
• Attendance obligations, prescribed working hours, work reports, personal performance of the task
• Entitlement to paid holiday
• An entitlement to be paid during absences such as illness, military service or accident
• Periodic remuneration such as a monthly or hourly wage
• A non-compete clause, including a restriction of the territory covered
• No risk of unpaid invoices, or none greater than an employee carries
• Assignments allocated by the client

No single feature decides the matter on its own. The fund looks at the overall picture, and within that picture subjection to instructions and the absence of entrepreneurial risk count for a great deal.

What the Federal Supreme Court clarified in the Uber case

On 16 February 2023 the Federal Supreme Court held in two rulings that Uber drivers are in dependent employment within the meaning of the AHVG, the Federal Act on Old-Age and Survivors' Insurance (published as BGE 149 V 57). The reasoning is worth reading well beyond the platform context, because it sets out the test clearly. The companies were able to give the drivers comprehensive instructions, compliance was monitored through the app, a relationship of subordination existed in essential areas, and the drivers carried virtually no economic risk.

Anyone who engages people through a platform while leaving them no substantial and genuine decision-making power over the work creates at least an indirect relationship of subordination. The same pattern applies to ordinary freelance arrangements. The more closely you direct, monitor and integrate the work, the closer the arrangement moves to employment.

The bill when the classification changes

Contributions can be claimed for up to five years after the end of the calendar year they relate to (Art. 16 para. 1 AHVG). The claim covers AHV, IV (disability insurance) and EO (compensation for loss of earnings during military service and parental leave), unemployment insurance (ALV), the cantonal family allowance fund (FAK), which pays child and education allowances, and mandatory accident insurance (UVG).

Here is an example. A specialist works for five years at CHF 90'000 per year, CHF 450'000 in total. The compensation office classifies the activity as employment.

Item	Rate	Amount on CHF 450'000
AHV, IV, EO	10.6%	CHF 47'700
ALV (up to CHF 148'200 annual salary)	2.2%	CHF 9'900
Family allowance fund (cantonal, example)	1.5%	CHF 6'750
Accident insurance, occupational accidents (example)	0.5%	CHF 2'250
Total		around CHF 66'600

Default interest of 5 per cent a year is added, and over five years that makes a noticeable difference. Depending on the level and regularity of the payments, the question of occupational pension provision (BVG) arises as well, and that pushes the bill up considerably once more. Where the work qualifies as employment, employment law claims also come into play, holiday entitlement and sick pay among them.

Why both halves stay with the company

The calculation covers the full contribution, including the half an employed person normally carries. That is deliberate.

Contributions on income from dependent employment must be deducted from every salary payment (Art. 14 para. 1 AHVG). Where that has not happened for years, a retroactive deduction is possible only within narrow limits, and the courts assess it with restraint, particularly where the employer knew or should have known that deductions were due. There is a further point. Once the collaboration has ended, there is no salary left from which anything could be deducted.

In practice the company carries the entire amount, while the person concerned is credited retroactively with AHV contribution years and benefit entitlements.

Seven arrangements worth checking

From our client work, these are the patterns where a closer look almost always pays off:

1. The person works almost exclusively for you. By far the largest part of their income comes from a single source.
2. They have a fixed workstation on your premises and use your infrastructure, from the laptop to an email address on your domain.
3. Working hours are prescribed or an attendance obligation exists in fact.
4. Remuneration is periodic and constant, for example a monthly lump sum or an hourly rate with time sheets.
5. Assignments are allocated to them, so the flow of work comes from your side.
6. A non-compete clause applies or the territory covered is restricted.
7. The collaboration is set up for the long term and differs little in daily practice from that of employed colleagues.

One case comes up often enough to single out: the former employee who leaves and carries on doing the same work as a freelancer. If the daily routine stays the same, the status usually stays the same too.

The route to legal certainty

The good news is that all of this can be clarified in advance, and the effort involved stays manageable.

A status assessment before the contract is signed. Every compensation office carries one out, usually through the questionnaire for self-employed persons, supplemented by the specifics of the arrangement. The fund issues a formal ruling that is served on the person concerned and on the company. That gives you clarity for this particular engagement.

A contract that matches reality. A contract helps when it describes what actually happens. Agree on a defined piece of work or a defined result, give up any right to direct the work that you do not actually need, and leave out the clauses on holiday, sick pay and non-competition that belong to an employment contract.

Documented evidence of self-employment. Record what you know about the other work the person does: who else they invoice, what equipment they own, whether they employ staff, how they present themselves on the market. These records are your basis if the fund asks questions years later.

The simpler alternative. A small part-time employment contract is often easier to run, precisely because it is predictable. Up to an annual salary of CHF 2'500 per employer, the simplified rules for small salaries apply. Some activities are excluded, so it is worth clarifying with the compensation office how the salary will be reported before the first payment goes out.

How we handle this for payroll clients

With every new payroll client we go through the existing contractor relationships once and flag those that raise questions in the light of the classification criteria. Where it is called for, we prepare the status assessment with the compensation office and handle the correspondence. That is part of our payroll service at the published fixed price of CHF 250 per month plus CHF 25 to 40 per employee, and our guide to outsourcing payroll describes everything the service covers. Companies setting up a Swiss entity from abroad will find the registrations that come first in our guide to hiring in Switzerland, and the full fee overview is on our pricing page.

Every few years the compensation office inspects payroll at Swiss employers. If you would like an existing arrangement checked before that inspection reaches you, book an intro call. No obligation.

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Note: This article reflects the position in August 2026 and does not replace legal advice in an individual case. The binding assessment of status is made by the competent AHV compensation office.

Sources: SVA Zurich, checklist on the classification criteria for self-employed activity · Federal Act on Old-Age and Survivors' Insurance (AHVG), Art. 5, 9, 14 and 16 · Federal Supreme Court, rulings 9C_70/2022 and 9C_76/2022 of 16.02.2023 (BGE 149 V 57) · AHV/IV information centre, leaflet 2.01 and leaflet 2.08, which is available in German only · Federal Social Insurance Office, "Amounts valid from 1 January 2026".