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Paying Workers in Bitcoin May Be Illegal Under Swiss Law

swiss francs
Despite the growing interest digital currency employers have shown in paying their workers in bitcoin and its alternatives, a new report suggests that the practice may not be legal in Switzerland, one of the global leaders in banking and finance.Entitled “The Legality of Wage Payment in Bitcoin under Swiss Labour Law”, the report was penned by Swiss Socialist Party member Jean Christophe Schwaab, who was notably called upon to draft a study on the dangers of bitcoin last December.Schwaab’s report could have broad implications, as it suggests that the payment of any potentially volatile assets in exchange for employment services is not legal under Swiss law.Schwaab told CoinDesk:“According to Swiss labor law, it is lawful to pay all or part of wages in kind or in foreign currency, provided that the amount paid matches the amount in Swiss franc contractually agreed by the parties or required by the collective labor agreement.However, the payment of wages in kind or in foreign currency must not cause a postponement of economic risk on the worker, because this risk must in all cases be borne by the employer.”The report comes just weeks after bitcoin-focused payroll solution provider Bitwage released a new survey suggesting nearly one in two bitcoin companies are open to compensating workers in digital currency.Volatility emerges as key issueScwaab asserts that the central roadblock to bitcoin wage payments is bitcoin’s price volatility, which cannot be legally passed on from an employer to an employee per the country’s Federal Act on the Amendment of the Swiss Civil Code.Because of bitcoin’s rapid fluctuations in value, Scwaab says that workers would be unable to anticipate their income. The regulation in question, he says, mandates that any salary payments should be sustained in value for at least one month after the payment.Furthermore, he said, the rules are mandatory, meaning Swiss workers are not able to waive this right under the law to accept bitcoin wages.Bitcoin bonuses are lawfulThe report did not fully limit bitcoin transactions between employers and employees, however.For example, Scwaab noted that there is no law that prohibits employees from exchanging the wages they earn for BTC. Further, he suggested that payments that are unrelated to a regular full-time salary would be allowed.Scwaab added:“A bonus (eg. at the end of the year) in bitcoin is generally lawful.”Bitcoin Association Switzerland reactsSpeaking to CoinDesk, members of local digital currency trade organization Bitcoin Alliance Switzerland (BAS) also weighed in on the report.BAS president Luzius Meisser disagreed with Scwaab’s findings, noting how Swiss workers are regularly compensated in payments that do not include the country’s native currency, the Swiss franc (CHF), and that a similar discussion also took place when Swiss lawmakers evaluated the legality of salary payments in euro.Meisser said:“Swiss workers regularly receive part of their salary in non-CHF form. For example, when a company provides free food to employees (above a certain level), its value is added to the income and taxed like the regular salary.”BAS vice president Alexis Roussel believes that even with the findings of the report, it would be possible for digital currency businesses to pay workers in BTC, provided “specific measures are taken by the company to hedge the risk for the employee to ensure [their] revenues are stable”.Meisser went on to suggest Scwaab’s report may be skewed due to his political associations, stating:“I am not an expert, but I would take everything that comes from Scwaab with a grain of salt as he is member of the Socialist Party, which was in 2011 also against paying employees in EUR.”Potential impactDespite the report’s findings and implications, Meisser doesn’t believe it will have a negative affect on the local startup scene.Meisser concluded:“Founders and employees at startups are risk-takers by definition. Here, minimal fixed salaries (sometimes zero) and a high variable bonus (be it in form of equity or bitcoins) are normal.”He added: “Regardless of what Schwab’s opinion is, startups will continue to do what makes sense to them”.Swiss francs via ShutterstockemployeesEuropelawSwitzerland
Original author: Pete Rizzo