The association as employer
Associations may employ staff (employees) or assign tasks to contractors (self-employed persons) to achieve their purpose. Many associations employ staff in functions such as operational management, administrative office or secretariat, to which they assign all operative activities. As employer, the association is responsible for compliance with the applicable provisions of the labour law and the social insurance law.
Further information on important aspects of this sub-topic can be found at the bottom of this page.
An employment relationship exists with a person who provides a service for the association against payment and is subject to the authority of the association or the committee. An employment relationship (employment contract) can exist even if a person works only for a period of a few hours or at irregular intervals. Social security contributions must be paid and the statutory provisions of the law on employment contracts such as periods of notice and entitlement to salary for holidays or incapacity for work must be adhered to (Article 319ff. CO – Swiss Federal Code of Obligations). For salaries and remunerations paid, a salary statement must be issued. It is important to differentiate employment from volunteer work. Volunteer work is not paid.
Question
Is there any evidence to support the introduction of performance-related pay and bonuses, for example for the senior management of a non-profit organisation?
Answer
The trend of moving away from fixed classifications defined according to training and the length of service is being observed at many organisations. At the same time, it is difficult to find the right balance between the two poles (training/length of service and performance focus) that also gives consideration to the different cultures found at a social level. Depending on the company, this requires a lot of tact, as you will then suddenly find yourself in a situation in which young employees earn more than long-serving, loyal employees with a little less punch.
From my perspective, any classification system needs to be based on a mix of criteria, including the professional requirements as per the requirements profile and job description (basic training, special advisory approaches, IT, etc.), a small percentage incentive for many years of service (i.e. level increase) and a performance component. Depending on the area in which somebody is working, it needs to be defined what is understood by performance.
As social organisations do not make a profit (or are not allowed to by the subsidy providers), no bonuses are paid. There are, however, other forms of recognition that can be deployed as an incentive for long-serving employees: increased support in terms of finance and time for further training, participation in important or interesting congresses, delegation to important project groups and paid holidays. There are even organisations that pay for their management staff to enjoy a wellness week after a particularly stressful period.
Question
My partner and I work in the therapeutic field. We would like to shift the focus of our services to people with disabilities. We want to set up an association for this purpose. I have read that only two people are needed for an association. Can my partner and I set up an association and provide therapy within the scope of the association?
Answer
An association must not operate for the purpose of generating a profit (Art. 60 ZGB). If the association is intended to enable its members to earn a living or a part thereof, it is by definition profit-driven. Associations are given preferential treatment with regard to taxes and liability. Any circumvention is therefore punishable by law. In your situation, a different legal form should be chosen, or the association should be organised differently.
However, associations are generally permitted to employ people to fulfil their non-profit objectives. Pursuant to Article 68 of the Swiss Civil Code, its members must recuse themselves from any transactions concerning themselves, their spouses and cohabiting partners and close relatives. This means that you, in your function as a representative of the association, cannot appoint yourself or your partner, nor can you hire yourselves.
However, you could formulate an idealistic or charitable objective in the purpose of the association (e.g. reduction of costs for affected people). This would allow you to recruit people who value the focus on people with disabilities and who are willing to take on responsibility as board members in the association. The Board of Directors could hire or commission you as a superior body on behalf of the association. You yourself could be represented on the Board in an advisory capacity.
Anyone who is affected by the outcome of a resolution from the general meeting or from the committee may not participate in the resolution but must recuse himself/herself. The same applies if relatives, such as spouses, parents, children, grandparents or grandchildren, are affected.
Question
We are looking for new committee members in the association. A married couple have expressed their interest. Is it generally allowed for related individuals to sit on the same committee?
Answer
Yes, this is allowed. In specific cases, it can be justified to ask whether family representation is appropriate or not. Keywords to consider here: synergies, short information paths, concentration of power, etc.
Ultimately, it is the members who decide with their vote whether or not they want to have people from the same family on the committee. It must be noted that the requirement to abstain from voting on legal transactions or legal disputes with the association also applies to relatives in accordance with Article 68 of the Swiss Civil Code (ZGB) Not least for this reason, it makes little sense for the committee to exclusively or primarily comprise family members. It is then almost impossible for resolutions to be passed in an orderly fashion.
If an association has an administrative office or conducts a business or employs staff, it qualifies as an employer. The committee is taking on the role of employer. It is responsible for compliance with the applicable provisions of the labour law and the social insurance law. The personnel management is either responsibility of the human resources department or is performed by the management or the administrative office. The committee remains responsible for the personnel management concept and the management and supervision of the executive staff.
If an association plays the role of employer (i.e. it has paid employees), it needs to pay social security contributions (old-age and survivors’ insurance, disability insurance, unemployment insurance, occupational old-age, survivors’ and disability benefit plans as well as accident insurance) for the employees. If it fails to do so, the committee can be held accountable and, in the worst case, be obliged to pay, provided the association’s assets do not cover the liabilities and the committee is at fault.
Many associations whose activities are realised by permanent employees entrust an administrative office with the performance of tasks and/or the administration. While the administrative office is acting on an operational level, the committee is acting on a strategic level.
Question
Are employees of an association automatically deemed to be members of the association?
Answer
As, generally speaking, the individuals concerned are required to provide their consent in order to join an association, it is not possible for association employees to be automatically admitted.
All of the members of an association have the same rights and obligations. If employees are also association members, they have the same voting and electoral rights as the other members and are required to pay the defined annual fee (unless the articles of association state something to the contrary). If employees account for a majority of the members within an association with a low member count, this can be problematic, as the general meeting is deemed to be the associations' most senior body. In this case, the employees could ultimately make decisions regarding the association, which is also their employer.
The committee’s management responsibilities include regular conversations with employees. Once a year, an employee appraisal should take place in which the performance of the employees is assessed and objectives for the coming year are jointly agreed.
Associations can have part of their activities carried out by salaried employees. Many associations employ staff, e.g. management, administrative office or secretaries, to which they assign the activities required for the fulfilment of the association’s purpose. In this case, the association takes on the role of an employer and must properly fulfil its obligations as an employer. For such associations it makes sense to have a human resources department and to create a concept for personnel management and administration.
An employment relationship exists with a person who provides a service for the association against payment and is subject to the authority of the association or the committee. An employment relationship (employment contract) can exist even if a person works only for a period of a few hours or at irregular intervals. Social security contributions must be paid and the statutory provisions of the law on employment contracts such as periods of notice and entitlement to salary for holidays or incapacity for work must be adhered to (Article 319ff. CO – Swiss Federal Code of Obligations). For salaries and remunerations paid, a salary statement must be issued. It is important to differentiate employment from volunteer work. Volunteer work is not paid.
If an association has several employees, it makes sense to set up a human resources position as part of the committee. This position is responsible for personnel issues and the management of any commercial business. In principle, the entire committee must approve higher-level HR issues, even if there is an operational management. Such issues are the personnel budget and requirement profiles, payroll and promotion regulations, qualification measures, vacation and further training regulations, hierarchies, employee appraisals, personnel administration including social security. Within this framework, the operational management can fulfil its management duties towards the remaining employees.
If an association employs staff, job descriptions should be created that list each job’s tasks, competences and its position in the organisation.
Occasionally a letter of recommendation will be issued for work with the committee. In any case, a certificate should be provided for outgoing committee members, which shows the function the person leaving the organisation occupied over what time. Salaried employees are entitled to a letter of recommendation.
The management strategy is implemented at the operational level of the commercial business or the administrative office. Their managers are entrusted with the operational management.
Overtime refers to working hours that exceed the contractually agreed working hours. Overtime is compensated by remuneration (salary + extra pay) or time off. The extra pay for overtime can be excluded in the contract. Extra hours accrue when working hours exceed the statutory maximum working time (45 hours per week). Extra hours have to be compensated by remuneration (salary + 25% extra pay) or time off (hours). In this case, the extra pay cannot be contractually excluded.
Question
Is there any evidence to support the introduction of performance-related pay and bonuses, for example for the senior management of a non-profit organisation?
Answer
The trend of moving away from fixed classifications defined according to training and the length of service is being observed at many organisations. At the same time, it is difficult to find the right balance between the two poles (training/length of service and performance focus) that also gives consideration to the different cultures found at a social level. Depending on the company, this requires a lot of tact, as you will then suddenly find yourself in a situation in which young employees earn more than long-serving, loyal employees with a little less punch.
From my perspective, any classification system needs to be based on a mix of criteria, including the professional requirements as per the requirements profile and job description (basic training, special advisory approaches, IT, etc.), a small percentage incentive for many years of service (i.e. level increase) and a performance component. Depending on the area in which somebody is working, it needs to be defined what is understood by performance.
As social organisations do not make a profit (or are not allowed to by the subsidy providers), no bonuses are paid. There are, however, other forms of recognition that can be deployed as an incentive for long-serving employees: increased support in terms of finance and time for further training, participation in important or interesting congresses, delegation to important project groups and paid holidays. There are even organisations that pay for their management staff to enjoy a wellness week after a particularly stressful period.
If the association engages in a commercial business, the operative management is responsible for personnel management. Nevertheless, in its role as superior and employer, the committee is responsible for managing the commercial business. It is advisable to delegate this task to a human resources department.
Employees of an association are paid for their work and usually have a specialist training in the area in which they operate. In contrast, committee members hold an honorary office and can have a different professional background.
Within organisations, responsibilities are designated to different bodies or people. Responsibilities are either explicitly defined by a competent authority or the mandate results from the job description, the definition of powers and responsibilities, departmental processes, committee regulations or any other organisational basis. The clear definition of responsibilities is an important task of the management. A lack of clearly defined responsibilities leads to poor results and, in many cases, causes conflicts. A mandate is a contract type under the Code of Obligations (CO).
If an association has an administrative office or conducts a business or employs staff, it qualifies as an employer. The committee is taking on the role of employer. It is responsible for compliance with the applicable provisions of the labour law and the social insurance law. The personnel management is either responsibility of the human resources department or is performed by the management or the administrative office. The committee remains responsible for the personnel management concept and the management and supervision of the executive staff.
An employed person is a person who works in a subordinate position for a certain or indefinite period of time without incurring an economic risk (employment contract). A self-employed person is a person who works under his/her own name on his/her own account, is in an independent position and bears the economic risk himself/herself (order, contract work, mandate).
If an association plays the role of employer (i.e. it has paid employees), it needs to pay social security contributions (old-age and survivors’ insurance, disability insurance, unemployment insurance, occupational old-age, survivors’ and disability benefit plans as well as accident insurance) for the employees. If it fails to do so, the committee can be held accountable and, in the worst case, be obliged to pay, provided the association’s assets do not cover the liabilities and the committee is at fault.
If an association employs staff, it needs to regulate who conducts the employee appraisals. In these appraisals, the employees’ performance is assessed and the objectives for the next period are set. As a rule, the operational supervisors are responsible for such appraisals. If the executive committee itself performs this function, only one or two persons who occupy the human resources position should perform this task. The operational manager is hired and assessed by the committee. In this case, too, it makes sense that only individual committee members conduct the recruitment and appraisal interviews.
Question
We now have to take on a commercial employee. How can we access useful information on adjusted wages?
Answer
The Swiss Association of Commercial Employees distributes an informative "Salary recommendations" brochure. It can be ordered at www.kvschweiz.ch under "Brochures".