When an employee works for another group company
In Swiss SME groups — operating holdings, branches with separate legal personality, shared service companies — it is common for an employee to remain employed by one company (formal employer) while performing activities mainly or temporarily for another affiliated entity. In practice this is internal secondment or intragroup secondment: not a transfer of contract, but an organisational realignment that must remain transparent for social security, tax and accounting.
Unlike cross-border posting governed by international agreements, between two Swiss companies the Code of Obligations on the employment relationship, the OASI Act (LAVS) and cantonal rules on withholding tax apply. The most frequent mistake is treating the employee as “employed by both” without documentation: this leads to double contributions, non-recoverable costs and inconsistencies in the individual legal entities’ financial statements.
This guide explains how to structure agreements, allocate personnel costs, manage OASI and occupational pension (LPP) and record transactions correctly in the accounts — with an eye to SMEs using tools such as Accountex to keep separate ledgers while coordinating HR management.
Three operating models and who pays what
Before opening ledger accounts, it is worth fixing in writing which model applies. The choice affects intragroup invoicing, accident insurance and managerial responsibility.
| Model | Formal employer | Operating user | Typical cost allocation |
|---|---|---|---|
| Pure secondment | Company A (employer) | Company B (host) | B reimburses A for salary, social charges and LPP contributions + any administrative mark-up |
| Personnel services | Group service company | Operating company | Monthly invoice by hours/FTE; indirect costs allocated using an agreed key |
| Temporary mutual agreement (same group) | Unchanged | Change of actual place of work | Letter to employee + intercompany agreement; no new contract unless employment is transferred |
| Transfer (permanent) | New company | New company | Not secondment: termination and new contract; properly handle LPP continuation, unused leave and other employment rights |
For temporary secondment between affiliated Swiss companies, the “pure secondment” or “personnel services” model is usually best: it keeps a single employment contract and allows full personnel cost to be invoiced to the benefiting company.
Minimum documentation between affiliated companies
Intragroup secondment agreement
Defines duration, percentage of time for the user company, place of work, operational manager and who bears travel, materials and training costs. States explicitly that the employment relationship remains with the lending company.
Includes a clause on subordination rights: the employee follows the host’s operational instructions, except disciplinary matters and dismissal reserved to the formal employer.
Letter to the employee
Written notice with secondment start and end dates, place of work, contact at the host company and confirmation that salary, leave and employment certificate remain with the formal employer.
Avoids ambiguity in case of accident or dispute: the employee knows whom to contact for day-to-day organisation and for contractual matters.
- Hours allocation policy (timesheet or fixed monthly percentage) approved by both managements.
- Invoicing terms: base (salary + social charges), inclusion of 13th salary, bonus, expenses, mark-up and billing frequency.
- For audited companies: treat intragroup prices as related-party transactions — document that reimbursements reflect full cost or a plausible market price.
Allocation of personnel costs
The accounting goal is for each company to show the personnel costs it uses economically, without double counting or hidden margins between entities.
| Cost item | Who records the expense | Recovery from host company |
|---|---|---|
| Gross salary and bonus | Formal employer (payroll account) | 100% of time share allocated to host |
| Employer OASI/IV/EO/ALV contributions | Formal employer | Reimbursed in block with salary base |
| Employer LPP contributions | Formal employer | Per agreement (full cost or employer share only) |
| Travel and representation expenses | Whoever pays the invoice | Direct recharge or inclusion in monthly flat rate |
| Mandatory training | Usually formal employer | If only for host projects, charged to host |
| Administrative mark-up | Optional on service company | 3–8% common in SME groups; document the rationale |
Acceptable allocation keys: agreed fixed percentage, hours from approved timesheet, or project-based split. For multiple seconded employees, a central HR company can invoice a single monthly amount with a detail attachment by cost centre — useful for management reporting by company in Accountex.
Typical accounting entries
Each legal entity maintains its own chart of accounts. Intragroup transactions require receivable/payable accounts towards affiliates and, on the host side, personnel cost or services purchased accounts.
Employer company (lender)
- Salaries and social charges: 5xxx / 6xxx personnel accounts as usual.
- Monthly invoice to host: Debit receivables vs affiliated company, Credit revenue from personnel services (or personnel cost adjustment if using internal “net” method).
- VAT: making personnel available between affiliated companies for consideration is generally a taxable service; recharging salary, social charges and related expenses without markup, in intragroup secondment meeting applicable criteria (e.g. Art. 28 VAT Act for cross-border group secondments), may in certain cases not constitute a supply relationship. With mark-up or a service-company model, verify taxability with your VAT adviser.
User company (host)
- Invoice receipt: Debit external personnel cost / administrative services (6xxx), Credit payables vs affiliated company.
- Allocation by cost centre or project for correct margins on separate income statements.
- At year-end: verify intercompany balances match mutual statements and that no personnel costs remain “orphaned” only at the employer.
At year-end close, eliminate mirror secondment revenue and costs in group consolidations (if prepared) so group turnover is not inflated. At individual non-consolidated SME level, correct allocation on each balance sheet is essential for cantonal/municipal profit tax.
Recommended monthly payroll flow
- Close timesheet or confirm allocation percentage for host company.
- Run payroll on employer company; full recording of salaries and social charges.
- Calculate amount to recharge (base + social charges + LPP + any expenses and mark-up).
- Issue intragroup invoice referencing period and employee (or FTE pool).
- Record payment between company bank accounts; reconcile related-party balances.
- Update management reports by company in Accountex (FTE cost per user entity).
Common mistakes and how to avoid them
De facto dual employer: if the host assumes disciplinary and dismissal powers without agreement, there is a risk of qualifying as a hidden employment relationship with the second company. Keep the contract and HR decisions with the formal employer.
Costs left entirely with the employer: the host’s balance sheet looks artificially efficient; the employer’s shows unproductive staff. Correct with systematic recharging.
Unreconciled intercompany balances: differences between invoice and timesheet accumulate and complicate audit and consolidation. A monthly statement signed by both finance teams reduces risk.
Confusion with temporary agency work (“temporär”): the temp agency is a third party unlike intragroup secondment; rules and licences differ. Do not label a simple secondment between group companies with the same shareholder as temp agency work.
Quick checklist for management and trustees
| Step | Action |
|---|---|
| 1 | Choose model (secondment vs transfer) and draft intercompany agreement + letter to employee |
| 2 | Define allocation key and inclusion of social charges, LPP, accident insurance and expenses |
| 3 | Verify accident insurance cover and withholding tax with insurer and adviser |
| 4 | Set up intercompany accounts and cost centres in each set of books |
| 5 | Automate monthly flow: payroll → invoice → reconciliation in Accountex |
| 6 | At year-end: balance related-party accounts, documentation for audit and transfer pricing |
Accounting coordination without complicating work
Temporary secondment between affiliated companies in Switzerland is a legitimate organisational lever when it stays anchored to a single employment contract, documented reimbursements and mirror entries in each entity’s books. For SMEs, the key is to standardise percentages or timesheets, monthly invoicing and intercompany accounts — so payroll, financial statements and reporting by company stay aligned.
Accountex helps keep separate records per legal entity while offering a coordinated view of personnel costs: by setting cost centres, related-party accounts and recurring recharge entries, the admin team reduces manual error risk and speeds monthly close even when the same employee works for several group companies.
Social security and insurance
In Switzerland one employer per contract is the operational rule for OASI/IV/EO, ALV and LPP. Secondment does not create a second insurance relationship until employment is transferred.
OASI, IV, EO and ALV: the company that pays salary and reports wages to the compensation office (or cantonal fund) remains liable for contributions. If the host company reimburses costs, the flow is purely accounting/financial between entities; the same wages are not registered twice.
Accident insurance (LAA/LAINF): the insurance obligation rests with the formal employer, even if the employee works regularly at the user company. Inform the insurer of the actual place of work and activities performed; in models similar to personnel lending, additional cantonal rules may apply. The premium can be allocated via intragroup invoice.
LPP (occupational pension): remains tied to the formal employer and the existing pension plan. Changing user company does not in itself require a fund change; a definitive transfer of the contract does. Intercompany reimbursements should include employer and employee contributions if the host company bears the full personnel cost economically.
EO, maternity and parental leave: daily sickness allowance (EO) and maternity and parental leave benefits (under the ordinance on social insurance) follow the employer that makes payments and filings; documenting the secondment helps in case of a compensation fund audit.
Withholding tax
If the employee is subject to withholding tax, the canton of the formal employer and correct declaration of employment income remain relevant. A secondment that permanently shifts the centre of activity may have cantonal implications: if in doubt, align with the competent cantonal office before changing withholding practice.