Hinduja family case puts Swiss labour laws on trial

Hinduja family case puts Swiss labour laws on trial

The Hindujas have filed an appeal against the court’s order, terming the verdict appalling and the charges baseless.

KOCHI: When news broke on June 21 that a Swiss criminal court had given jail terms to four members of the billionaire Hinduja family on charges of exploiting their servants at their Geneva villa, many hailed it as a testimony to the strength of Switzerland’s legal system. It also triggered discussions on the harsh conditions in which domestic helps work even in rich countries.

Switzerland is known for its business-friendly policies but its labour laws are strict. The rules stipulate maximum allowable working hours, mandatory rest period, and how wages should be fixed and paid.

During the hearing, Geneva public prosecutor Yves Bertossa argued that the servants were forced to work up to 18 hours a day, seven days a week, confined to the house with their passports confiscated, and paid only a fraction of the market rates for such jobs.

The Hindujas have filed an appeal against the court’s order, terming the verdict appalling and the charges baseless. Under Swiss laws, the lower court’s judgment is not final and will not be implemented until all avenues of appeal are exhausted.

The family argued that the staff members had agreed to the working arrangements and that there was no mistreatment. They also claimed the work hours were exaggerated to include leisure time during which the servants watched TV along with family members. This, however, is open to interpretation because Swiss laws define working time as that when the employee remains at the employer’s disposal.

Origin of the case

According to the Swiss media, the conviction of the Hindujas, handed out by Judge Sabina Mascotto, stems from a case that began in 2018. In April 2018, Swiss prosecutors reportedly raided the Hindujas' villa in Geneva as well as some of their offices and other local businesses following complaints filed by the employees. During the raid, documents and hard drives were seized. Under Swiss law, public prosecutors have sweeping powers to investigate, press charges, and even impose prison sentences up to six months, as well as fines and penalties.

Reports say six employees approached the authorities. The first complainant, a 58-year-old woman, worked for the family for over 20 years, accompanying them on their trips mainly to look after the children. She lodged a complaint in 2018, and was followed by two others who worked as cooks. Three more former employees did likewise but withdrew them during the proceedings. Since the servants and the family reached a settlement, Judge Mascotto ordered the defendants to pay a reduced compensation of Swiss Franc (CHF) 8,50,000 (Rs 7.9 crore) and CHF 2,70,000 (Rs 2.5 crore) in legal fees.

Hinduja family case puts Swiss labour laws on trial
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Code of Obligations

Switzerland is a confederation of 26 cantons. The responsibility for legislating on most employment-related matters lies at the federal level. The Code of Obligations regulates the broad areas of employment such as leave policies, rules for dismissal and resignation, notice periods, transfers, etc. Wage-related issues are taken care of by rules at the cantonal level.

The federal laws cover working time issues, rest breaks, leave policies, occupational health and safety, and collective agreements (legally-binding industry-level contracts for standard pay and other benefits). In the absence of such pacts, authorities at federal or cantonal level can issue a ‘standard employment contract’ for all employees in a specific sector. Individual employment contracts are valid but can’t deviate from collective agreements or standard employment contracts -- except to the advantage of the employee.

The Code of Obligations kicks in if no other law, collective agreement or standard employment contract with mandatory minimum wages applies.

Wage dumping

Switzerland follows the International Labour Organization’s (ILO) standards in employee protection. According to the Swiss media, the investigators found the Hinduja family’s workers were brought to the country on tourist visas and that they didn’t have work permits. They were reportedly paid between CHF 140 (Rs 13,000) and CHF 520 (Rs 48,000) per month. This pales in comparison with the going rate for domestic workers in Geneva, which is CHF 19.50 (Rs 2,140) per hour.

There is no statutory national minimum wage in Switzerland. “Social partnership and collective bargaining are key principle with regards to wage-setting in Switzerland. Minimum wages are negotiated between workers and employers in collective agreements, which are binding on signatory parties,” says Fabian Maienfisch, spokesperson for Switzerland’s State Secretariat for Economic Affairs (SECO), in an email response to this newspaper. SECO is the federal department for economic and labour market policies in Switzerland.

While the government usually doesn’t intervene in the wage-setting process, it steps in to deal with situations of ‘wage dumping’, where employees are paid unreasonably low wages to work in unfavourable working conditions. “In the event of repeated wage dumping in sectors where there are no collective agreements, the government can enact standard employment contracts with mandatory minimum wage,” Maienfisch explains.

Switzerland’s five major cantons have their own pay standards that are applicable to employees in their geographical area. These are Basel-Stadt (minimum rate of CHF 21 per hour), Geneva (CHF 24 per hour), Jura (CHF 20.6 per hour), Neuchâtel (CHF 20.77 per hour), and Ticino (CHF 20 per hour). These are benchmarks which employers are expected to meet. In case of a dispute, the law tends to look at it from the employee’s perspective. The penalties for labour disputes vary across the Swiss cantons. For example, in Geneva, employers who do not pay the minimum stipulated wage could face administrative fines of CHF 30,000 (Rs 28 lakh) per complaint.

Besides, working without a valid permit is prohibited. Under Swiss laws, domestic work is on par with any other job and must be declared to the relevant authorities for social security measures and tax purposes. The social security coverage includes pension, disability, unemployment and maternity benefits.

"As a member of ILO, Switzerland is committed to the promotion and respect of fundamental rights and principles at work, of which the prohibition of forced labour is one. Switzerland has ratified conventions in this area and forced labour is prohibited both by private law and criminal law," Maienfisch says. In the Hindujas’ case, the family contended that the Swiss embassy in India had endorsed the employees’ work contracts. However, the 18-hour work day exceeds the cap on work hours in Switzerland, which is set at 45-50 hours per week.

Employee protection, work-life balance

Switzerland’s rules for protecting the interests of workers are pretty clear and straightforward. They include caps on working hours, rules and conditions for overtime, compulsory and uninterrupted rest hours after a work day, and mandatory annual paid holidays.

Companies can make employees work up to 45-50 hours per week, depending on the industry. If an employee is made to work overtime, a minimum of 25% will have to be paid for the extra time. The cap on overtime is fixed at two hours a day. Working on holidays will attract an additional 50% pay. Rules in several cantons insist that employers must obtain the ‘consent’ of employees for overtime and holiday work.

Swiss laws mandate that employers provide a healthy and safe working environment. In the Hindujas’ case, workers were allegedly made to sleep on the floors when family functions were held, which could be seen as a violation of this provision.

Employers should also provide staff with an undisturbed, continuous daily rest period of at least 11 hours between two work-days. According to federal rules, employees need not work for more than five-and-a-half days a week.

The rules are specific about annual leaves as well. A minimum of four weeks of annual paid leave is the norm in most sectors. These are meant to be taken as unused leaves, and can't be encashed or replaced with other financial benefits. However, when employment ends, the employer is liable to pay the outgoing employee for any annual leave entitlement accrued but not taken.

Swiss standards in pay

Swiss salaries are comparatively higher than many developed countries. According to estimates by the Organization for Economic Co-operation and Development, Switzerland has one of the highest annual wages in the world at around CHF 60,000 (Rs 55 lakh). In 2014, there were attempts in Switzerland to introduce what would have been the highest minimum wage in the world – CHF 22 (Rs 2,040) per hour or CHF 4,000 (around Rs 3.75 lakh) a month. However, voters rejected the proposed legislation because they felt the existing industry standards were better.

What next for Hindujas

According to local media, the family's lawyers have brokered an out-of-court settlement with the employees. However, the prosecutors still went ahead with the case considering the gravity of the charges. The lower court convicted the influential business family members for mistreating their servants, but cleared them of the more serious charge of human trafficking. With the appeal pending, the final word on the Hinduja case has not been spoken. Whatever decision the higher court takes, it will be a test on the robustness of Swiss labour laws.

Geneva’s dark underbelly

1.This is not the first time that Geneva, home to several international organisations, diplomatic missions, and high net worth individuals, has reported mistreatment of servants. In 2008, Geneva police arrested Libya’s former ruler Muammar Gaddafi’s son Hannibal Gaddafi from a five star hotel where he was staying. The police action was in response to a tip-off that Hannibal and his wife Aline had beaten two domestic servants with a coat hanger. Hannibal’s wife was pregnant at the time of the incident. Armed police broke open their suit to make the arrest, which triggered a huge diplomatic row l. The matter was further complicated when a local newspaper published the news along with the police photo of Hannibal. An angry Gaddafi ordered retaliatory measures and two Swiss citizens were arrested in Tripoli. Libya also cut back oil supplies to Switzerland and withdrew more than $5 billion in assets from Swiss banks. Hannibal sued Geneva cantonal authorities and the newspaper, demanding damages for the ‘illegal invasion’ of his privacy. In a bid to defuse the crisis, then Swiss President Hans-Rudolf Merz apologised to the Libyan government. Swiss police eventually dropped their case after the complainants backed off following an out-of-court settlement.

2. More recently, in 2021, four Filipino workers complained to the Geneva Public Prosecutor’s Office that they were working for Pakistani diplomats in Geneva for more than 20 years without pay. The complainants, all women, said they left the Philippines because the Pakistani mission to the UN promised them a decent life in Geneva, with a salary, a roof over their heads and payment of social insurance. However, they had to accept to work without pay in exchange for a legitimation card (a special card diplomats give to their employees, which is issued by the Swiss mission). They had to work for other employers to survive, alleged the complaint, filed through a labour union. The Pakistan mission refuted the charges as unsubstantiated. Following the complaint, the Swiss mission, which oversees issuing visa permits to domestic workers in diplomatic households and monitors compliance with employee contracts, suspended issuing visas for domestic workers employed under the Pakistan mission till the dispute is settled.

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