The Council of States, the upper house of parliament in Switzerland, has voted to override minimum wage laws in Swiss cantons in favour of collective labour agreements. Parts of the government argue that salaries secured by unions on the national level should be given a higher priority than canton-enforced minimum wages.

Companies working across cantons subject to different minimum wage laws

According to the proposals, collective labour agreements (CLAs) should take precedence over cantonal minimum wage laws. CLAs are government-guaranteed work contracts, typically created between trade unions and international companies, where workers are given pre-agreed minimum salaries, 13th-month payment agreements and designated amounts of paid leave.

Currently, five Swiss cantons and several cities have already created their own minimum wage laws. Supporters of the proposal argue that, as more cantons vote to introduce these laws, entrepreneurs face unequal salary rules and legal trouble, particularly in businesses that work across cantonal boundaries.

For example, a company with a CLA and jobs in both Geneva and Vaud is currently subject to two different minimum wage rules - a 23 franc-an-hour enforced minimum wage in Geneva and a CLA that applies in the rest of Switzerland which may pay workers much less.

Collective labour agreements in Switzerland given precedent over minimum wage

“This creates an unfortunate situation because cantonal minimum wages can invalidate a CLA which is declared binding for the whole of Switzerland by the Federal Council,” said state councillor Erich Ettlin. As the main force behind the new proposal, he demanded that CLAs take precedence over cantonal rules to avoid any legal doubt.

His proposal was approved by the Council of States by 28 votes to 16. The bill has now been sent to the National Council for approval but is expected to meet stiff resistance from lawmakers.

The decision has been condemned by the commission on social security and the executive Federal Council, which argued that the proposal overrules the democratic will of cantons that impose a minimum wage through referendums. State councillor Alex Kuprecht said that it is “problematic, for reasons of democracy, to give priority to collective labour agreements, which are private arrangements."