Facts

The A. UK LTD is an English subsidiary of A. Holding AG, based in U., which operates chalets and hotels in Switzerland. It recruits young employees in Great Britain to look after holiday guests and concludes fixed-term employment contracts with them, governed by English law.

On 24 May 2014, the company applied for EC/EFTA work permits for the deployment of employees in the 2014 summer season. The Department of Industry, Trade and Labour of the Canton of Valais (DIHA) required the form 'Posting confirmation', according to which posting costs, in particular meals and accommodation, may not be deducted from wages.

On 22 October 2014, the DIHA rejected the application for one employee because the company had deducted expenses for meals, accommodation, a ski pass and health insurance from the wages. The objection (21 November 2014) was dismissed on 22 January 2015. The appeal to the Council of State of the Canton of Valais of 10 March 2015 was dismissed together with two other similar proceedings on 18 April 2018. The administrative law appeal to the Cantonal Court of Valais was dismissed on 23 November 2018.

By public law appeal of 14 January 2019, the company requests that the cantonal court judgment be set aside and the applications be granted, or alternatively that the matter be remitted. The Department of Economic Affairs of the Canton of Valais and the SECO request that the appeal be dismissed.

The question in dispute is whether the company, which is based abroad and recruits persons for short-term assignments in Switzerland, may deduct accommodation and meal costs from the wages of the posted workers, and whether this constitutes prohibited discrimination under Art. 9 Annex I AFMP, Art. 8 Cst. or Art. 2 AFMP.

Considerations

The Posting of Workers Act (PWA) covers posting in the proper sense, i.e. cross-border services (Art. 1 para. 1 lit. a PWA) as well as deployments in a place of business in Switzerland of a company belonging to a corporate group (Art. 1 para. 1 lit. b PWA). The applicability of the PWA to the company based in England is undisputed. The fixed term of the employment contract and the lack of employment in the state of origin do not preclude this.

Art. 2 para. 3 PWA establishes a prohibition on deducting accommodation and meal costs, since such allowances represent only the reimbursement of actual expenses. It is presumed that posted workers maintain their centre of life abroad and continue to bear costs there. The prohibition applies to all posting constellations, regardless of whether the work is performed at a Swiss place of business. What is decisive is that the employees are paid and socially insured under the law of the state in which they ordinarily work, here therefore England. The question of whether the Swiss place of business constitutes the ordinary place of work within the meaning of Art. 327a CO may be left open, since Art. 2 para. 3 PWA takes precedence as a special provision.

Art. 13 L-GAV permits deductions in the hospitality industry, but is tailored to employees employed at the place of work and is not comparable to posted employees. A breach of the prohibition on deductions therefore does not arise from the fact that the L-GAV and Art. 327a CO provide for divergent rules.

The prohibition on deductions is not absolute. Deductions that do not violate the minimum wage are in principle permissible, but pursuant to Art. 3 sentence 2 PWA they may not exceed the customary local level. The legislative history shows that this rule is…