What's inside counts

On 9 February, Swiss citizens narrowly approved - by just 50.3 per cent - an initiative "against mass immigration", which imposes limits on the number of 'non-Swiss' allowed into the country. There are fears that this will lead to the end of Switzerland's Agreement on the Free Movement of Persons (AFMP) with the European Union (EU).

The AFMP came into force in 2002 as part of the bilateral agreements between the EU and Switzerland. Since the enforcement of the AFMP, migratory flows into Switzerland have consistently increased. Over the last five years, net immigration has been around 80,000 people per annum (70 per cent of whom are EU nationals). 'Non-Swiss' now comprise 23 per cent of the 8 million Swiss population.

A fringe of the Swiss population has widely denounced this influx, on the basis of its perceptions that immigrants erode the nation's 'distinctive culture' and contribute to rising rents, crowded transport and more crime. The Swiss People's Party - known for its anti-'non-Swiss' and anti-EU agenda - presented in February 2012 an initiative "against mass immigration". A majority of Swiss voters approved the initiative on 9 February 2014.

Annual quotas

The initiative provides for the addition of a new article 121a in the Swiss Federal Constitution (SFC), which requires Switzerland to conduct its own immigration policy autonomously. In particular, article 121a requires annual quotas for all 'non-Swiss' (whether EU or non-EU nationals) and on all types of permit under the scope of the legislation. Further, rights to permanent residence, family reunification and social benefits may be limited.

These annual quotas will be set mindful of Switzerland's global economic interests and will give priority in the job market to Swiss nationals. Permits applications will be judged according to employer requests, capacity to integrate and financial independence.

Article 121a disallows contradictory international treaties; existing international treaties must be renegotiated and adapted within three years.

Immigration law

Article 121a will result in fundamental changes to the current Swiss immigration legal framework and could have the consequences described below. It should be noted that 'non-Swiss' already established in Switzerland will not be affected by the initiative.

• Quotas. Yearly quotas will be applicable to all types of permit and to all 'non-Swiss', irrespective of nationality. This will mainly have an impact on EU nationals, as quotas have already been applied for 'third-state' (i.e. non-EU) nationals applying for work permits. However, all permit applications based on family reunification rights will become subject to quotas, which is not the case today.
• Swiss priority. The Swiss authorities will set quotas to give priority to Swiss nationals. Companies intending to file work permit applications for EU nationals may first have to demonstrate that there are no good Swiss candidates on the local market. However, companies will not be forced to hire unsuitable Swiss nationals.
• Integration capacity. Swiss authorities will examine whether a permit-applicant possesses the requisite 'integration capacity'. This is not a condition under current legislation and will have to be specified in an implementing provision. However, the 'integration capacity' may be a requirement to speak a national language of Switzerland.

Bilateral agreements

Article 121a is materially contrary to the AFMP and so will lead to the latter's renegotiation/revocation, giving rise to further important consequences. It could have an impact on other bilateral agreements, as they are directly linked to the AFMP, which is part of a package of seven agreements. At this stage, however, consequences remain uncertain.

The European Commission issued a statement on 9 February expressing its regret that the initiative had been adopted, although it did not give any indication as to the effects that the denunciation of the AFMP may have on the other linked agreements. The European Commission stated: "This [i.e. adoption of the initiative] goes against the principle of the free movement of people between the European Union and Switzerland. The Union will examine the implications of this initiative on Swiss-EU relations as a whole."

Implementing provisions

The Swiss government has three years to introduce the necessary implementing provisions. Theoretically, the legislation could enter into force before this period has lapsed. However, as the implementation process is likely to take some time, you may expect that it will not enter into force before 2017. Until then, EU nationals continue to benefit from the AFMP. A draft law is expected by the end of 2014.

The initiative's wording is general, so important questions remain. The Swiss government will benefit from some discretion, in particular with respect to the actual numbers of quotas and how they will be allocated among the different types of permit application.

For instance, if high enough quota ceilings are set by the federal authorities regarding work permit applications, the cantons may be in a position to continue to grant work permits to EU nationals without affecting the business needs of the companies.

Matthew Shayle is an associate in the private client group of Lenz & Staehelin's Geneva office

He writes a regular blog on Switzerland for Private Client Adviser

Copyright & permissions