Overview
Payroll Cycle
Employer Contributions
Employee Contributions
Minimum Wage
Hiring
Hiring Employees
Hiring Contractors
Hiring Expats
Background Checks
Employment Contracts
Onboarding
Employee Benefits
Social Security
Healthcare and Insurance
Leave Policy
Public Holidays
Work Permit and Work Visa
Probation Period
Notice Period
Termination and Severance
Personal Income Tax
Employer of Record services in Switzerland offer comprehensive support in managing payroll cycles, including handling employer and employee contributions, ensuring compliance with minimum wage regulations, facilitating the hiring process for employees, contractors, and expatriates, conducting background checks, drafting employment contracts, facilitating onboarding procedures, managing employee benefits, administering social security programs, coordinating healthcare and insurance coverage, overseeing leave policies, considering public holidays, facilitating work permit and work visa processes, overseeing probation periods, notice periods, termination, and severance procedures, as well as providing guidance on personal income tax obligations.
| Continent | Europe |
| Country | Switzerland |
| Capital | Bern |
| Time zone | UTC+01:00 (CET) |
| Total Time zones | 1 |
| Working hours per week | 41[33] |
| Working week | Monday–Friday |
| Typical hours worked | 8.2 |
| Personal Tax filing deadline | Generally 31 March, but may vary per canton. |
| Financial Year | 1st January to 31st December |
Hiring Options in Switzerland
Employee
Employers can hire employees on indefinite or fixed-term contracts, with a maximum duration specified. Employees can work either full-time or part-time.
Independent Contractor
Engaging independent contractors is possible if they have the ability to organize their own time and duties and bear the economic risk associated with their work. However, it's important to be cautious about potential misclassification issues.
Agency Worker
Generally, agency workers in Switzerland must be formally employed by authorized companies. If the receiving company's employees are covered by an extended collective employment agreement, agency workers can also benefit from the provisions regarding salary and work duration outlined in the agreement.
Employment Contracts and Policies in Switzerland
Requirements
Within the first month of employment, the employee must receive written information regarding the parties involved, the starting date, the position, the salary (including any additional elements), and the weekly work duration.
Compliance
Mandatory legal provisions and collective labor agreements, which may be extended by the state to cover specific industries such as construction, furniture, hospitality, restaurants, private security services, and retail, must be observed.
Probationary Periods
Employers are allowed to implement probationary periods, which are limited to a maximum of 3 months according to statutory regulations.
Policies
"Industrial companies" involved in manufacturing, processing goods, or utilizing machinery and automatic processes are required to have a written health and safety policy. Additionally, a disciplinary measures policy may be necessary. While these policies are optional for other companies, it is common to have expense-reimbursement policies in place. It is highly recommended to establish specific grievance policies.
Third-Party Approval
The mandatory health and safety policy of an industrial company must be reviewed by the Cantonal Labor Authority for approval.
Employee Benefits in Switzerland
Employee benefits in Switzerland have a strong focus on mandatory provisions, with contributions from both the employer and the employee. Alongside these mandatory benefits, there are also commonly offered perks such as training and development opportunities.
Mandatory Employee Benefits
Mandatory Employee Benefits in Switzerland revolve around the comprehensive social security system, which covers five main areas: old age, survivors and disability, health, illness and accidents (both work-related and non-work related), maternity and military services leave, unemployment, and family allowances.
Pillar I - Social Security System
The first pillar encompasses the compulsory federal social security system, providing old age and survivors' pensions (AHV) as well as disability pensions (IV). Both the employer and the employee contribute equally to this pillar, with a fixed contribution rate of 10.60% (2023) based on total earnings, without any salary ceiling.
Pillar II - Occupational Benefits
The second pillar comprises employer-sponsored pension coverage, including the mandatory pension plan (BVG). The employer is required to contribute at least 50% of the total contributions. The savings contributions range from 7% to 18% of covered pay, varying according to the employee's age. Many employers offer additional pension benefits to supplement the AHV and BVG systems, which are also considered part of the second pillar.
Pillar III - Voluntary Benefits Provision
The third pillar consists of voluntary individual retirement arrangements, allowing individuals to make personal contributions towards their retirement savings.
Retirement Benefits
First Pillar Benefits - Social Security
The first pillar of retirement benefits in Switzerland is provided through the federal social security system known as AHV. Designed to ensure a basic level of income for most Swiss retirees, these benefits are accessible to individuals who reach the statutory retirement age of 65 for men and 64 for women. Mandatory insurance coverage applies to individuals who have legal residence in Switzerland, earn their income within the country, or are Swiss citizens employed by Swiss companies. Contributions to the AHV system are based on total earnings and are shared equally between employers and employees. The minimum annual pension for a single person is CHF 14,700, while the maximum pension is CHF 29,400 per year. For married couples, the maximum pension is capped at 1.5 times the maximum pension amount.
Second Pillar Benefits - Pension Scheme
The second pillar of Switzerland's three-pillar retirement system comprises employer-sponsored pension coverage, which can be both voluntary and mandatory. All employers, with only a few exceptions, are required by law to establish and maintain a pension plan for their employees under the BVG legislation. Employees are eligible for coverage if they are already covered by the AHV social security system, are at least 17 years old, and earn an annual income equivalent to at least 75% of the maximum annual pension (2023: CHF 22,050). Retirement pension coverage begins on January 1 following an individual's 24th birthday. The law stipulates savings contributions based on age, with combined contributions from the employer and employee as follows:
| Age of Employees | Saving Contributions |
|---|---|
| 25-34 | 7% |
| 35-44 | 10% |
| 45-54 | 15% |
| 55-64/65 | 18% |
According to the law, the employer is required to pay at least 50% of the total contributions. However, it is common for employers to provide more generous benefits than the minimum required by law.
Survivors Benefits
First Pillar Benefits - Social Security
Survivors benefits in Switzerland are provided through the federal social security system, financed by contributions from employed individuals aged 17 and above who are covered under the AHV system. Eligible surviving spouses and dependent children may receive a survivor's pension if the deceased contributed to the AHV system for at least one year. The spouse's pension is payable to the widow or widower, amounting to 80% of the pensionable salary. Each eligible orphan is entitled to a survivor's pension equal to 40% of the pensionable salary.
Second Pillar Benefits - Pension Scheme
Under the mandatory pension law, all pension plans must allocate at least 4% of contributions towards death and disability insurance. This includes coverage for spouse/partner pensions and orphan pensions. The surviving spouse's pension is calculated as 60% of the deceased's accrued old-age pension, projected without interest until the normal retirement age. Each eligible orphan receives a pension equal to 20% of the pensionable salary. The spouse's or partner's benefit ceases upon the beneficiary's death or remarriage. Many employers offer additional coverage beyond the minimum requirements.
Survivors Pension under UVG/LAA (Accident Insurance)
If a covered employee dies due to an accident, the surviving widow/er and any surviving half or full orphan are entitled to survivors benefits under the UVG Law. The widow/er receives a pension equal to 40% of the pensionable salary, with a maximum annual salary of CHF 148,200. Half orphans and orphans are entitled to pensions equal to 15% and 25% of the pensionable salary, respectively. The total orphan's pension cannot exceed 70% of the pensionable salary.
Disability Insurance
Short-Term Disability Insurance
Compulsory accident disability coverage provides benefits for short-term disabilities resulting from an accident until the insured person can return to work, is declared permanently disabled, or passes away. Professional accidents are financed by the employer, while non-professional accidents are financed by the employee. The daily cash benefit amounts to 80% of the insured salary from the third day after the accident. The maximum annual insured salary is CHF 148,200, and the UVG Law provides additional benefits such as coverage for medical expenses, prescription drugs, tests, and healing aids. Cash sickness benefits are not legally required but are commonly provided. If there is no daily sickness insurance, the employer is obligated to continue paying the full salary for at least three weeks during the first year of service and for an appropriate period based on the employment duration in subsequent years. The salary continuation requirement can be fulfilled by a daily group sickness insurance that covers at least 80% of the employee's salary for two years, with the employer contributing 50% of the premium.
Long-Term Disability Insurance
Switzerland offers sickness and disability benefits under the federal law on general provisions to all insured individuals through either the compulsory or optional scheme of the old age, survivors, and disability insurance. These benefits are financed through employer and employee contributions from employed individuals aged 17 and above. In the case of disability resulting from an accident, benefits may also be provided under the mandatory accident insurance (UVG/LAA) program. Benefits within the accident insurance amount to 80% of the insured salary, up to a maximum of CHF 148,200 per year. The disability pension for illnesses is granted after a waiting period of either 360 days without group sickness insurance or 730 days with group sickness insurance. The disability pension is calculated similarly to the survivor's pension and depends on the individual's capital.