Definitive Guide to Hiring in Switzerland

Hiring in Switzerland

Hiring employees compliantly in Switzerland means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Switzerland so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Switzerland; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Switzerland

In Switzerland, labor law, benefits, taxes, etc. vary between cantons. However, many employment laws in Switzerland fall under federal legislation. Federal legislation is what is featured in this hiring guide. We recommend that you utilize an Employer of Record provider to help navigate cantons and federal employment compliance.

Employee Probation Period

• The first month of the employment relationship is deemed to be the probationary period. 
• By written agreement, the parties may extend the probationary period up to a maximum of three months (in exceptional cases, six months for apprenticeships), shorten or waive it entirely.

Annual Leave in Switzerland

• Currently, the legal minimum number of holidays in Switzerland is four weeks (20 days) per year, or five weeks for those under the age of 20. 
• However, contracts – individual or collective – can, and often do, provide for a higher number of annual days.
• Employees over 50 years of age are often granted more paid leave.

Holidays in Switzerland

• There are 26 cantons (states) that make up Switzerland and each canton sets its public holidays independently. The exception is National Day, which is the only federal holiday.
• Most of the cantons celebrate the following public holidays, for which employees are given the day off, including:

Maternity Leave Switzerland

• Maternity leave is a legal right in Switzerland and employees are eligible for maternity pay after at least three months in continuous employment with the same employer, provided that social insurance contributions have been made for a minimum of 9 months and that a minimum of five of these months were spent in employment.
• A new mother will be paid at 80% of her full wage for 14 weeks after childbirth (or CHF 196 where 80% of salary would exceed this figure). 
• Only the canton of Geneva differs, extending this to 16 weeks. 
• The mother is also protected against dismissal during the pregnancy and for 16 weeks after giving birth.

Paternity Leave Switzerland

• Fathers are entitled to 2 weeks of paternity leave

Sick Leave in Switzerland

• Sick leave entitlement depends on the number of years' service in Switzerland and an employee has to be continuously employed for three months to qualify for payment.
• During the first year of work, an employer will be expected to pay a maximum of 3 weeks of sickness pay (depending on the canton), but is entitled to ask for a doctor’s certificate for an absence of more than 3 consecutive days. 
• After a year, the period for which a sick employee would be paid will depend on the canton, length of service, and other conditions.
• Sick leave insurance (KTG) provides coverage for 730 days in total out of 900 consecutive days.

Working Hours in Switzerland

• The standard work week in Switzerland is 45 hours for industrial workers, office personnel, technical personnel, and retail employees. 
• For all other workers, the limit is fixed at 50 hours.

Overtime in Switzerland

• Under Swiss law, there is overtime when weekly working hours are above 45 hours (called 'travail supplémentaire'). 
• By Law, one can normally not execute overtime more than 2 hours per day and 170 hours per annum in total.
• Overtime is typically paid at 125% of the normal rate or time off in lieu.

Termination of Employment in Switzerland

• If an employment contract has been concluded for a specific term or for the performance of a specific task, it terminates without notice at the end of that term or upon fulfilment of the task, unless the employment contract is continued. 
• In the latter case, the employment contract becomes a contract for an indefinite period
• Irrespective of the fixed duration of the employment contact, the parties to the contract are free to agree upon immediate termination of the contract at any time. 
• If an employment contract has no specific term, either the employer or the employee may terminate it at will (see exceptions in chapter II/1 below) by giving notice of termination, whilst the minimum notice period to be observed varies according to the previous duration of the employment relationship
• The employer as well as the employee may terminate the employment contract without advance notice (i.e., with immediate effect) if there is a "serious cause" (Art. 337 CO). 
• A serious cause is any circumstance under which the terminating party can (pursuant to the principle of bona fides) no longer be reasonably expected to continue the employment relationship with loyalty and trust.
• Dismissal during the probationary period requires 7 days’ notice.
• For dismissals during the first year of employment, a month’s notice is standard. 
• This increases to 2 months from the 2nd to the 9th year of employment and to 3 months from the 10th year of employment onwards. 
• It may be possible for an employer and employee to agree to an immediate termination of contract where it is of mutual benefit

Notice Period in Switzerland

• Dismissal during the probationary period requires 7 days’ notice.
• For dismissals during the first year of employment, a month’s notice is standard. 
• This increases to 2 months from the 2nd to the 9th year of employment and to 3 months from the 10th year of employment onwards. 
• It may be possible for an employer and employee to agree to an immediate termination of contract where it is of mutual benefit.

Severance in Switzerland

• Under the Code of Obligations (Articles 339b et seq), severance payments must only be paid if the employee affected is over the age of 50 and has worked for more than 20 years for the same employer. 
• In that case, the statutory minimum severance payment is equal to two months' salary.

Switzerland Salary and Wages

13th / 14th Month Salary in Switzerland

• Yes
• There us no statutory requirement to pay the 13th or the 14th month salary.
• However, it is customary for employers to pay the 13th month, either in December equating one month rent, or half in July and half in December.
• In addition, employees may receive various allowances, including: area, child, travel and expense allowances.

• Federal old age and disability insurance (AHV/IV/EO) is mandatory for all employees.
• The annual contribution of 10.6% of total employee remuneration (with no ceiling) is divided between the employer and employee.
• The employer is required to deduct the contributions from the salary and remit the total amount to the social security authorities.
• Professional pension plans are mandatory for employees; private pension plans are voluntary.
• All social security taxes (except for the medical insurance) are the employer’s responsibility.
• The employer must withhold and remit the total deduction and deduct the employee’s share from his gross pay.
• If the individual is self-employed, they basically have to cover the employer’s and the employee’s share, however different contribution rates may be applicable.

Immigration Switzerland

• Any foreigner who wants to perform a gainful (productive) activity in Switzerland must, in principle, be in possession of an authorization.
• Any activity (self-employed or employed status) that normally procures a gain is a gainful activity, even if the activity is performed for free or if the remuneration consists only of coverage of basic expenses.
• Switzerland has the following dual system for the admission of foreign workers:
  • The provisions of the Agreement on the Free Movement of Persons (AFMP) and its directives for European Economic Area (EEA) citizens locally employed in Switzerland
  • The provisions of the Foreign Nationals and Integration Act (FNIA) and its provisions for non-EEA citizens and EEA citizens seconded to Switzerland

Value Added Tax (VAT) in Switzerland

• Switzerland standard VAT rate: 7.7%. Switzerland reduced VAT rate: 3.7% (Hotels). 
• Further reduced VAT rate: 2.5% (Foodstuffs, books, foodstuffs, water). 
• Exempt from Swiss VAT: insurance, financial services, education, health.
• From January 2024, the following VAT rates will apply: -
  • Standard Rate: - 8.1%
  • Reduced Rate: - 2.6%
  • Special Rate for Accommodation: - 3.8%

Mandatory Benefits in Switzerland

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, maternity leave, sick leave, overtime pay, notice period, severance pay
• Statutory benefits also include social security benefits

Payroll Accrual in Switzerland

Country Accruals Additional Information

Description

Resident individuals and individuals having a gainful activity in Switzerland are required to contribute to the mandatory old age and disability insurance scheme. Employers must also contribute. The contribution is 10.55 percent of total remuneration (unlimited) of which 5.275 percent is charged to the employee and 5.275 percent to the employer.Individuals having a gainful activity in Switzerland are also subject to mandatory unemployment insurance. The contributions (employee and employee each pay half of the total) are 2.2 percent of remuneration up to an annual salary of CHF148,200. A solidarity surcharge of 1.0 percent (split evenly between the employee and the employer) is also due on income over CHF148,200 uncapped.Switzerland has concluded social security treaties with more than 30 countries/jurisdictions. Providing certain conditions are met, exemption is available for a certain period from the Swiss social security system if an employee continues to contribute to their home social security system. Please note that special regulations apply to individuals from countries/jurisdictions from the European Union.

Payroll Accruals Additional Information

Accrued Benefits in Switzerland

Why use Global Expansion to hire in Switzerland

Establishing a branch office or subsidiary in Switzerland can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Switzerland labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Switzerland law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Switzerland. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Switzerland Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.