Hire employees and manage payroll in Switzerland

Our guide to employing in Switzerland.

Country Facts

The Swiss Confederation is a federal republic made up of 26 cantons. The country is a top performer in terms of quality of life and economic performance according to several international rankings. Its nominal GDP in 2020 was 749 billion USD, making it the 20th largest economy in the world. In terms of Human Development Index, it ranks as second in the world, with a score of 0.955. Although not a member of the EU or the Eurozone, it is through different treaties a participant in the Schengen Area and the European Single Market. Switzerland was also a founding member of the European Free Trade Association.

country

Capital

Bern

Currency

Swiss Franc (CHF)

Languages spoken

German, French, Italian, Romansh

Population size (2020)

8,63 million

Ease of doing business (world bank ranking)

36

Cost of living index(2021)

131,75

Payroll frequency

Monthly

VAT - standard rate

7,7%%

GDP - real growth rate(2020)

-2,39%

Employing in Switzerland

It is customary, but not obligatory to register a legal entity in order to employ people in Switzerland. When hiring takes place, the employee’s details should be reported to the Social Security authorities known as AHV (“Ausgleichkasse”). This will yield a specific registration number that is used on all official correspondence.


If a foreign employer chooses to not establish a legal entity in Switzerland, up to 2-5 employees can be hired and will then be referred to as ANO-BAG workers (Arbeitnehmer mit Arbeitgeber ohne Beitragspflicht), which edtails that these employees are working for a non-contributory employer. It will then be the employee who is registered with the authorities and who makes both the employee’s and employer’s contributions for social security and tax.


Employment in Switzerland is regulated by the federal constitutions and law as well as cantonal law and case law. A number of collective agreements relating to the so called “Obligationsrecht (the code of obligations) are legally binding. An employment contract can make different arrangements in cases where no binding collective agreement applies.

Working hours have a legal limit between 45 - 50 hours per week, depending on sector, and should be mentioned in the employment contract (Arbeitsvertrag / contrat de travail). Although the common work week is 40 hours. Work hours should usually be mentioned in the employment contract. Overtime work is termed Überstunden and must be compensated with a 25% salary premium, or with time off corresponding to the same duration as the overtime hours. For all night or shift work, authorisation is necessary from the cantonal authorities. Work on Sundays or on public holidays is banned, but exemptions can be requested. It is not uncommon that employers in Switzerland offer their staff to work flexible hours (Gleitzeit - horaire flexible).


Employers are also legally bound to provide a Pension Fund for every employee aged above 25 and has an annual income over CHF 21 510. Equally, employers have to arrange a Pension Fund for all employees over the age of 18 years, this fund is rather focussed on risk mitigation with regards to invalidity/death. Such fund contributions have to be at least divided equally between the employee and the employer. Pension contributions vary according to the employee’s age and are usually at 20- 25% of the salary for employees aged 40 or older.

List of Public Holidays - 2022

There are few federal public holidays in Switzerland, but other holidays also apply, depending on the canton. Below the federal holidays are listed.

Date Holiday Name

1 January

New Year’s Day

26 May

Ascension Day

1 August

Swiss National Day

18 September

Federal Day of Thanksgiving, Repentance and Prayer

25 December

Christmas Day

Minimum wage

There is no official minimum wage Switzerland, but most of the voluntary collective agreements contain detail minimum compensation. These range from 2 200 to 4 200 CHF per month for blue collar employees and from 2 800 to 5 300 CHF per month for white collar employees.

Salary payouts

Employers must provide a payslip to employees each month. This should list all deductions made to the salary including taxes, social insurance and voluntary contributions. In Switzerland, a 13th month’s salary payout is very common, although not obligatory. It must be included in the employment contract.

Taxes in Switzerland

Learn how employment taxes and statutory fees affect your payroll and your employees’ paychecks in Switzerland.

Employer

Corporate income tax rate : Due to the federal system, with cantons setting their own tax rates on top of the federal corporate tax, the rates vary from canton to canton. The corporate tax rate therefore ranges between 11.9% and 21.6%. The choice of what canton to establish in therefore heavily influences tax costs.

AVS (old age and survivors’ insurance) + AI (disability insurance) + APG (compensation fund for loss of income because of service or maternity leave) : 5.30%

AC (Unemployment Insurance) up to maximum 148,200 CHF : 1.10%

Supplementary Unemployment Insurance above 148,200 CHF : 0.50%

Family Compensation Fund : 2.45%

Maternity Insurance : 0.043%

Early Childhood Contribution : 0.07%

Occupational Accident Insurance also applies and varies depending on insurance provider and risk premium.

Total Employment cost : 9.5%

Employee

AVS (old age and survivors’ insurance) + AI (disability insurance) + APG (compensation fund for loss of income because of service or maternity leave) : 5.30%

AC (Unemployment Insurance) up to maximum 148,200 CHF : 1.10%

Supplementary Unemployment Insurance above 148,200 CHF : 0.50%

Maternity Insurance : 0.043%

Income Compensation : 0.225%

Occupational Accident Insurance also applies and varies depending on insurance provider and risk premium.

Total Employee Cost : 7.2%

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