Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll services and hire new talent in Switzerland.
Overview
In 2022, Switzerland retained its top position as the world's most innovative country for the twelfth consecutive year. Switzerland's strong collaboration between academia and industry and its exceptional quality of life continually attract talent worldwide, ensuring a steady influx of skilled professionals.
If your organization's expansion plans involve hiring in a country known for its innovation and transformation but lack a physical presence there, a crucial requirement for recruiting local talent, Neeyamo can provide valuable support. We offer comprehensive solutions for onboarding and managing employees in Switzerland, including payroll processing, local compliance adherence, benefits administration, and more.
Facts And Stats
Capital
Bern
Currency
Swiss Franc
Official Language
German, French, Italian
Fiscal Year
1 January to 31 December
Date Format
DD/MM/YYYY
Country Calling Code
41
Time Zone
Switzerland uses Central European Time (CET) during the winter as standard time, which is one hour ahead of Coordinated Universal Time (UTC+01:00), and Central European Summer Time (CEST) during the summer as daylight saving time, which is two hours ahead of Coordinated Universal Time (UTC+02:00).
Global Payroll
Overview
Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity.
Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform - Neeyamo Payroll
Payroll Associations
The Global Payroll Association (GPA) is instrumental in supporting individuals and organizations engaged in payroll and its related functions. These associations offer many advantages that foster professional growth, facilitate networking prospects, encourage knowledge exchange, and promote industry advocacy.
Payroll Taxes
Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.
How to calculate payroll taxes?
Neeyamo – a Payroll Specialist, acts as your personalized Payroll Calculator. Ensuring adherence to local regulatory requirements using multi-level controls. Providing timely and accurate payroll, courtesy of our experts worldwide and using a tech-based integrated smart helpdesk solution with seamless support experience manned by payroll experts - Neeyamo has all your payroll needs covered.
Employee Taxes
Total employee social tax rates generally range from 5% to 25%, depending on multiple criteria.
Employees' total social tax rates consist of the following component rates:
|
Old age and survivors insurance scheme |
4.35% |
|
Invalidity insurance fund |
0.7% |
|
Loss-of-income/maternity insurance fund: effective starting Jan. 1, 2021 |
0.25% |
|
Unemployment Insurance |
1.1% for annual income up to CHF 148,200 |
|
Occupational benefits |
minimum tax rates vary depending on the pension plan |
|
Non-occupational accidents |
tax rates depend on the insurance provider and the degree of risk involved |
Employer Taxes
Total social tax rates for employers generally range from 5% to 30%, depending on multiple factors.
Employers' total social tax rates consist of the following component rates:
- Old age and survivors insurance scheme: 4.35%;
- Invalidity insurance fund: 0.7%;
- Loss-of-income/maternity insurance fund: effective starting Jan. 1, 2021, 0.25%; effective until Dec. 31, 2020, 0.225%;
- Unemployment Insurance: 1.1% for annual income up to CHF 148,200;
- Occupational benefits: minimum contribution rates vary depending on the pension plan; employer contribution must be at least equal to employee contribution;
- Occupational accidents and diseases: contribution rates depend on the nature of the business and risk involved; and
- Family allowances: Effective since Jan. 1, 2021, tax rates for employers vary among cantons and range from 0.7% to 3.5%, except the tax for agricultural employers is 2%. Effective for 2020, tax rates for employers varied among cantons and ranged from 0.3% to 3.63%, except the tax rate for agricultural employers was 2%.
Payroll Cycle
Overview
Undoubtedly, payroll is a critical process for any organization. The pay cycle in Switzerland refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.
Frequency
Employees must be paid monthly by the last working day; however the pay date is typically by the 25th of the month.
13th Month Cycle
Salaries in Switzerland are paid once a month and are often based on a 13-month system. That means an annual salary is paid out in 13 installments: once a month until the end of the year when a worker receives two installments. Working less than a full year means the 13th month payment is typically paid on a pro-rata basis. It is not the same as a bonus.
Global Work
Overview
Employer of Record: Definition
Employer of Record services (EOR) providers help you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account, prior to making a job offer to an international hire.
Employer of Record services (EOR) providers act as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits ensuring compliance with local tax laws and regulations.
This allows organizations to focus on collaborating with the employee in Switzerland for operational tasks, with the knowledge that they have a cost-effective solution to support their global payroll & HR requirements, as they continue their global expansion.
HR Mandates and Practices
Minimum Wage
With effect from January 1, 2023, the monthly minimum wage has increased from CHF 23.27 to CHF 24.00
Overtime
Under Swiss law, there is an important difference between time worked in excess of the contracted working time but within the limits of the maximum weekly working hours (i.e., extra hours or ‘Überstunden’) and time worked in excess of the maximum weekly working hours (i.e., overtime or ‘Überzeit’).
Employees are required to work extra hours if:
- the need for extra hours arises because of temporary circumstances and not, for example, because of a permanent lack of staff; and
- the additional working hours may reasonably be expected from the employee.
Employees are required to work overtime if:
- the requirements for overtime are met; and
- the additional working hours are necessary because of an urgent business need, extraordinary workload, to carry out an inventory or balance of accounts or to prevent or overcome a disruption to business.
For employees with a weekly maximum of 45 working hours, the total overtime must not exceed 170 hours in a calendar year. For employees with a weekly maximum of 50 working hours, the total overtime must not exceed 140 hours in a calendar year.
Data Retention Policy
Tax records and social tax documents must generally be kept for a minimum of ten years.
New tax rules for cross border commuters working from home
From January 1, 2023, up to 40% of a cross-border commuter employee's annual working hours can be worked from home without affecting their taxation.
Cross-border commuters are taxed in Switzerland if they live in France and work in Switzerland. Switzerland is then required to pay France a portion of the tax collected.
Hiring and Onboarding Requirements
Hiring
According to article 8(2) of the Constitution, no one may be subject to discrimination based on race, origin, language, mental or spiritual disability, social position, religious, political and ideological convictions, or gender.
The law ensures the factual and legal equality of men and women (article 8(3) of the Constitution), particularly in the areas of education, family and work. Men and women are entitled to equal pay for work of equal value.
In labor law, the Equal Treatment Act applies. This promotes actual equality between the sexes (article 1). According to Article 3(1) of the Act, employees may not be discriminated against, either directly or indirectly, based on their gender (eg., because of marital status, family situation or pregnancy). This prohibition applies to remuneration, promotion and dismissal, the allocation of tasks and the organization of working conditions. In the event of a refusal of employment based on discrimination, the employee is entitled to compensation under article 5(2) of the Act.
Onboarding
The following information is needed for onboarding:
- Employee details
- OASI number
- residence permit,
- prosecution certificate,
- criminal record extract
Probation
The maximum probationary period permitted by law is three months (article 335(b)(2) of the Code of Obligations). An extension of this probationary period is not permitted, either by agreement or at the employer's discretion. However, where the probationary period is interrupted by illness, accident or performance of a legal obligation, it will be extended accordingly (article 335(b)(3) of the Code of Obligations).
Leave
National Holidays -
In Switzerland, there are 26 cantons (states) and each canton sets its public holidays independently. August 1st (national holiday) is the only federal holiday. The labor law equates it to Sunday. The cantons can make a maximum of eight other public holidays a year on Sunday. In most Cantons, the following are 9 legally recognized public holidays are generally observed:
- January 1: New Year's Day
- April 17: Sechseläuten
- April 29: Pentecost Monday
- May 18: Ascension Day
- August 1: Swiss National Day
- September 9 - 11: Knabenschiessen
- December 25: Christmas
If a public holiday falls on a Saturday or Sunday, it will not be moved to a weekday.
Annual Leave
Employees are entitled to 4 weeks of paid vacation per year, of which at least 2 weeks must be consecutive. Where an employee has not yet completed one year’s service, his holiday entitlement is fixed pro-rata. Employees under the age of 20 are entitled to five weeks of paid vacation.
An employer cannot pay employees in lieu of granting them time to take a vacation, and unused vacation generally cannot be carried over to the following year. In cases where a public holiday falls during an annual vacation, the vacation period shall be extended accordingly. Swiss Code of Obligations, March 30, 1911, Art. 329 (a)(c).
Sick Leave
All employees residing or gainfully employed in Switzerland are entitled to sickness benefits. The insured pays premiums, which vary depending on the fund, the type of benefits provided, the age first insured, and the canton. Employers are not required by law to contribute, but some collective agreements require the employer to share employees’ membership fees.
Swiss law requires employers to continue to pay employees who are unable to work due to illness for up to 3 weeks in the first year of employment and for longer periods at full pay proportionate to longer periods of employment. Cantons specify sick leave limits after an employee’s first year. Employers may require a medical certificate for any absence longer than 3 consecutive days due to sickness.
Maternity Leave
All employees are entitled to maternity leave for 14 weeks after the birth of a child.
Pay – An employee who has worked at least five out of the nine months before birth may receive 80 percent of her regular pay as a daily allowance subject to a maximum of 196 francs per day from Social Security. Female employees who have recently given birth may not be employed for 8 weeks after the birth and then only with their consent up to the 16th week.
There are no specific provisions for maternity leave before the birth of a child, but pregnant employees can take sick leave during this time if they cannot work. Female employees may not work during the first 8 weeks after the birth. Pregnant women may not be employed between 8 p.m. and 6 a.m. from the 8th week before the birth.
Paternity Leave
Employees are entitled to 2 weeks (10 days) of paid leave which can be taken up to 6 months following the birth of the child and may be split up in daily or weekly increments. Fathers will receive compensation equal to 80% of their income.
Other Leave
Leave to care for relatives:
As per a new federal act effective 1 January 2021, an employee is entitled to continued salary payment in the event of short absences, and extended care credits within OASI.
Jury Leave/ Voting Leave :
Employers are required to grant their employees a paid leave of not less than three weeks in order to perform their legal obligations.
Bereavement Leave:
Employees are entitled to up to 3 days of paid leave due to the death of a close family member. The precise conditions are often set by collective agreements.
Leave for Extra-Curricular Activities:
Employees under 30 years of age are entitled to 1 week of leave without pay per year to do volunteer work for a social or cultural organization. Any leave for youth work not taken by the end of the calendar year is forfeited. Leave days not taken expire at the end of the calendar year.
Termination
Notice period
Termination is considered legally valid from the moment the recipient receives it.
The statutory notice periods are as follows:
- 7 days during the trial period
- 1 month during the first year of service
- 2 months during the second to the ninth year of service
- 3 months from the tenth year of service
Alternatively, the parties can contractually agree on a notice period. A fixed-term employment contract ends on the expiry of the agreed period.
Severance pay
Swiss private employment law does not provide for statutory severance pay, except for employees of at least 50 years of age with at least twenty years of service. Such employees are entitled to severance of between 2- and 8 months’ salary; however, as pension benefits financed by the employer are deducted from the amount due, this exception hardly ever applies in practice.
An obligation to pay severance may nevertheless arise from a contractual provision contained in an individual employment contract, in a collective bargaining agreement, or in a social plan (negotiated either voluntarily or in the application of the rules on large-scale redundancy). And of course, employers may offer voluntary or negotiated severance, for example, as part of a termination agreement.
Visa
Overview
In Switzerland, there are two ways one may obtain a work permit:
A citizen of an EU member state or a citizen of the European Free Trade Association (and can enter Switzerland for 3-6 months while they search for a job):
- L (short-term resident): This is a permit valid from 3-12 months for individuals who have a valid employment contract.
- B (resident foreign nationals): This permit is for foreign nationals who have a valid employment contract for at least 12 months. This permit is valid for up to 5 years and can be extended automatically if the duration of the employment is extended.
- C (settled foreign nationals): This permit is valid indefinitely after one has resided in Switzerland for 5 uninterrupted years.
- G (cross-border nationals): For citizens who work in Switzerland but reside in a different country. Cross-border commuters must return home at least once a week.
Note that the EU Blue Card is not valid in Switzerland.
Non-EU/EFTA Nationals: When an EU/EFTA citizen cannot be hired for a job, a company can extend a job offer to a third-party national. The employer must be able to show that they have made efforts to hire an EU/EFTA or any individual that already resides in Switzerland and must be able to show why the candidate was not fit for the job. For non-EU/EFTA nationals, permits L, B, and C can be applied for. However, there is no limit to how long it may take to obtain the work permit.
Employee Background Checks
Legal and Background Checks
If the applicant is in a non-terminated employment relationship, the current employer may not be contacted by the potential employer without the applicant’s consent. In principle, references may only be obtained with the employee’s consent, and former employers may not say more than what is already stated in the job reference. However, clarifications regarding the job reference are permitted.
If no reference is available, the former employer may not even confirm that an employment relationship existed between it and the applicant. It is also questionable to what extent the inclusion of personal information from the internet, and especially from social media platforms, during the application procedure is permissible. Some scholars opine that employers must abstain from these practices; others think that employers are under an obligation to confront the applicant with online search results.
Although the data that can be found on the internet is publicly accessible, this does not release the employer from the obligation to limit the processing of personal information relevant to the issues of suitability and feasibility of an employment relationship (Article 328(b) of the Code of Obligation). The consent of the applicant is always required if external graphological expertise is sought or a psychological aptitude test is to be carried out. Here too, the question of relevance to the job to be filled arises. Thus, if external specialists are commissioned to conduct a background check, they must always act responsibly, cautiously and with respect for the privacy of the candidates.
Last updated on September 25, 2023
If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com
