How to hire and pay employees in Switzerland

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Switzerland

Before hiring

EMPLOYEES IN
Switzerland

Before you hire employees in Switzerland, there are some key things you’ll need to know. Firstly, Switzerland has a complicated three-tiered taxation structure on the national, regional, and local level. It’s crucial for employers to understand this structure and how income taxes may vary for their employees.

In Switzerland, holiday entitlement is also dependent on an employee’s age, though the minimum annual leave entitlement is four weeks per calendar year. 

We know keeping track of all this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform. 

Get an overview of what you need to know when hiring in Switzerland below.

At a glance

CURRENCY

CHF

OFFICIAL LANGUAGE

GERMAN, FRENCH, ITALIAN, ROMANSH

PAYROLL FREQUENCY

MONTHLY

PUBLIC HOLIDAYS

10

(based on region;
see here
)

EMPLOYER TAXES

8%

of gross salary

13th / 14th SALARY

Not required.

Good to know

  • Switzerland has a complex three-tiered taxation structure on the national, regional, and local level. This means income tax rates may vary a lot within Switzerland. Social contributions are split equally between the employer and the employee. Mandatory insurance may increase the employer contributions.
  • Compared to other European countries, Switzerland has fairly liberal employment laws, especially when it comes to terminating contracts.
  • Overtime is usually compensated with time off in lieu or at 125% rate of base salary. Overtime compensation is capped to 60 hours yearly.

Labor laws in

Switzerland

Working hours and overtime

Employees in Switzerland usually work 40-42 hours each week. The maximum is 45 hours per week for office workers.

Employees can take rest breaks of:

  • 15 minutes when working more than 5.5 hours
  • 30 minutes when working more than 7 hours
  • 1 hour when working more than 9 hours

Overtime is usually compensated with time off in lieu or at a rate of 125% of an employee’s base salary. Overtime compensation is capped to 60 hours yearly. 

Employment contracts

Probationary period

The probationary period in Switzerland is between a minimum of one month to a maximum of three months.

Pensions

Non-compete agreements

Non-compete agreements are allowed in Switzerland. The provisions must be appropriately limited with regard to place, time, and scope. The duration of non-competition cannot exceed three years from the termination of employment.


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Benefits and leave in

Switzerland

Vacation time

The minimum annual leave entitlement is four weeks per calendar year. If an employee is under twenty or over fifty years of age, the holiday entitlement is five weeks per year. When an employee has worked less than a year, holiday entitlement is fixed pro rata.

Sick leave

During sick leave, employees in Switzerland receive their salary and other contractually agreed-upon compensation for a limited period depending on the years of service. The breakdown is as follows: 

  • Three weeks in the first year of employment
  • Four to eight weeks in the second year of employment
  • Eight to nine weeks in the third year of employment

Parental leave

Women in Switzerland are not allowed to work for a period of eight weeks after they have given birth. Mothers receive a total of 14 weeks of maternity leave after giving birth. Mothers receive a daily allowance, which equals 80% of their average salary during a 98-day time period. The maximum allowance is CHF196 per day.

Employees may take time off work for up to three days to take care of sick children.

Holidays

View a list of recognized public holidays in Switzerland here.

Employer tax

In Switzerland, employers are required to contribute a minimum of 8.08% in social security contributions which includes:

  • Old age, survivors insurance (OASI)
  • Disability insurance (DI) 
  • Income compensation
  • Unemployment insurance
  • Family contribution
  • Travel insurance
  • Occupational pension scheme
  • Occupational accident insurance

Individual tax

Switzerland has a complex three-tiered taxation structure on the national, regional, and local level. This means income tax rates may vary a lot. Social contributions are split equally between the employer and the employee. Mandatory insurance may increase the employer contributions. 

Income taxes are levied at three levels: federal, the cantonal, and municipal. Municipalities follow the cantonal tax law, but set their communal tax rates.

Direct federal tax for single taxpayers can range from 0 to 11.5% depending on their income level. Married and single taxpayers with minor children pay 0 to 13% taxes dependent on income. 

Zurich cantonal tax on income ranges from 0 to 13% for both married and single taxpayers with or without children. 

Individuals are also required to pay 6.88% in social security contributions. 

Termination in

Switzerland

In Switzerland, employment can be terminated without penalty by either party if statutory notice periods are honoured.

Severance payments are only applied to employees over the age of 50, when they have worked for more than 20 years for the same employer. Then, the standard minimum severance payment is equal to two months’ salary.

Notice period

The minimum notice period in Switzerland is one month, except when otherwise agreed upon in collective bargaining agreements. Notice periods are the same for employers and employees.

The statutory notice periods are:

  • Seven days during probationary period
  • One month during the first year of employment
  • Two months during the second to ninth year of employment
  • Three months from the 10th year of employment onwards

Start hiring employees in

Switzerland

Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast. 

We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities. 

With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.

Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.

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