Payroll & Employment Guide: Switzerland

Hiring in Switzerland

When hiring in Switzerland, employers must account for cantonal rules, sectoral wage floors, and mandatory social insurance registration. Contracts are often tailored by canton and sector, and social-insurance obligations start from day one of employment.

Key hiring steps include:

• Checking canton-specific minimum wage or CBA wage tables where applicable.
• Preparing written employment contracts in the agreed language (often German, French, or Italian, or bilingual for international roles).
• Registering employees for AHV/IV/EO (old-age, disability, and loss-of-earnings insurance), unemployment insurance, and accident insurance.
• Enrolling eligible employees into an occupational pension plan (2nd pillar/BVG).

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Employee Benefits

Swiss employees benefit from strong statutory social protection and, in many cases, generous employer-provided benefits. Employers must contribute to social insurance and pension schemes, with further benefits often defined by CBAs or company practice.

Mandatory Benefits:

• Statutory social insurance: AHV/IV/EO (old-age, disability, loss of earnings), unemployment insurance (ALV), accident insurance (occupational and non-occupational where applicable), and occupational pensions (BVG/2nd pillar) above minimum salary thresholds.
• Minimum annual leave: 4 weeks (20 working days); employees under 20 typically receive at least 5 weeks.

Common Employer-Provided Benefits:

• 13th-month salary, which is common in many sectors and often required under CBAs.
• Enhanced pension plans (above the mandatory BVG minimums).
• Supplementary health-related benefits, such as contributions toward private health insurance, wellness, or accident cover.
• Meal allowances, mobility allowances (e.g., travel card contributions), and other perks.

Designing a benefits package consistent with local market expectations and CBA requirements is key to attracting and retaining talent in Switzerland.

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Taxes in Switzerland

Switzerland applies progressive personal income tax, but total tax burden varies significantly by canton and municipality, as employees pay federal, cantonal, and communal taxes.

Personal Income Tax:
Employees may be taxed either through source tax (for many foreign employees without a C permit) or via annual tax returns. Tax rates and brackets differ by canton and municipality, and employers must apply the correct source-tax tables where applicable.

Employer Payroll Costs:

• Employer contributions to AHV/IV/EO (old-age, disability, loss of earnings).
• Employer share of unemployment insurance (ALV).
• Accident insurance premiums (occupational and sometimes non-occupational).
• Occupational pension (BVG/2nd pillar) contributions, which vary by pension plan and age bracket.

Combined employer social insurance and pension contributions typically represent around 12–20% or more on top of gross wages, depending on pension design, canton, and industry risk factors.

Payroll in Switzerland

Swiss payroll must be run in CHF, reflecting all mandatory social-insurance contributions and any source tax obligations. Employers should maintain detailed records supporting each payroll run.

Payroll Currency: CHF.

Payroll Cycle:
Monthly payroll is standard. Contracts should clearly specify the pay date (e.g., last working day of the month).

Payslips & Deductions:
Payslips should itemise:

• Gross salary and any bonuses or allowances
• Employee contributions to AHV/IV/EO, ALV, and pension (BVG)
• Accident insurance deductions (where employee share applies)
• Source tax (for employees subject to withholding tax)
• Net salary and payment date

Key Deadlines:
Social insurance (AHV/IV/EO, ALV) and pension contributions are usually reported and paid monthly or quarterly, depending on provider agreements. Cantonal and tax-office timelines vary and must be tracked carefully.

Looking for detailed guidance on social-insurance deductions, pension contributions, and canton-specific payroll requirements?

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Legal Regulations

Swiss employment law is primarily governed by the Code of Obligations, social-insurance legislation, and sector or company CBAs. Cantonal rules can add another layer for minimum wages, leave, and working conditions.

Key Compliance Responsibilities:

• Register employees with AHV/IV/EO and unemployment insurance and ensure correct classification.
• Enroll eligible employees into an occupational pension scheme (BVG) as soon as salary thresholds are reached.
• Observe canton or CBA minimum wage rules where they exist (e.g., Geneva, Ticino, etc.).
• Respect working-time limits, rest periods, and leave rules laid out in law and CBAs.

Total Employment Cost:
High Swiss salary levels, combined with social-insurance contributions and pension obligations, mean employer costs often represent an additional 12–20%+ on top of gross salary, depending on canton, sector, and benefit level.

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Work Permits & Visas for Switzerland

Work-permit requirements in Switzerland depend on nationality and the type and duration of employment. Employers often lead the permit application process.

EU/EFTA Nationals:
Citizens of EU/EFTA states benefit from freedom of movement, with simplified registration processes. Short-term work and longer stays are subject to notification or permit requirements but are generally easier to obtain.

Non-EU Nationals:
Non-EU nationals normally require an employer-sponsored work permit. Quotas apply for certain permit categories. The employer typically submits the application and must demonstrate role relevance, salary level, and local labour-market considerations.

Once approved, employees must also comply with residence-registration rules and local authority requirements.

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EOR & PEO Services in Switzerland

Partnering with an Employer of Record (EOR) or Professional Employer Organisation (PEO) in Switzerland allows you to hire quickly and compliantly without setting up a local entity or building internal payroll infrastructure.

Employer of Record (EOR) in Switzerland:

An EOR becomes the legal employer of record for your Swiss workforce, typically handling:

• Drafting Swiss-law employment contracts (often multilingual).
• Registering employees for AHV/IV/EO, unemployment, accident insurance, and BVG pensions.
• Running payroll, issuing payslips, and managing source tax for foreign employees.
• Administering benefits, leave, and local HR documentation.
• Assisting with work-permit sponsorship and compliance for non-EU hires.

PEO Services in Switzerland:

For companies that already have a Swiss entity, PEO services support:

• Day-to-day HR administration and workforce support.
• Local statutory payroll and benefits management.
• Compliance with CBAs, social-insurance laws, and canton-specific rules.
• Drafting and managing compliant employment documentation.

EOR and PEO models reduce risk, speed up market entry, and simplify operations in a complex but attractive labour market.

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Payroll Calculator

Estimate gross-to-net pay in CHF, employer social charges, and pension costs using Dhi ADT’s Switzerland payroll calculator. Compare canton-specific scenarios and simulate different pension and benefit configurations.

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