Switzerland – Employer of RecordReading Time: 6 minutes
Globalization Partners provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in Switzerland. Your candidate is hired via Globalization Partners’ Switzerland PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Table of Contents
- Hiring, Negotiating and Doing Business in Switzerland
- Employment Contracts in Switzerland
- Switzerland Working Hours
- Vacation Leave in Switzerland
- Sick Leave in Switzerland
- Maternity Leave in Switzerland
- Termination and Severance Pay in Switzerland
- Health Insurance Benefits in Switzerland
- Additional Benefits in Switzerland
- Holidays in Switzerland
- Why Globalization Partners
Our Global Employer of Record model and Global PEO service enables customers to run payroll in Switzerland while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Switzerland.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. Globalization Partners allows you to harness the talent of the brightest people in 187 countries around the world, quickly, and painlessly.
Hiring, Negotiating and Doing Business in Switzerland
The Swiss are a hardworking people who value honesty and responsibility. They are proud of their historical neutrality and of their record of saving money to provide future material wealth. Punctuality is very important, which means that not only should you not arrive late, but you should not arrive early either. Businesses tend to be run fairly formally, and meetings are for getting business done and include limited small talk. The Swiss take business very seriously and do not appreciate jokes and humor in meetings. They also tend to be modest and not toot their own horn.
Salaries in Switzerland, specifically in Zurich and Geneva, are among the highest in the world, for all types of professions. The average monthly income of a Swiss household is CHF 8,797, but this includes pension, interest, assets, etc. In Switzerland, wages are established according to seniority. During the last decade, employers in both the public and private sectors have increasingly adopted performance-related pay systems. Despite the fact that Swiss employers are legally required to pay equal wages to men and women, on average women’s wages are lower than those of their male counterparts, regardless of qualifications or experience.
Salaries are typically reviewed once a year in November or December, with pay raises taking effect on January 1st of the following year.
In Switzerland, trade unions exist and about 25% of employees belong to a union. Trade unions rarely engage in a strike in Switzerland.
When negotiating terms of an employment contract with an employee in Switzerland, it may be useful to keep the following in mind:
Employment Contracts in Switzerland
It is best practice to put a strong employment contract in place in Switzerland which spells out the terms of the employee’s compensation, benefits, and termination requirements. An employment contract in Switzerland should always state the salary and any compensation amounts in Swiss Francs rather than a foreign currency. The employment contract template is part of the service with Globalization Partners; no need to draft a separate template if you use our employer of record and PEO service in Switzerland.
Switzerland Working Hours
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. Having said that, the standard working hours depend on employer, specific job requirements, and the specific industry and most employees work between 40 and 42 hours.
Overtime is defined as the hours exceeding the agreed upon amount of working hours agreed to in the employment contract. Overtime is typically paid at 125% of the normal rate or time off in lieu.
Vacation Leave in Switzerland
Swiss law provides all employees with annual holiday paid leave. The minimum amount required by law is four weeks per year. The minimum length of holiday may be extended through contractual agreements.
Sick Leave in Switzerland
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.
Maternity Leave in 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.
Employers are obligated to make reasonable accommodation for the needs of an expectant or new mother to ensure the continued good health of her and her baby. She is exempt from certain types of hazardous or physically stressful work and can be paid 80% of her salary if her employer is not able to offer her alternative duties. From 8 weeks before her due date, an expectant mother is exempt from night work (starting at 8:00 pm). There are additional legal provisions made for breastfeeding mothers to leave the workplace, and pregnant women are also entitled to more frequent breaks.
Although there is currently no statutory paternity leave, new fathers may at the discretion of their company be permitted to take paid leave, although this varies from a single day to five days according to the employer.
Termination and Severance Pay in Switzerland
Probationary periods in Switzerland are typically between 1 and 3 months. Dismissal during the probationary period requires 7 days’ notice. Employers can also issue notice, or by granting an indemnity in place of notice whereby the contract is terminated immediately.
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.
Redundancy is possible in Switzerland and employers have few obligations other than providing paid notice of 8.7 weeks to employees who’ve been employed for over 1 year, and 4.3 weeks for those employed less than 1 year. There is no severance pay required by law.
Health Insurance Benefits in Switzerland
Switzerland is known throughout Europe for its high-quality medical and paramedic services. Switzerland spends more than 10% of its GDP on health, resulting in medical facilities having the latest technology, as well as one of the world’s lowest patient-to-doctor ratios.
Health insurance is compulsory for all residents in Switzerland and covers the costs of medical treatment and hospitalization. Residents are responsible for contacting insurance providers, since employers are not necessarily responsible for arranging coverage. In most cases, Swiss insurance authorities do not accept global health insurance even if the policy states that it covers medical care in Switzerland.
Depending on the level of coverage, an annual individual health insurance package can cost up to CHF 10,000. Residents must also pay part of the cost of treatment through an annual deductible of CHF 300, and a charge of 10% of the costs over and above the excess up to a maximum of CHF 700.
Additional Benefits in Switzerland
Some employers provide supplementary private insurance policies that provide for coverage of some treatments not covered by the basic insurance or to improve the standard of room and service in case of hospitalization.
Holidays in Switzerland
There are 26 cantons (states) that make up Switzerland and each canton sets its public holidays independently. The exception is August 1st, 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:
- New Year’s Day
- Good Friday
- Easter Monday
- Ascension Day
- Whit Monday
- Swiss National Day
- Christmas Day
- St. Stephen’s Day
Why Globalization Partners
Establishing a branch office or subsidiary in Switzerland to engage a small team is time-consuming, expensive and complex. Swiss labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners makes it painless and easy to expand into Switzerland. Our comprehensive solution enables you to hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Switzerland PEO and Global Employer of Record model provides you peace of mind so that you can focus on running your business.
If you would like to discuss how Globalization Partners can provide a seamless employee leasing or PEO solution for hiring employees in Switzerland, please contact us.