Employer of Record in Switzerland

Switzerland Without needing you to create an entity, the EOR (Employer of Record) solution takes care of your company’s expansion needs in Switzerland. The Federal Republic of Switzerland, often known as the Swiss Confederation, is made up of 26 cantons or states. Due to its simple tax regulations that make it easy for any firm to operate, Switzerland is widely regarded as a tax haven. Although it may appear complicated when viewed from the outside, their tactics are very comparable to those of other nations.

Our extensive worldwide network and automated human resource (HR) platform ensure that distant teams are quickly onboarded, that their payrolls are managed, and that contracts are formalised in accordance with local regulations. Find out more about EOR solutions and how to utilise the support of a global network of professionals.

Overview of Switzerland

• Population: 85.4 million people (2020)
• Currency: Swiss franc (CHF)
• Capital City: Bern
• Languages spoken: German, French, Italian, Romansh
• Gross Domestic Product (GDP): USD 747,969 billion (2020)

Employment Landscape in Switzerland

Essential Considerations for Employment in Switzerland

Switzerland, as a developed country, offers numerous advantages for businesses of all sizes. Here are some of the benefits of starting a business in Switzerland:

• Strong economy and currency: Switzerland boasts a robust and financially independent economy, providing a stable environment for business operations.
• Presence of multinational corporations (MNCs): The country hosts the headquarters of numerous multinational corporations, creating a dynamic and thriving business atmosphere with ample networking opportunities.
• Efficient and reliable administration: Switzerland is known for its efficient workflow and well-organised processes, ensuring a smooth and hassle-free work environment.
• Liberal labour market: The labour market in Switzerland is characterised by simple and practical regulations that are employer-friendly. The streamlined processes make it easier for employers to navigate and manage their workforce.
• Liberal tax system: Switzerland has a highly favourable tax system, known for its low to moderate tax rates. This allows businesses and individuals to retain a significant portion of their earnings.
• Political stability: Switzerland enjoys political stability, with a consistent and reliable legal framework. The country has a reputation for avoiding frequent changes in rules and regulations, providing a predictable business environment.

While Swiss employment law is generally liberal compared to other European countries, it is important for businesses to thoroughly understand the legal and operational aspects when setting up a business entity in Switzerland. Compliance with Switzerland’s legal requirements, which are categorised between federal and cantonal levels, is crucial.

To ensure a smooth and trouble-free setup of your business entity in Switzerland, it is advisable to seek guidance from local experts in employment laws. Connecting with these experts can help mitigate challenges and ensure compliance with Swiss employment regulations.

Entitlements	Explanation
Statutory Working hours	The statutory work hours are 45 hours per week.
Overtime Eligibility	Statutory and contractual overtime is subject to the restrictions listed below: A person should not work more than two hours of overtime each day. For workers who put in 50 hours per week, the annual maximum for overtime should be 140 hours. For workers who put in 45 hours per week, the maximum amount of overtime per person per year should be 170 hours. The employees who are selected over time have the burden of proof, and they must notify the company right away. Overtime compensation is at least 25% more than regular salary.
Paid public holidays	Paid public holidays are determined by Swiss cantons (states). Some of the key holidays are, New Year’s Day Good Friday Easter Monday Ascension Day Whit Monday Swiss National Day Christmas Day St. Stephen’s Day
Holiday Pay	An employee is entitled to four weeks of paid vacation each year, plus pay for sick days, annual leave, and working on legal holidays.
Medical leave	The first year of employment comes with 21 days of compensated sick time for the employee. In the second year, you can take up to two months off, and in the third year, you can have eight or nine weeks off. Depending on the canton, an employee may also be eligible for additional paid sick leave and unpaid leaves. Within three days of their absence, the employees are required to submit sick leave notes.
Maternity Leave	A female employee is entitled to three months of paid maternity leave. As long as the woman has been worked and paid into social security, the maternity leave is assured. Except in Geneva, where the leave allowed is 16 weeks, women can take up to 14 weeks of unpaid leave in exchange for 80% of their wages. Although there is no such thing as a legally mandated paternity leave, some employers do provide it. To preserve their health, new moms are entitled to some specific accommodations, such as staying away from strenuous labour and night shifts, among other things. The social security program covers all maternity and paternity benefits.
Annual Leave Accrual Entitlement	The employees get an annual paid leave depending on the duration and type of service. Duration of service Leaves Work up to 38 hours a week Four-week leave per year Part-time employees Pro-rata paid leave
Leave Expiry	Leaves for the current year cannot be rolled over to the next year.
Accrued Leave At Termination	Any unused leave or annual leave is paid upon the termination of service.

Contractors vs. Full-Time Employees

It’s crucial to comprehend the benefits and drawbacks of both contractual and full-time agreements while thinking about work contracts in Switzerland. Your choice should be in line with your company’s needs. No matter the kind of contract selected, it is necessary to provide the pay in Swiss Francs (CHF).

For transient organisations founded in Switzerland, contractual labour is perfect. On the other hand, recruiting full-time workers can be a better option if your company is growing nationally. Let’s examine each characteristics:

Working full-time in Switzerland:

• High degree of direction: Workers are directed and overseen by their superiors at all times.
• Fixed work hours and expected regular attendance at the office: There are established work hours and requirements for regular attendance at the office.
• Workspace allotment: Each employee has a certain area set aside for them.
• Agreement for a trial period: A trial period may be set up to determine whether an employee is a good fit for the job.
• Employee subordination to superiors: Workers are under the direction and control of their superiors.
• Periodic payment: Salaries are paid on a regular basis, such as once a month.

Work on Contract in Switzerland:

• Lack of subordination: Contractors operate freely and with more autonomy.
• Flexible ending: The legal connection may end as desired and in accordance with the terms agreed upon.
• Workload restrictions: There may be restrictions on how much work contractors may take on.
• Supply of supplies and equipment: Typically, contractors bring their own supplies and equipment to the work.

Our Employer of Record (EOR) solution can accommodate your employment needs, regardless of whether your company wants contractors or full-time workers. Further information and aid in navigating Switzerland’s work market may be obtained from our specialists. To find out more about how we can help you with your hiring efforts, get in touch with us.

Recruiting in Switzerland

When it comes to employment in Switzerland, there are two primary laws that govern the process:

• Code of Obligations (Articles 319 to 362): This law outlines the general employment regulations, including contracts, working hours, leave, termination, and other essential aspects of the employer-employee relationship.
• The Labor Act: This act provides further provisions and protections for employees, covering aspects such as working conditions, safety, social security, and more.

Additionally, Switzerland has provisions for collective bargaining under the Collective Labor Law, allowing employees and employers to negotiate and establish collective agreements.

Job applicants in Switzerland typically utilise various job portals to search for employment opportunities. Some popular job portals in the country include:

• LinkedIn
• Indeed
• Adesso
• Monster

Applicants are required to submit their curriculum vitae/resume, a cover letter, and educational certificates as part of their application. It is important for applicants to write their cover letter and application details in the language specified by the employer on the job portal.

If you require assistance in hiring professional talents in Switzerland while ensuring compliance with Swiss labour laws, we can provide the necessary support. Our experts will help you navigate the intricacies of Swiss employment regulations, allowing you to attract and hire skilled professionals while adhering to all legal requirements.

Probation & Termination in Switzerland

In Switzerland, the typical probationary term is between one and three months long. The employee is entitled to perks and other rights specified in the contract when the probationary term is ended. Although there is no protection for employees in the event of a dismissal resulting from an accident, illness, or pregnancy. With a seven-day notice, the employment agreement may be ended during the probationary period.

Termination of Service

There are several ways to end an employment agreement in Switzerland. The potential outcomes are as follows:

• Mutual Agreement: The contract may be terminated by mutual agreement between the employer and the employee.
• Parties’ Initiative: The contract may be terminated at the employer’s or employee’s request.
• Employee Death: Should an employee pass away, the contract will be promptly cancelled.
• Contract Expiration: If a contract has a set expiration date, it will automatically expire when that time comes.
• Other justifications: Depending on the situation, termination may also take place for other justifications.

In Switzerland, the amount of notice required to discontinue an employment agreement varies on the employee’s length of service. The standard notice time might be anywhere between one week and two months. Depending on how long the individual has worked for the business, the precise length is decided.

When ending an employment contract in Switzerland, it’s critical that both employers and employees are informed of their alternatives and follow the proper notification requirements.

Type of Employment	Notice Period
An employee on probation	7 days
Workers with up to one year of employment	One month
Workers with between two and nine years of employment	Two months or as decided/mentioned in the contract
Workers with more than 10 years of employment	Three months

EOR Solution in Switzerland

Businesses may grow in Switzerland more profitably and easily while still adhering to all regulations thanks to an EOR solution. By going the EOR path, you can be guaranteed that your expanding organisation will be in compliance with laws governing the handling of payroll and other employment-related duties. Our organisation assists you in handling your employees’ contracts, work permits, tax obligations, monthly payroll, taxes, and visas in Switzerland.

Outsourcing Employment Through an Employer of Record

You need to keep a number of things in mind when you decide to grow your company organisation in Switzerland. You will also have to cope with the local administrative and labour rules in that country while expanding your firm there. These could be difficult. Therefore, it is preferable to deal with a local payroll company that is aware of and complies with local labour rules.

Types of Visas In Switzerland

Anyone willing to work in Switzerland needs to get any one of these visas as per their requirements.

Visa Category	Explanation
L Permit	Available to non-EU and EU/EFTA citizens. Used for short-term employment, up to 12 months. Quota restrictions apply when the length exceeds four months. In order to be considered, applicants must demonstrate that they satisfy the educational and job experience criteria.
B Permit	Available to citizens of the European Union (EU), the European Free Trade Association (EFTA), and countries outside of the EU Valid for a year, but can be extended If the length is more than four months, it is capped. Applications for permits must demonstrate that they satisfy the standards for education and job experience. The employer will have the work permit approved when they apply for an entrance visa at the Swiss consulate. Within 14 days after arrival, the residence permit can be obtained at the Residents Registry office.
G Permit	It is open to permanent residents who have resided continuously in Switzerland for 10 years, commuters, and cross-border employees.
Residence Permit Eligibility	The following qualifications must be met in order to be granted a residency permit. Should have a familial link or a domestic tie Not being a forbidden immigrant; requiring a relative or a domestic connection; and making contributions to Switzerland’s social, economic, or cultural level
Residence Permit	residency permits for those with sufficient resources. Pay yearly lump-sum taxes in accordance with the several cantons
Switzerland Transit Visa (A-Visa)	The transit visa is given to transient travellers who are staying in the country for a few days while they wait for a flight to another country.

Work Permit

Our company handles all the duties and demands associated with work permits as a reputable EOR agency in Switzerland. A few important questions are addressed in the table below.

Work Permits	Details
Can we sponsor Work Permits in Switzerland?	Yes
Processing time	Four to six weeks
Work permit process	Step 1: Your employer submits an application for your work permit to the local Swiss canton’s immigration office. Step 2: You submit a work visa application via the Swiss consulate. Step 3: You will receive the visa when your local employer completes your work permit. Step 4: You must provide the following papers in addition to the visa application form. A copy of your passport documentation of your job offer a resume detailing your previous employment and educational background;
Work Permit validity	12 months
When can an employee travel to Switzerland?	After your work permit has been successfully processed and the visa has been issued
Can a Resident Visa be switched to a Work Permit?	No
What’s the cost of a Work Permit Visa?	On average, the cost is CFH 100

Payroll & Taxes in Switzerland

Understanding Switzerland’s Employment Contract and Establishing a Payroll

It is essential to become familiar with the laws and guidelines regulating employment contracts in Switzerland before forming your company organisation there. Foreign businesses must set up a payroll system in order to efficiently hire and manage personnel in Switzerland while maintaining compliance with regional labour laws. Setting up a payroll may be done in a number of ways, including:

• Establishing a Separate Legal Entity and Internal Payroll Management: This entails setting up a Separate Legal Entity in Switzerland and an Internal Payroll Management department. Direct control over payroll management is offered by this choice.

• Remote Payroll: If your business has a parent company, you may integrate the payroll of the parent company with the payroll of your Swiss workers. This remote payroll configuration makes it possible to administer payroll more efficiently between several locations.

• Collaboration with a Local Company for Payroll Outsourcing: Working with a Local Company for Payroll Outsourcing in Switzerland that is Focused on HR Tasks might be a Viable Option. While you maintain liability and overall control, they will manage payroll.

• Using a global employer of record (EOR) service for payroll outsourcing Another choice is to collaborate with a worldwide EOR service based in Switzerland. They can manage your payroll while guaranteeing adherence to local rules and regulations and offer full-service HR assistance.

The best payroll system for your company will rely on your unique business needs, resources, and preferences. You may efficiently handle payroll procedures and guarantee adherence to Swiss employment laws by selecting the appropriate strategy.

Taxes in Switzerland

Tax	Explanation
Income Tax	Gross income Tax Rate (%) CHF 0 to 28299 0% CHF 28300 to 50899 1% CHF 50900 to 58399 2% CHF 58400 to 75299 3% CHF 75300 to 90299 4% CHF 90300 to 103399 5% CHF 103400 to 114699 6% CHF 114700 to 124199 7% CHF 124200 to 131699 8% CHF 131700 to 137299 9% CHF 137300 to 141199 10% CHF 141200 to 143099 11% CHF 143100 to 144999 12% CHF 145000 to 895800 13% Over CHF 895900 11.5%
Tax Returns	Yes
Financial Year-End Date	December 31
Tax Documents	Not applicable
Corporate Tax	8.5% with additional cantonal-level taxes
Withholding Tax (For Non-Residents)	8%
Payroll Tax	No payroll tax is applicable
Sales Tax	8%
Employers’ Social Security and statutory contributions	Employers contribution: 5.275% Employee contribution: 4.2%
Public Pension	Between 7% to 18%
Medical Insurance	Every citizen of Switzerland is given health insurance to cover the expense of medical care in the event of an accident or illness.

Streamlining the process of establishing a subsidiary in Switzerland and managing essential operations such as hiring employees and setting up payrolls is crucial to expedite your expansion plans. Considerations like the city and location of your subsidiary play a significant role in this process. Generally, companies opt for a limited liability company (LLC) as it offers advantages for both the parent company and the subsidiary.

LLCs function as self-financing entities and follow a decentralised business model, which helps mitigate the risk of core business loss. To establish your subsidiary in Switzerland, follow these steps:

Step 1: Register your subsidiary: Choose a suitable business structure such as GmbH or AG and register it with the Swiss Companies Register. GmbH requires at least two shareholders with a minimum deposit of CHF 20,000 in a Swiss account, while AG has a minimum share capital requirement of CHF 100,000. Additionally, the director of the subsidiary must be a Swiss resident.

Step 2: Documentation: Once the required deposits are made in the Swiss account, the association articles should be drafted and notarized. Submit the notarized articles of association, along with the bank certificate, to the registry for incorporation. Finally, register for VAT to comply with tax regulations.

Why go through the complexities of subsidiary incorporation when you can rely on our expertise? We offer customised solutions to simplify the process and ensure compliance. Discover more about our tailored services and let us handle the intricacies of establishing your subsidiary in Switzerland.