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Employment in Switzerland

Swiss employment law appears complex and confusing when looking from an outside view, although in some ways there are many similarities to other countries.

Compared to the laws of most European countries, Swiss employment law is quite liberal, particularly in relation to terminations of employment contracts.

Apart from gender discrimination and sexual harassment, Swiss law does not require an employer to treat all its employees the same under similar conditions. Only a discrimination of a single or a small group of employees might be prohibited if it amounts to a violation of such person’s personality. Swiss legal requirements are divided between the federal level and the cantonical level.

Therefore, the points below are general guidelines and particular requirements will vary from canton to canton. For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Switzerland

Key points on employment in Switzerland

There are several key areas to be aware of within Switzerland’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the Swiss laws and rules for both Swiss employees as well as foreign nationals.

  1. Probation Period

    The first month of the employment relationship is considered a probation period. Longer probation may be agreed upon by written agreement, standard employment contract or collective employment contract; however only to a maximum of three months.

  2. Termination

    Notice Period

    The required notice periods in Switzerland are:

    • During the probationary time period: seven days notice
    • During the first year of employment: one month notice
    • From the second to the ninth year of employment: two months notice
    • From the ninth year of employment: three months

    The time period commences on the date of the receipt of a notice.

    Procedure

    Ordinary termination with a time period of notice is the usual procedure for the termination of a contract of employment having an indeterminate time period. The terminating party does not need any reason for terminating the employment relationship, however the act must not constitute discrimination or other unlawful motive. Upon request of the other party, the party giving notice has to provide the reasons for the termination in writing.

    There are certain special limitations on terminating employees under Swiss law. This prohibits employers from terminating employment relationships (where the employment lasted for over three months or is fixed term of over three months), during the following:

    • During periods which the employee is prevented from performing work fully or partially by no fault of his or her own – e.g. due to illness or accident for up to 30 days in the first year of service, for up to 90 days as of the second year of service until and including the fifth year of service, and for up to 180 days as of the sixth year of service;
    • During pregnancy and during the 16 weeks following the lying-in of an employee;
    • During the employee’s participation, with the agreement of the employer, at a foreign aid service assignment abroad ordered by the competent federal authority; and
    • During the employee’s performance of compulsory Swiss military service, civil defence service, military women’s service or Red Cross service and, in case such service lasts more than 11 days, during the four weeks prior to and after the service.

    Severance Pay

    Severance pay is only due if the employee is at least 50 years old and if, furthermore, he or she has been employed with the same employer for at least 20 years. The amount of severance pay may be arranged in written agreement or a collective bargaining agreement, but must equal at least the employee’s wages for two months

  3. Leave

    Annual Leave

    The amount of annual leave required by Swiss law is:

    • Four weeks for workers and apprentices over 20 years old
    • Five weeks for workers and apprentices up to 20 years old

    Maternity Leave

    Maternity leave entitlement is for up to 98 days (14 weeks). Both full-time and part-time employees are entitled to maternity leave. Mothers are paid 80% of their wages in the form of a daily allowance, but no more than CHF 196 per day.

    Sick Leave

    Employees are generally entitled to paid sick leave, provided that the employment relationship has existed for more than three months. The duration of allowable paid sick leave however may vary from Canton to Canton, and for each will depend on factors such as the years of service. As an example, the courts of the Canton of Zurich apply the following:

    • First year of service (above three months): 3 weeks
    • Second year of service: 8 weeks
    • Third year of service: 9 weeks
    • Fourth year of service: 10 weeks (and so on).
  4. Pension

    The Swiss social security system is based on a ‘three pillar’ system.

    The first pillar consists of:

    • AHV (Age and Survivors’ Insurance)
    • IV (disability insurance)
    • EL (supplementary benefits)
    • EO (income compensation regulations, maternity insurance)

    Employees and employers each contribute 5.15% of the total income from employment (8.4 % for the AHV, 1.4 % for the IV and 0.5% for the EO total 10.3%).

    The second pillar includes:

    • BVG (Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans)
    • UVG (Swiss Federal Law on Accident Insurance)

    The insured and the employer usually pay equal contributions to the pension fund. The amount varies but employer must contribute an amount that equals at least the contributions of all employees together.

    The third pillar is third Voluntary Personal Pension Provision and is not contributed to by employers.

Outsourcing Employment Through a GEO Employer of Record Service

Companies entering Switzerland can make a decision whether to use their own resources or to use a Global Employment Organization to handle employment and payroll responsibilities. A GEO solution is particularly beneficial when a company is looking to setup an office quickly with a manageable cost. The complexity of employment regulations in Switzerland makes the use of a GEO advisable to ensure full compliance with employment laws, including the drafting of local employment contracts for workers.

The company that is expanding into Switzerland contracts with the GEO to employ and payroll their staff on their behalf. The GEO then assumes the legal responsibility for these employees, sponsoring them on work permits if necessary, complying with local employment law and running their monthly payroll. This is especially useful to fulfill all of the specific withholding requirements for pensions and benefits, as well as documenting termination, probation periods and leave requests.

 

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