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Comprehensive Guide to Employment and Labor Laws in Switzerland

Switzerland has some of the most flexible forms of employment & labor legislation globally. The WEF Global Competitiveness Report has ranked Switzerland among the top three countries regarding flexibility in the recruitment and dismissal of employees. 

Entrepreneurs and global companies face low incidental wage costs. Strikes in Switzerland have been far more infrequent among other European countries in the last decade. Switzerland also attracts skilled immigrants who settle in the country for exciting work opportunities. 

Companies planning to expand their business operations and hire local talents must enter into an employment relationship in compliance with Switzerland’s labor law. Some of the basic labor regulations in Switzerland are 

  • a maximum of 45-50 hours of work weekly
  • minimum four weeks’ working days of annual vacation leave 
  • 98 days of maternity leave in Switzerland for foreigners and citizens

This page on employment law in Switzerland guides you through the most critical aspects of the labor code, including working hours, leave schemes, payroll taxes, dismissal rules, and data privacy obligations. 

Applicability of the Act

Registered employers must extend the benefits under the labor law in Switzerland to every employee, irrespective of nationality. 

The labor law in Switzerland encompasses a broader idea of employee rights, social protections, and greater transparency in wage payment between employers and unions. Switzerland’s employment law derives a legal framework from the labor laws and applies it to the individual relationship between employers and employees. 

In general, independent contractors or freelancers are outside the scope of Switzerland’s employment law. However, specific provisions like working hours may still apply to certain employment relationships like an apprentice, traveling salesperson, etc. 

Further, individuals hired for the post involving significant decision-making power are usually kept outside the purview and protection of labor law in Switzerland, like working hours, overtime protection, leave compensation, dismissal rules, employee privacy, etc. They may negotiate a suitable contract with the employer based on their professional competence. 

Employment Contract

An employment contract details two critical aspects of an employment relationship: 

  • the employer must pay the salary, and social insurance contributions and grant paid leave as per labor laws
  • the duty of the employee to provide the work envisaged

Employers may provide written contracts for fixed-term or indefinite-term employment relationships to avoid misinterpretation and legal complications in the future. 

As per the Swiss employment rules, employers may conclude employment contracts within one month of the employment, mentioning the following details: 

  • Employer and employee name 
  • Date of commencement of the employment
  • The employee’s job role
  • The weekly working hours
  • The salary and any allowances

The labor regulations in Switzerland also allow employees to have more than one job. Employers may have specific restrictions on the same in the contract. 

Key Provisions of the Act

Switzerland’s employment rules and employer obligations are derived from the statutory laws below. These statutory laws also form the legal framework popularly referred to as the labor act in Switzerland. 

  • the Federal Constitution
  • the Federal Work Act 
  • the Code of Obligations 
  • the Federal Act on Workers’ Participation 
  • the Federal Act on Gender Equality
  • the Federal Act on Deployment 
  • the Federal Act on Placement Agencies and Staffing Leasing Services 
  • the Federal Ordinance against Excessive Compensations with Listed Companies 
  • Other statutory laws on Swiss social security and social insurance, and  collective labor agreements in specific economic sectors

Some of its key provisions, including working hours, leave schemes, payroll taxes, dismissal rules, and employee privacy obligations are discussed below. 

Working hours 

  • Switzerland’s employment law obliges employers to record and document employees’ working hours. 
  • Employers must also retain the record of working hours for five years.
  • Employers may use any one of the following tools to record working hours:
  • Electronic or mechanical clocking in and out attendance systems
  • Manual entry and excel documents
  • Specialized software or mobile applications
  • The average working hours in Swiss labor law is 40-44 hours a week, varying on the employment field. 
  • Switzerland’s working hours law includes service trips abroad. 
  • Employers may provide an average daily rest of 11 hours as prescribed under the labor code in Switzerland. 
  • Recent reports suggest that a four-day workweek is becoming a reality in some small businesses in Switzerland. 
  • The daily rest period for breastfeeding employees varies between 30 to 90 minutes. 
  • Employers must also ensure working hours and break times fall within statutory limits for employees with multiple jobs. 
  • Employers are generally forbidden from asking employees to work at night, Sundays, or on public holidays. 

Overtime 

  • Employers may ask their employees for overtime work under the following circumstances: 
  • when an urgent deadline needs to be met 
  • when the Swiss labor act rules are respected, notably the maximum duration of a working week 
    1. A maximum of 45 hours per week in industrial companies and for office and technical staff, sales employees
    2. The limit is 50 hours for other employees.
  • Switzerland’s employment rules prescribe a yearly buffer of 60 hours for office employees.
  • The labor regulations in Switzerland allow employers to exclude overtime compensation through a written contract. 
  • Employers must compensate at the hourly rate plus a 25% premium.
  • Switzerland’s labor law obliges employers to arrange medical examinations with counseling for employees who regularly or periodically perform night work. 

Minimum wage

Switzerland’s employment rules do not prescribe a mandatory minimum wage. 

Employers are expected to compensate their employees with fair wages equivalent to their work. The labor law in Switzerland mandates bonus payments over and above the salary on occasions, such as at Christmas. Additionally, a 13th salary or bonus month payment is not compulsory but usually common in Switzerland. 

Public holidays 

  • Swiss labor law fixes nine public holidays per year.
  • August 1 is the only public holiday celebrated throughout Switzerland 
  • 26 cantons have their additional public holidays 
  • Employers may consider public holidays as Sundays for all legal purposes, i.e. 
  • Employees cannot ask their employees to work on public holidays
  • Whereas employers must apply for legal authorization to make employees work on public holidays 

Leave schemes

  • Birth & Parenting Leave (BPL):

Employers pay 80% of the salary or no more than CHF 196 per day for BPL employees. Further, cantonal provisions or individual employment contracts may provide more generous arrangements. Some standard benefits under BPL: 

Maternity leave

  • During pregnancy, the labor law in Switzerland prescribes maternity insurance and protection against wrongful dismissal. 
  • Employers must grant at least 14 weeks ( 98 days) of paid maternity leave after the birth. 
  • Employers may also grant an additional two weeks of unpaid leave after the mandatory 14-week period. 
  • Employers may grant paid maternity leave in Switzerland to employees who have worked at least five months during pregnancy.

Paternity leave

  • Effective January 01, 2021, the labor code in Switzerland prescribes two weeks (14 days) of paid paternity leave for eligible employees. 
  • Employers need not grant paid paternity leave at a stretch. 
  • There is no provision for shared paternity leave in Switzerland.  

Annual leave:

  • Switzerland’s labor code entitles at least four weeks of annual paid leave. 
  • An individual employment contract or a collective bargaining agreement may, of course, provide for more leave.
  • The labor code in Switzerland also prescribes paid leave for part-time employees in proportion to the hours worked.
  • However, employers can reduce these paid annual leave entitlements in case of extended absence. 

Other leaves 

Switzerland’s labor law mandates employers to grant leave during ordinary working hours, without employees having to use their paid vacation, say, leave for personal reasons, family events, or even job searches. 

Additionally, employers must grant paid leaves for employees under 30 for youth and sports activities.

Sickness leave:

  • The Swiss labor law ensures salary for employees who have met with an accident or are ill. 
    1. When employment contracts provide daily insurance: Employees receive at least 80% of their salary for 720 or 730 days over 900 days.
    2. When employment contracts do not provide daily insurance: Employers pay three weeks’ salary during the first year and, after that, extend based on the duration of working relations. 
  • Employers can verify the employee’s incapacity by hiring an independent medical officer. 

Child illness

  • Employers may grant up to three days of paid leave to care for sick children. 
  • The labor law in Switzerland does not put the onus on the employer for the prolonged absence of employees attending to their child’s illness. 

Military service

  • Switzerland’s labor act rules oblige employers to grant leave for military service or civil service.
  • Employers must pay 80% of the employee’s daily salary.
  • However, the employer receives daily compensation under the allowance for loss of earnings scheme.

Payroll taxes & obligations

The financial year in Switzerland runs from 1 January to 31 December. Here are various payroll tax obligations for employers as per Switzerland’s labor laws –   

  • A registered employer in Switzerland is required to:
  • deduct and withhold taxes (Quellensteuer system) and social security contributions from the salaried employee
  • pay & file withheld taxes to authorities monthly or quarterly, depending on the number of employees and canton 

Income taxes deduction

  • Swiss federation and the Swiss cantons and communes levy income taxes on individuals. 
  • Income taxes in Switzerland are progressive and generally vary across cantons and communes. 
  • Individuals are taxed in proportion to their personal circumstances, such as single taxpayers, taxpayers with dependents, or married taxpayers.  
    1. Varies between 12% to 27.2% for employees earning a gross annual income of CHF150,000 
    2. For a gross annual income of CHF500,000, the income tax rate varies between 19.5% and 37.05% 

Social security contributions

  • As of January 01, 2022, compulsory social security contributions are 10.6% of gross wage (deducted as 5.3% from employees and 5.3% from the employer)
  • Old age and survivor insurance (AHV) is contributed equally among employers and employees at 8.7% of the total salary. 
  • Disability insurance (IV) is at 1.4% of the total salary
  • Both employers and employees contribute 0.5% of the salary for income compensation in case of service or maternity (EO).
  • Employers also contribute towards mandatory accident insurance (UVG) and unemployment insurance (ALV) for employees with wages up to CHF148,200. 
  • Employer contribution to family compensation fund (FAK) depends on the cantonal legislation in force.
  • The labor law in Switzerland allows employers to offer occupational benefit plans and deduct insurance premiums from employees’ salaries. 
  • Employers bear all administrative costs (VK) related to the registration of employees and fee payments. 
  • Social security obligations also apply to foreigners employed in Switzerland. 

Payslip

  • Swiss employment rules prescribe a monthly payroll cycle with payments made on the 25th of each month.
  • There is no template for payslips as per the labor code in Switzerland. We recommend employers mention the following details in the employee payslip:
  • Information about the employer and employee, like their social security number, company code, employee code, etc. 
  • Time worked by the employee
  • The rate at which the employee is paid 
  • Employer’s social security and other contributions
  • Date of paying the remuneration
  • Total amount paid 

Employee termination

The labor law in Switzerland does not require employers to provide a reason or justify their action of employee termination. However, employers are advised to take enough legal precautions before mass terminations. 

Notice period:

  • Employers may ask employees to serve a notice period before the termination of the employment contract. 
  • The labor regulations in Switzerland mandate notice periods must always have the same duration for employers and employees.
    1. One month during the first year of employment 
    2. Two months between the second and ninth year of employment
    3. Three months beyond nine years of employment
    4. Seven days during the probation period 

Severance payment:

  • Switzerland’s labor law is not stringent on employers regarding severance payment. 
  • Employers make severance payments only if the employee affected is over 50 and has worked for more than 20 years for them. 
  • Employer obligation to pay severance wage is eliminated if the employer contributed to the employee social security scheme. 
  • Otherwise, the statutory requirement for severance payment is two months’ salary. 

Data protection and employee privacy

Even though the European Union’s General Data Protection Regulations (GDPR) do not apply directly, the labor regulations in Switzerland enforce the Code of Obligations upon employers while monitoring, processing, and storing employee data at the workplace. 

The Federal Data Protection and Information Commissioners (FDPIC) in Switzerland regulate and supervise any activity involving personal data protection, including employee data and background checks. 

Employers are prohibited from using monitoring systems that directly control employees’ behavior in the workplace. Further, Switzerland’s employment rules limit employers from handling employee data restricted to employment relationships only. 

Penalties 

The labor law in Switzerland provides for specific instances of penalties on employers:

  • Employers may be fined, or companies shut down in the event of not recording employee work hours. 
  • Employers may be liable if a foreigner starts working without qualifying for an appropriate residence and work permit.
  • Employers are penalized for late tax payments up to 5% of the outstanding/due amount. 

Upcoming Changes

Switzerland’s direct democracy approved a bill on 25 September 2022 to harmonize the retirement age of men and women at 65 years and introduce changes in Old Age and Survivors’ Insurance. The provisions of the bill will come into effect from 1 January 2024. Read the official notification here

Compliance Strategies for Employers

Employers in Switzerland must follow the labor act rules to maintain a responsible, safe, and effective workplace while hiring and managing employees. Entrepreneurs and global companies can use adherence strategies to comply with Swiss labor law. 

Standard employment contract:

  • The labor regulations in Switzerland mention guidelines and minimum requirements for the working conditions of employees. 
  • Companies may follow these guidelines to draft contracts and manage their employees in Switzerland. 

Forming an in-house HR team:

  • Companies may hire HR experts to draft job-specific employment contracts, payroll management, and compliant hiring following Swiss labor law. 
  • HR experts shall also look after recording working time, workplace conditions, organizational changes, employee appraisals, etc. 

Outsourcing to an independent firm:

  • Contemporary times have witnessed a rise in SaaS-based HR solutions while hiring and managing global employees.  
  • Such third-party firms can draft employment-related legal documents, manage payroll, and more. 
  • Employers usually choose them for compliant global expansion quickly and with minimum effort. 

How Can Multiplier Help?

Switzerland implements European Union Directive No. 533/91. This forces employers to avoid uncertainty and insecurity about the terms of the employment relationship and to provide employees with improved protection.  

Having a well-written employment contract in a language understood by employees and employment terms compliant with Switzerland’s labor law can help in hiring. You can collaborate with a global PEO platform like Multiplier to simplify hiring and managing employees. 

Using Multiplier, entrepreneurs and global companies can quickly hire and manage local talents through automated employment contracts and ensure compliant business expansion in 150+ countries, including Switzerland. 

Not just that, but experts at Multiplier can help you draft employment-related documents in multiple languages as prevalent in the country of operation, such as Switzerland.

Frequently Asked Questions

Switzerland’s labor law recognizes trade unions with the following conditions:

  • Unions must be independent of employers, i.e., have organizational independence
  • Unions must be independent of third parties, i.e., governmental authorities
  • Unions must not enforce membership

Trade unions can enter collective bargaining agreements and organize strikes or employee lock-outs.

Employers may be liable for the maximum compensation amounts for discriminatory dismissal equivalent to six months of the employee’s legal and contractual entitlements. Employers are also held liable for discrimination or harassment of employees by colleagues in the workplace. 

Employers own all IP rights, even if it is created in the performance of the employee’s duties. However, employees can acquire IP for their work not performed under contractual duties against payment of adequate compensation to the employer. 

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