If you’re expanding your company or seeking out-of-country talent, there are certain requirements you must follow for a successful partnership. Every country has different tax laws, contractual obligations, and compensation expectations that will determine the cost of hiring your new employees and how to conduct business with them. This is especially true in Switzerland, which consists of 26 separate cantons, each with its own standards, laws, languages, and even public holidays.
Learn how to find and secure talented workers with this guide to hiring employees in Switzerland.
What to know before hiring in Switzerland
Switzerland’s population of 8,453,550 is a combination of Swiss, German, French, Italian, Portuguese, Kosovo, and other residents who work together to create a cultural hotspot. Each canton uses the same national currency — the Swiss franc, also called the CHF, SFr, or FR. The country’s capital city is Bern — sometimes spelled Berne. Its largest sectors are the agricultural, chemical and pharmaceutical, engineering, watchmaking, tourism, banks and insurance, commodities trade, and retail industries.
Favorable corporate tax laws and cultural accessibility are two reasons many multinational corporations have established a base in Switzerland, but the country thrives on its small and medium-sized businesses. Unlike many other countries, you do not need to establish a company or legal entity in Switzerland to hire an employee. However, that doesn’t mean the process is without its complexities — you still must navigate each canton’s specific requirements.
All employer-employee relationships must abide by the following statutes:
- SR 151.11 — The Federal Act on Gender Equality
- SR 220 — The Code of Obligations
- SR 221.331 — The Federal Ordinance Against Excessive Compensations With Listed Companies
- SR 822.11 — The Federal Work Act
- SR 822.14 — The Federal Act on Workers’ Participation
- SR 823.11 — The Federal Act on Placement Agencies and Staffing Leasing Services
- SR 823.20 — The Federal Act on Deployment
Switzerland recognizes trade unions as long as they meet all legal requirements.
1. Cantons in Switzerland
Switzerland is divided into 20 cantons and six half cantons for a total of 26 separate entities. Though they all fall under the Swiss national umbrella, they are powerful entities on their own. Each canton has its own sense of tradition and culture and, by extension, its own societal expectations, language, dialect, and public holidays. They also have their own ways of self-governing, including laws, constitutions, and governmental structure.
When hiring new employees in Switzerland, you must be aware of the canton you are advertising your position in and the various laws and restrictions there. Once you hire employees, their canton-of-residency may also give insight into translation expectations or tax rates to include in your employment contracts, like which holidays to give them off and how much it will cost to employ them compared to equally qualified candidates from another canton.
How to hire in Switzerland also depends on specific communes — smaller governmental bodies residing within each canton.
2. The labor market in Switzerland
Switzerland’s labor force includes 5.067 million workers with low unemployment rates compared to other European countries. Workers here are highly skilled, with many holding degrees from higher learning institutions. In terms of early childhood education and secondary schools, the Swiss education system varies between cantons. Experts project half the country’s population between the ages of 25 and 65 will hold a higher education degree or advanced professional diploma by 2037.
3. Languages in Switzerland
Multilingualism is a core component of the Swiss culture, largely due to the Languages Act, which prioritizes respect and education for multiple Swiss languages. Roughly two-thirds of the country’s residents speak more than one language in the average week. Swiss children learn at least two of the national languages during their early education years.
Switzerland has four national languages — German, French, Italian, and Romansh — thanks to its cultural makeup and proximity to other countries. Swiss-German is the most widely spoken across cantons. French is common in western cantons and Italian in the south. Romansh is a lesser-used — but still important and nationally recognized — language that derives from the Rhaetian people, early inhabitants of the Alps region. Some additional, non-national languages spoken here include English, Portuguese, Spanish, and Serbo-Croatian. Some cantons and demographics also have their own dialects and colloquialisms.
All employment contracts, interviews, and assignments should account for your interviewee or employee’s native language or languages. It’s considered good practice to have all documents translated and to hire an interpreter when necessary.
4. Working hours and time off
The average employee in Switzerland works 40 to 42 hours per week with a varying maximum of hours per week depending on one’s specific industry and job. Companies subject to seasonal or weather-related operational changes may have increased weekly working hours — often between 45 and 50 total. They may also require overtime of up to four hours as long as the weekly average over six months doesn’t exceed the maximum. Employees who work five-day weeks can extend working hours by two hours if an eight-week average is below the maximum, or by four hours if a four-week average is below the maximum.
Many companies restrict or make provisions for overtime in the employment contract. Every employee is entitled to a 15-minute break every five and a half hours and a 30-minute break every seven hours. Employees working nine hours get at least a one-hour resting break. Employees working quick turnaround shifts have a right to at least 11 consecutive hours between shifts. Employees get at least one day off per week — usually Sunday.
Employees are entitled to sick time as needed, including three weeks within the first year of employment with a company. Each canton has its own paid time off and sick leave restrictions. Women must get a minimum of eight weeks off after giving birth and are legally entitled to 14 weeks of paid maternity leave. In 2021, Switzerland adopted a two-weeks paid paternity leave plan.
Regardless of their canton, every employee gets four weeks of holiday time each year, five if the employee is 20 or younger. Employees and employers can negotiate additional time off in their contracts if desired. National Day on August 1 is the only federal holiday, but cantons have their own local and public holidays. If National Day falls on a Tuesday or Thursday, it’s common to give employees a long weekend. Switzerland also celebrates New Year’s Day, Easter, and Christmas Day, but specific regulations for those times vary between employers. Some employees may choose to claim extra salary instead of taking a paid holiday.
5. Employment contracts
Swiss employees can be temporary, agency-supplied, part-time, or full-time. The first month of employment is considered the probationary period. You can agree in your employment contract to extend this to three months. If at any point you choose not to move forward with the partnership, you must give at least a seven-day notice.
Employment contracts are not required but are common and highly recommended since some terms are only legally recognized if they are in writing. Contracts are binding — an employer may not go against the terms of the agreed-upon contract. Switzerland has several laws to protect trade unions and some types of employees, like women or minors. Employers are required to have a written letter detailing the start date, job function, wage, and number of hours employees will work each week.
Though there is no time limit on how long a contract is valid, you are not permitted to issue “chain” contracts — a series of fixed-term contracts initiated back-to-back with the same employee. Once the last day of the contract is finished, the employee-employer relationship is over, with no notice required.
You and your employee agree upon an equal duration for giving a departure or termination notice. This notice should not be less than one month in the first year of employment and two months for every length of employment up to nine years. Three months is customary beyond that. You cannot terminate employees if they are pregnant, ill, or on maternity leave. You only need to pay severance if employees are age 50 or older and have worked for you for 20 years or longer.
6. Compensation and benefits
Switzerland has no federal minimum wage, but some cantons do. Employees are paid once at the end of the month. Statutory overtime includes time worked over the maximum number of legal working hours and should only be used in exceptional circumstances. Statutory overtime is different from contractual overtime and is only permitted during day or evening shifts on workdays. It must be compensated at the employee’s wage, plus an additional 25 percent premium. Employees can also choose to receive time off instead of the wage increase if they ask or agree to this arrangement. Statutory overtime should never exceed two hours per day per employee — with some exceptions granted in emergencies — and may never exceed 170 hours for 45-hour weeks or 140 hours for 50-hour workweeks.
Employers typically pay 80 percent — with a yearly limit — of an injured employee’s salary if they have suffered a work-related injury. The amount may differ depending on the industry or specific insurance plan. Employers are responsible for establishing a social security relationship between their employees and their canton’s social security office. Social security includes contributions to Maternity Leave Insurance (MSE), Disability Insurance (DI), Child Benefits Insurance (FZ), and pension, or Old Age and Survivors Insurance (OASI). Social security rates include 5.30 percent for the employer and 5.30 percent for the employee.
Bonuses and 13th-month salary are not required but are common. Employers may award bonuses contractually or at their discretion. Note that Switzerland has strict bonus guidelines in place for the financial industry.
If an employee has been with your company for longer than three months, works at least eight hours each week, and meets income requirements, the individual can participate in an employer-sponsored pension fund. The current minimum for AHV pension is 1,195 CHF. The employer is also responsible for accident insurance.
As of July 2020, the Swiss Federal Act on Gender Equality (GEA) requires all companies with 100 or more employees to conduct an internal audit to ensure pay equality is enforced.
7. Taxes
The 2021 federal income tax rate for individuals spans from 0.77 percent to 11.5 percent, though each canton and commune may have additional guidelines and reductions. The federal VAT rate is 7.7 percent.
Cost of hiring an employee in Switzerland
The total cost for hiring an employee in Switzerland includes:
- Job advertising
- New-hire onboarding, training, and paperwork
- Working with a hiring agency or internal committee
- Applicant tracking software
- Background checks
- A local bank account
- A local space to conduct interviews
- Any special equipment for employees
- A translator or interpreter
- Travel expenses for traveling to and from Switzerland, if necessary
- Employer pension contributions
- Employer social security contributions
- Bonuses or 13th-month salary, if applicable
- Employee vacation entitlement
- Employee paid time off and sick time entitlement
Hiring practices in Switzerland
You can recruit any eligible employee aged 18 and older when hiring someone in Switzerland, including management positions. Society prioritizes cleanliness, honesty, and hard work, which are evident in these expectations for professional interactions:
- Swiss culture values punctuality and organization, so be prepared for every interview and business meeting.
- Professional settings call for business-formal attire.
- Start meetings and introductions with a firm handshake and established eye contact. Do not break eye contact during your handshake.
- Use candidates’ last names and any titles — like Dr. or Mrs. — until they indicate you can call them by their first names.
- Avoid standing too close or invading personal space during conversations.
Remember to study your region closely for canton- and commune-specific cultural expectations or hiring guidance. A local expert can help with this.
What does a company need to hire in Switzerland?
It’s in your best interest to establish a relationship with a canton’s local economic offices or embassy. You do not need a legal entity to hire there, but if you choose to start a Swiss company, you can choose between:
- A single-owner sole proprietorship
- A general partnership
- A limited partnership
- A corporation or joint-stock company
- A limited liability company
- A subsidiary
- A local branch of an established business
Branches are one common route for outside companies and require you to pay local taxes and maintain at least one Swiss resident with legal authority. You must have all legal documentation, contracts, and established financial accounts prepared. One way to avoid the hassle of creating a company is to work with Globalization Partners’ global employment platform.
Hiring remote employees in Switzerland
Before 2020, 496,000 Swiss employees occasionally worked remotely, while others worked more than half of their jobs from home. 2020 saw an expected increase in the number of people working from home, with 22 percent of employees reporting feeling more productive than before. Remote employment is expected to remain an important part of the workforce moving forward.
As you’re scheduling remote interviews, remember to compare your local time zone to your interviewee’s and choose a time that accommodates each of you. Switzerland writes the date in day/month/year format. Note all critical information, like the country code, +41, and the internet code, .ch.
Find top talent in Switzerland with help from Globalization Partners
Globalization Partners’ global employment platform can help you navigate the complexities of hiring out-of-country employees. Our technology makes complying with a specific canton’s and commune’s guidelines as you hire employees in Switzerland seamless. Our full stack global employment platform expedites entity setup, employment logistics, and payroll. That means you can focus on your daily operations and establish strong international relationships. Learn more about how our AI-driven platform will benefit your company. Request a proposal today.
