- Overview: Switzerland
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Switzerland
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Switzerland Guide below will help you understand the nuances of labor legislation in the country.
Companies hire international workforce for various reasons but in most cases they are:
- entering the foreign markets to sell company products. To do so, the company hires sales representatives who would represent their product and sell it to their local client base.
- hiring a global talent with unique skills that is unavailable in the local market or costs the company less than the talent with similar skills hired in the home country.
Before entering a certain foreign market or engaging a global talent, it is crucial for the company to understand how it can make local hires and reward its workers on a monthly basis. Growing companies often face a challenge of paying benefits and bonuses to the commission-based independent sales representatives they are working with.
If you intend to hire and pay your foreign workforce in full compliance with labor laws and regulations of Switzerland, then the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company and we specialize in global employment, meaning we can employ your employees in Switzerland and act as their legal employer on your behalf. We will payroll your foreign workforce monthly and provide benefits to them through our global network so you don’t have to set up your own legal entities there.
We are experts in global workforce employment in , and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Switzerland.
Hiring and Firing Workforce in Switzerland Guide
By all reasonable criteria, Swiss market it a good destination for those considering international expansion. Its stable economy evident in the low inflation rate, low tax rate, relatively strong and stable currency, top-notch socio-economic infrastructure, high workers’ salary, highly welcoming orientation to investors (local or foreign), to mention just a few, have made it one of the most attractive places in Europe and the world to do business. Having considered the benefits of doing business in Switzerland, Acumen International has compiled some vital information that will guild you through your journey toward expanding to Switzerland.
# Employment Agreements
Permanent employment contracts
The employment contract contains essential information such as the names and addresses of the employer and employee, the position, the salary and the weekly working hours. Anything not expressly set out in the contract is, as a general rule, regulated by the Swiss Code of Obligations or by a collective bargaining agreement (CBA), if applicable. In some sectors, standard employment contracts (SEC) exist. The SEC replaces the individual employment contract and functions in the same way. However, the clauses of an SEC are non-negotiable. They have been defined in advance in order to guarantee the worker a minimum salary and social security benefits. When an SEC exists for a given profession, the employer has no choice but to submit to that SEC. The only option for not using the standard contract is to agree on a contract which favors the worker even further, with a higher wage for example. Standard employment contracts usually concern non-unionized professions which need to be regulated to avoid wage dumping. There is an SEC at the federal level for workers in the domestic economy. Other SECs depend on the canton and concern sectors such as design, call center operators and construction.
There is no limit to the duration of a fixed term contract. However, if the same parties enter into successive employment contracts without an objective reason to do so, a court may consider that the parties have in fact entered into an employment agreement for an unlimited period. In this case, provisions governing employment agreements of unlimited period (such as notice periods in the case of dismissal) will apply.
Collective agreements set the terms and conditions of employment, which include, amongst others: categories and related job descriptions; duties and obligations; minimum wages; job retention rights during absences due to illness; salary increases due to length of service; termination, resignation, criteria for calculation of the severance pay; night work; maternity leave; and holidays. Collective agreements are concluded for from two to five years. In the meantime, there are annual wage negotiations in the autumn, at which the wage increase for the beginning of the following year and possibly other wage components are negotiated. In exceptional cases, wage agreements for more than one year are concluded.
#Employment Termination and Severance Pay (Dismissal)
As a principle, both parties to an employment contract may terminate the employment agreement at any time, subject to either the statutory or contractual notice period; without the need to fulfill any statutory grounds for termination. The party issuing the termination must however provide a written explanation of the termination upon the other party’s request. A specific ground for terminating the employment contract is not required. The employer is however prohibited from dismissing an employee for specific reasons. Generally, a dismissal is deemed abusive if issued:
- Due to a quality inherent to the personality of the employee (for example, dismissal due to race or gender).
- Because the employee exercises a constitutional right.
- To prevent an employee from asserting contractual claims (for example, a contractually agreed severance payment).
The parties can terminate the employment agreement at any time, based on their mutual consent, by entering into a termination agreement. Entering into such an agreement typically results in the employee waiving certain mandatory rights pertaining to the employment relationship. In particular, the parties may agree to terminate the agreement before the end of the contractual notice period, which implies that the employee renounces part of their right to their salary. In addition, the parties usually agree on terminating the employment relationship on a particular date, causing the employee to waive their right to be protected against termination and to receive their salary during a certain period of time if they are prevented from working due to illness. By law, the employee may validly waive claims resulting from mandatory rights only one month after the end of the employment agreement. Therefore, the validity of termination agreements is subject to limitations. According to case law, such agreements must include equivalent ‘reciprocal concessions’. More precisely, the employer must grant the employee what they are legally and contractually entitled to obtain until the end of the notice period (including e.g. compensation for overtime or untaken vacation days), as well as an ‘additional allowance ‘as a compensation for the waived rights. The Swiss Federal Supreme Court has not established clear criteria with regard to the method of calculation of this additional allowance.
#It is prohibited to dismiss
The following categories of workers enjoy absolute protection against dismissals:
- Pregnant mothers: during the pregnancy and 16 weeks following the birth of the child
- Employees who are fully or partially prevented from working due to an illness or accident: during a period of 30 days in the first year of service, 90 days from the second to the fifth year of service (included), and 180 days after the sixth year of service
- Employees performing a compulsory military or civil defense service (provided that the service lasts more than 11 days): for the duration of the service, as well as the four weeks preceding and following the service
- Employees participating in a foreign aid programme assigned by the Federal authorities, with the employer’s consent: for the duration of the programme.
During the trial period the statutory minimum notice period is seven days (Article 335b CO). After the trial period, the statutory minimum notice periods are one month during the first year of service, two months from the second to the ninth year of service (included), and three months thereafter (Article 335c CO). Longer or shorter notice periods can also be agreed upon by the parties in writing, in a collective labour agreement or in a standard employment agreement. However, after the trial period, the notice period cannot be shorter than one month, unless otherwise provided in a collective labour agreement and in any case limited to the first year of service. The employment agreement ends at the end of a month, unless otherwise agreed. It is mandatory that notice periods be of the same length for both employer and employee. Should the employment agreement state otherwise, the longest notice period is applicable to both parties.
Employees are not entitled to any financial compensation (such as a severance payment) upon termination of their employment agreement. Nevertheless, the Swiss Code of Obligations provides a compulsory rule on mandatory compensation for employees who are over 50 years of age and have worked for more than 20 years for the same employer. In practice, however, this rule is of very little significance insofar as payments made by the employer to the employee‘s pension fund can be deducted from the compensation due by the employer
#Employee Benefits and Contributions
Mandatory benefits required by law to be provided by an employer
- Minimum paid holiday entitlement
- Public holidays
- Entitlement to paid sick leaves
Basically, the Swiss employer is fully liable to social security contributions in respect of its employees. This system, however, only applies to resident employers and non-resident enterprises having a permanent establishment in Switzerland. The contributions are borne fifty-fifty by both employer and employees. However, the employer contributes insurance premiums for occupational accidents and diseases. He can deduct insurance premiums for non-occupational accidents (as well as the employee’s share for pension, sickness and unemployment insurance) from the employees’ salary. The rates are, in general, based on the gross salary.
Non-mandatory benefits that are offered by an employer
Travel costs from your home to your place of work, usually consisting of a second-class rail season ticket or the equivalent cost, paid monthly with your salary. Companies without a staff restaurant or canteen may pay a lunch allowance or provide luncheon vouchers. Expenses paid for travel on company business or for approved training and education may be detailed in a separate document.
Travel (Reisespesen, frais de voyage) and relocation expenses to Switzerland depend on your agreement with your employer and are usually included in your employment contract or the employer’s general terms. If you’re hired from outside Switzerland, your air ticket (or other travel costs) are usually booked and paid for by your employer or his agent abroad. In addition, you can usually claim any extra travel costs, for example the cost of transport to and from airports. If you travel by car to Switzerland, you can usually claim a mileage rate or the equivalent air fare cost. Most Swiss employers pay your relocation expenses up to a specified limit, although you may be required to sign a contract which stipulates that if you leave the employer before a certain period elapses (e.g. five years), you must repay a percentage of your removal costs, depending on your length of service. An employer may pay a fixed relocation allowance based on your salary, position and size of family, or may pay the total cost of removal. The allowance should be sufficient to move the contents of an average house (castles aren’t usually catered for) and you must normally pay any excess costs yourself.
The trial period is, by statutory law, considered to be the first month of an employment relationship. However, the probation period may not exceed three months. Where the period that would normally constitute the probation period is interrupted by illness, accident or performance of a non-voluntary legal obligation, the probation period is extended accordingly.
Overtime is defined as hours worked in excess of the normal weekly working hours. An employee is obliged to work more than the normal working hours to the extent that the employee can in good faith be reasonably expected to do so. By statutory law, overtime must be compensated with an additional premium of 25%. It is, however, permissible to agree in writing that overtime work will not be compensated with an additional premium or even not compensated at all. It is also possible, subject to the employee’s consent, for overtime to be compensated by time off of at least equivalent duration. Contracts with management-level employees usually completely waive their right for overtime, either by payment or time off.
In the majority of Swiss companies, the normal weekly working hours under an employment contract of a collective bargaining agreement are between 40 and 44 hours. The legal maximum weekly working hours are 45 for industrial workers, office, technical and other employees including salespersons in large retail stores; for all other commercial enterprises, the legal maximum weekly working hours are 50.
The minimum paid annual holiday entitlement in Switzerland for all employees is four weeks. Young employees up to the age of 20 are entitled to five weeks of holidays per year. Vacation must be used and cannot be compensated by payment; compensation of vacation by payment is admissible only at the end of an employment relationship. For the duration of their holidays, employees are entitled to the same pay as if they were working. Part-time employees and employees paid on an hourly basis are entitled to pro-rata holiday time.
Rules regarding medical leave are as follows:
- If the employee is prevented from working by illness or accident and the legal requirements are met, the employer is obliged to continue salary payments for a limited time. Many employers take out insurance which provides coverage against loss of salary in the event of medical leave.
- Under certain circumstances, employees may request time off to care for sick children
- Code of Obligations prohibits employers from giving termination notices to employees who are prevented from working by illness or accident for up to: 30 days in the first year of service, 90 days in the second to fifth years of service and 180 days in the sixth and subsequent years of service.
Maternity leave lasts 98 days (or 14 weeks) from the day it starts. Both full-time and part- time employees are entitled to maternity leave. Women who return to work earlier lose their entitlement to compensation. Cantonal provisions, staff rules and collective labour agreements may provide additional solutions. Women must not work during the first eight weeks after the birth.
Employers must grant time-off to fathers with a new child, but this I is limited to a couple of days. There are no statutory rights to longer paternity leave, but some collective bargaining agreements and individual agreements provide for a right to take paternity leave.