Switzerland requires 13-month salaries (sometimes 14), mandatory pension contributions, and strict termination procedures. Miss the 13th-month payment and you'll owe back wages plus penalties when employees find out their rights.
The math gets worse when you factor in setup costs. A Swiss entity runs €15,000-30,000 upfront plus 3-6 months of legal paperwork. Your perfect hire can't wait half a year while lawyers shuffle documents.
Option 1: Set up your own entity
- Cost: €15,000-30,000+ upfront, €8,000-15,000 annual maintenance
- Timeline: 3-6 months minimum
- Complexity: Commercial register, tax registration, social security setup, payroll infrastructure
- Makes sense when: Hiring 15+ people long-term, permanent Swiss market presence
Option 2: Hire contractors
- Cost: None upfront, but limited control
- Timeline: Immediate
- Risks: Misclassification fines (€50,000+), back social security payments, employment law violations
- Makes sense when: Short projects (< 6 months), specialized consulting work
- Note: Hire with Columbus also handles contractor agreements and payments
Option 3: Use an employer of record (Recommended for most)
- Cost: $179/month per employee
- Timeline: 2-3 days to hire
- Complexity: None - we handle everything
- Makes sense when: 1-20 employees, testing the Swiss market, multi-country teams
If you're hiring 1-5 people, entity setup costs more than 4-5 years of EOR fees ($179/month = $2,148/year per employee). An EOR like Hire with Columbus handles employment contracts, the 13th-month salary, pension contributions, tax compliance, and all the Swiss-specific requirements that trip up foreign companies.
Ready to hire in Switzerland without the compliance headaches? Get started with Hire with Columbus.
What employment types can you use?
You've got three paths to bring someone onboard in Switzerland, and the costs tell the story: entity setup runs €25,000+, while an EOR costs $179/month per employee. Here's how they actually compare.
How can you hire in Switzerland?
| Approach | Upfront Cost | Timeline | Best For | Key Considerations |
|---|---|---|---|---|
| Set up your own entity | €25,000-35,000 | 4-6 months | 20+ employees, permanent presence | Full compliance burden, ongoing legal costs |
| Hire contractors | €0 | Immediate | Short projects (<6 months) | Misclassification fines up to €50,000 |
| Use an EOR (Recommended) | $179/month | 2-3 days | 1-50 employees, market testing | We handle all compliance and payroll |
Setting up your own entity makes sense if you're planning a permanent Swiss operation with 20+ employees. You're looking at €25,000-35,000 in incorporation costs, plus ongoing accounting fees of €3,000-5,000 annually. The timeline? Four to six months before you can legally employ anyone.
You'll need to register with cantonal tax authorities, set up payroll systems, and deal with Switzerland's complex social insurance requirements. That's before you hire your first person.
Hiring contractors seems faster, but Switzerland's employment laws are strict about misclassification. If someone works exclusively for you, follows your schedule, or uses your equipment, they're probably an employee in the eyes of Swiss authorities.
The penalties hurt: up to €50,000 in fines plus back taxes and social contributions. One audit can cost more than years of proper employment.
Using an employer of record like Hire with Columbus lets you hire legally in 2-3 days instead of months. We become the legal employer in Switzerland while you manage day-to-day work and performance.
The math works: five employees cost $895/month with an EOR versus €25,000+ to set up an entity, plus ongoing compliance costs. You're saving money and avoiding legal headaches.
Employment contract types in Switzerland
Once you've decided on an EOR approach, you'll need the right contract type. Switzerland recognizes several employment arrangements, each with specific rules.
Permanent contracts (unbefristeter Arbeitsvertrag) are your go-to for core team members. No end date, standard notice periods, and full benefits. Most Swiss employees expect permanent contracts after a probationary period.
Swiss law allows probationary periods up to three months with one month's notice from either side. After that, notice periods extend based on tenure.
Fixed-term contracts (befristeter Arbeitsvertrag) work for specific projects or temporary coverage. Maximum duration is typically three years, though you can renew once. After that, the contract automatically becomes permanent.
Be careful here. If someone works beyond their contract end date, even by a day, Swiss courts often rule the contract has become permanent. We handle these transition dates for you.
Part-time contracts give employees the same rights as full-timers, just prorated. Someone working 60% time gets 60% of the salary and vacation days, but full health insurance coverage.
Part-time employees can request schedule changes, and Swiss law generally favors work-life balance arrangements.
Temporary contracts through agencies let you test someone before hiring directly. The agency remains the legal employer, but you can offer permanent employment after the assignment ends.
| Contract Type | Max Duration | Notice Period | Best For |
|---|---|---|---|
| Permanent | Indefinite | 1-3 months | Core team members |
| Fixed-term | 3 years | Per contract terms | Project work, maternity cover |
| Part-time | As agreed | Same as full-time | Flexible arrangements |
| Temporary | 18 months | 1 week | Trial periods |
Which contract should you use? For most international hires, start with a permanent contract after a three-month probationary period. It's what Swiss employees expect, and it gives you flexibility to build your team.
Hire with Columbus handles all contract drafting, ensuring compliance with Swiss employment law and cantonal requirements. We'll recommend the right structure based on your specific situation and handle any transitions between contract types.
How does payroll and taxation work?
Your €60,000 employee actually costs €82,500 per year in Switzerland. Here's the breakdown of what makes Swiss payroll so expensive.
Switzerland has a multi-layered tax system with federal, cantonal, and municipal taxes. Add in social security contributions, mandatory insurance, and the famous 13th-month salary, and your payroll costs jump way above base salary.
Swiss tax brackets for 2025
Federal income tax rates are just the beginning. Cantonal and municipal taxes vary wildly by location.
| Annual Income (CHF) | Federal Tax Rate | Typical Total Rate* |
|---|---|---|
| CHF 0 - 18,600 | 0% | 8-15% |
| CHF 18,601 - 31,600 | 0.77% | 12-20% |
| CHF 31,601 - 41,400 | 0.88% | 15-25% |
| CHF 41,401 - 55,200 | 2.64% | 18-28% |
| CHF 55,201 - 72,500 | 2.97% | 20-30% |
| CHF 72,501 - 78,100 | 5.94% | 22-32% |
| CHF 78,101+ | 11.5% | 25-40% |
*Total includes federal, cantonal, and municipal taxes. Varies by canton - Zug is lowest, Geneva highest.
Social security contributions breakdown
Swiss social security hits both employer and employee hard. These rates aren't negotiable.
| Contribution Type | Employee Rate | Employer Rate | Total Rate |
|---|---|---|---|
| AHV/IV/EO (Old age/disability) | 5.3% | 5.3% | 10.6% |
| ALV (Unemployment) | 1.1% | 1.1% | 2.2% |
| NBU (Accident insurance) | 0% | 0.7-3.4% | 0.7-3.4% |
| Family allowances | 0% | 1.4-3.5% | 1.4-3.5% |
| Total mandatory | 6.4% | 8.5-13.3% | 14.9-19.7% |
The accident insurance rate depends on your industry. Office work pays 0.7%, construction pays 3.4%.
Payment schedule and bonuses
Swiss employees expect their 13th-month salary in November or December. This isn't optional - it's contractually required for most positions.
Most companies pay monthly on the 25th of each month. Some pay bi-weekly, but monthly is standard. The 13th month is typically split across the year or paid as a lump sum in December.
You'll also need to budget for vacation allowances. Swiss employees get 4-5 weeks paid vacation, and many companies pay a vacation bonus of 8.33% of annual salary.
Total employment cost example
What a CHF 70,000 salary actually costs you as an employer:
Base salary: CHF 70,000 13th month: CHF 5,833 Employer social contributions (10.5% average): CHF 7,962 Vacation allowance (8.33%): CHF 6,321 Administrative costs: CHF 2,000
Total annual cost: CHF 92,116 (31% above base salary)
This doesn't include pension contributions, which add another 7-18% depending on the plan.
Payroll cycle and deadlines
Swiss payroll runs on strict deadlines. Miss them and penalties start at CHF 200 per violation.
Monthly cycle:
- Payroll processing: 20th of each month
- Employee payment: 25th of each month
- Tax withholding remittance: 15th of following month
- Social security payments: 31st of following month
Annual requirements:
- Salary certificates (Lohnausweis): January 31st
- Annual tax reconciliation: March 31st
- Pension fund reporting: January 31st
The December payroll is particularly complex because of the 13th month and annual reconciliations.
Common payroll mistakes
Swiss authorities take payroll compliance seriously. The expensive mistakes we see companies make:
Wrong tax withholding rates. Using federal rates only instead of total rates including cantonal and municipal taxes. Penalty: Up to CHF 10,000 plus interest.
Missing the 13th month. Forgetting to accrue or pay the mandatory 13th month salary. This creates immediate labor law violations and employee complaints.
Incorrect social security calculations. Using wrong rates or missing contributions entirely. The penalty is 5% of unpaid amounts plus interest.
Late payments to authorities. Missing the monthly deadlines for tax and social security remittances. Penalties start at CHF 200 and compound monthly.
No work permit tracking. Failing to verify employee work authorization before payroll. This can shut down your entire operation.
Setting up compliant payroll in Switzerland yourself means hiring a local accounting firm (CHF 2,000-4,000/month), payroll software (CHF 200-500/month), and someone who understands Swiss labor law. Get it wrong and penalties start at CHF 200 per violation.
With Hire with Columbus, we handle all Swiss payroll compliance for $179/month per employee. We calculate the correct tax rates, manage social security contributions, ensure timely payments, and handle the 13th month automatically. Your employees get paid correctly and on time, every time.
Okay, that's a lot of legal jargon.
Here's the thing: you don't actually need to remember any of this. That's literally what we're here for. We'll handle the compliance while you focus on building your team in Switzerland.
No lawyers required. Promise.
What benefits and leave are required?
You'll pay salary 13 times a year in Switzerland, not 12 – that's the standard 13th-month bonus most employees expect. Beyond that cultural norm, three benefits are mandatory: health insurance contributions, pension payments, and unemployment insurance. Here's what you owe and when.
Annual vacation
Swiss employees get 20 days minimum vacation per year (4 weeks). Workers under 20 get 25 days, which is oddly generous compared to most countries that give younger workers less time off.
Vacation accrues monthly – employees earn 1.67 days per month worked. You can't make employees forfeit unused vacation, so they either take it or you pay it out when they leave.
Most companies give 25-30 days to stay competitive. Banking and tech companies often offer 28+ days to attract talent.
Sick leave
Employees can take up to 3 days sick leave without a doctor's note. After that, they need medical certification for continued absence.
Here's where it gets expensive: you pay 100% of salary for the first 3 weeks of illness. After that, daily sickness allowance insurance kicks in and covers 80% of salary for up to 730 days. You're required to have this insurance – it costs about 1.4% of gross salary.
For shorter illnesses (under 30 days), you typically pay the full salary and the insurance reimburses you. The paperwork is manageable, but tracking who pays what when gets complicated fast.
Parental leave
Maternity leave: 14 weeks at 80% pay (capped at CHF 220 per day). Mothers must take at least 8 weeks after birth – the rest can be taken flexibly within 14 weeks of delivery.
Paternity leave: 10 days within 6 months of birth, paid at 80% salary (same daily cap). Fathers can take these days individually or in blocks.
The government pays these benefits through social insurance, but you'll handle the paperwork and often advance the payments. Many companies top up to 100% salary to stay competitive.
Public holidays 2025
Switzerland has 8-11 public holidays depending on the canton. Here are the national ones:
| Date | Holiday | Notes |
|---|---|---|
| January 1 | New Year's Day | National |
| April 18 | Good Friday | Most cantons |
| April 21 | Easter Monday | Most cantons |
| May 1 | Labour Day | Some cantons |
| May 29 | Ascension Day | National |
| June 9 | Whit Monday | Most cantons |
| August 1 | Swiss National Day | National |
| December 25 | Christmas Day | National |
| December 26 | Boxing Day | Most cantons |
Each canton adds 2-4 local holidays. Zurich observes 9 total, Geneva has 11, and rural cantons often have more religious holidays. You don't pay double for holiday work – just regular overtime rates if applicable.
Mandatory benefits
Health insurance: Employees pay their own premiums directly to insurers, but you might offer subsidies. About 60% of companies contribute CHF 100-300 monthly toward premiums.
Pension (2nd pillar): You contribute 7-18% of salary depending on employee age. Employees match your contribution. This isn't optional – it's required for salaries above CHF 22,050 annually.
Unemployment insurance: You pay 1.1% of salary up to CHF 148,200, employees pay the same rate. On higher salaries, you both pay an additional 0.5%.
Accident insurance: You pay about 0.7-1.4% of salary for occupational accidents. Employees pay around 1-3% for non-occupational coverage.
Total mandatory contributions run about 12-15% of gross salary for employers.
Optional competitive benefits
The 13th-month salary isn't legally required but 95% of companies pay it. Skipping it makes hiring nearly impossible.
Popular additional benefits:
- Company cars or transport allowances (CHF 100-200 monthly)
- Meal vouchers (CHF 10-15 per workday)
- Phone and internet allowances
- Additional pension contributions above the minimum
- Private health insurance upgrades
Many companies offer 6+ weeks vacation, flexible working arrangements, and professional development budgets of CHF 2,000-5,000 annually.
Common benefit mistakes
Forgetting accident insurance deadlines: You have 30 days to register new employees. Miss this and you're personally liable for accident costs until coverage starts.
Miscalculating pension contributions: The rates increase with employee age (7% for ages 25-34, up to 18% for 55+). Getting this wrong means back-payments with interest.
Ignoring cantonal holidays: Your Zurich employee can't work on Sechseläuten while your Geneva team works normally. Track local holidays or face labor disputes.
13th-month payment timing: Most employees expect this in November or December. Pay it late and they'll assume cash flow problems.
Administering these benefits correctly requires local HR expertise (CHF 80,000+ annual salary), benefits software (CHF 200+ monthly), and legal review (CHF 5,000+ yearly). Risk of errors can mean CHF 10,000+ in penalties and back-payments.
Hire with Columbus handles all benefit administration, compliance tracking, and local holiday management for $179/month per employee. We ensure you never miss a deadline or miscalculate contributions.
What are the compliance requirements?
Written contracts are mandatory in Switzerland. Verbal agreements don't count and expose you to claims. Here's exactly what you need to know to stay compliant.
Employment contract requirements
Every employment contract in Switzerland must be in writing and include specific mandatory clauses. The contract needs to be in German, French, or Italian depending on the canton where your employee works.
Required clauses include the employee's full name and address, job description and duties, start date, salary amount and payment schedule, working hours, vacation entitlement, and notice periods. You also need to specify the workplace location and any probationary period.
The contract must be signed before the employee starts work. Miss this deadline and you're looking at potential fines plus the employee can claim the contract is invalid.
Probation periods
Standard probation periods in Switzerland are three months for most positions. You can extend this to a maximum of six months, but only if it's explicitly stated in the employment contract from day one.
During probation, either party can terminate with seven days' notice. After probation ends, full employment protection kicks in and notice periods jump way up.
You can't extend probation retroactively. If you didn't specify six months upfront, you're stuck with three months maximum.
Working time regulations
The standard work week is 40 hours for office workers and 45 hours for industrial workers. Daily working time can't exceed 9 hours (10.5 hours in exceptional cases with employee consent).
Employees must get at least 11 consecutive hours of rest between working days. Overtime is capped at 170 hours per year for office workers and 140 hours for industrial workers.
You're required to keep detailed records of working hours, breaks, and overtime. These records must be available for labor inspections and kept for five years.
Notice periods by service length
Notice periods depend on how long the employee has worked for you:
| Years of Service | Employee Notice | Employer Notice |
|---|---|---|
| Probation period | 7 days | 7 days |
| 0-1 years | 1 month | 1 month |
| 1-9 years | 2 months | 2 months |
| 10+ years | 3 months | 3 months |
Notice must be given by the end of a calendar month, with termination effective at the end of the following month(s). Get the timing wrong and you'll owe additional salary payments.
Termination process
You can't fire someone in Switzerland without valid cause during the notice period. Valid reasons include serious misconduct, repeated performance issues after warnings, or economic necessity.
For economic dismissals affecting multiple employees, you must consult with employee representatives first. Some cantons require notification to local employment authorities before large-scale layoffs.
Certain employees have enhanced protection. Pregnant women, employees on military service, and those on sick leave for up to 180 days can't be dismissed except for serious cause.
Severance pay requirements
Switzerland doesn't mandate severance pay in most cases, but there are exceptions:
| Situation | Severance Required |
|---|---|
| Standard termination | No statutory requirement |
| Dismissal after age 50 with 20+ years service | 2-8 months salary |
| Mass layoffs (canton-specific) | Varies by canton |
| Contractual agreements | As specified in contract |
Many employment contracts include severance clauses that go beyond legal minimums. These are binding and must be paid regardless of termination reason.
Data protection compliance
Switzerland follows GDPR-equivalent data protection laws. You need explicit consent to process employee personal data beyond what's necessary for the employment relationship.
Employee files must be kept secure and access limited to authorized personnel only. Employees have the right to access their data and request corrections.
Violations can result in fines up to CHF 250,000 for individuals or administrative sanctions for companies. Data breaches must be reported within 72 hours.
Common compliance mistakes
Invalid employment contracts are the biggest trap. Missing mandatory clauses, using the wrong language, or failing to get signatures before start date can void the entire agreement.
Wrong termination processes cost companies heavily. Firing someone without proper notice, during protected periods, or without valid cause leads to reinstatement orders plus back pay.
Improper working time records trigger labor inspection fines. You need detailed documentation of hours worked, breaks taken, and overtime accumulated.
Penalties for violations
Common compliance failures in Switzerland carry steep costs:
- Invalid employment contract: CHF 5,000-20,000 fine plus contract deemed void
- Improper dismissal: 3-6 months salary compensation plus potential reinstatement
- Working time violations: CHF 500-40,000 per violation depending on severity
- Data protection breaches: Up to CHF 250,000 plus administrative sanctions
- Missing social security registrations: CHF 300-2,000 plus retroactive contributions
Hire with Columbus ensures every contract and termination follows Swiss law exactly. We handle all compliance requirements, from contract drafting to termination procedures, so you never face these penalties. At $179/month per employee, it's much cheaper than dealing with compliance violations after the fact.
What has changed recently?
Switzerland rolled out several significant employment law changes in early 2025 that directly affect how you hire and manage employees there. The most impactful change is the new AI monitoring disclosure requirements that took effect in January 2025 - if you're using any AI tools to monitor employee productivity or communications, you now need explicit written consent and must detail exactly what's being tracked.
The federal government also increased the minimum wage contribution thresholds for social insurance. Starting January 2025, the AHV/IV/EO contribution ceiling jumped to CHF 148,200 annually (up from CHF 142,800 in 2024). This means higher-paid employees will see larger deductions, and your payroll costs for senior hires just got more expensive.
New parental leave extensions
Switzerland expanded its parental leave benefits in March 2025. Fathers now get 3 weeks of paid paternity leave (up from 2 weeks), and there's a new "care leave" provision allowing up to 10 days of paid leave for employees caring for seriously ill family members. The care leave is paid at 80% of salary, capped at CHF 220 per day.
Non-biological parents in same-sex partnerships also gained equal parental leave rights under the updated family code. This applies retroactively to any adoptions or partnerships formalized after January 1, 2025.
Remote work tax clarification
The Swiss Federal Tax Administration finally clarified the messy remote work tax situation in February 2025. If your Swiss employee works from home more than 40% of the time, you can now deduct home office expenses directly through payroll - but only if they have a dedicated workspace that meets specific square footage requirements (minimum 6 square meters).
Cross-border remote work got clearer rules too. Swiss employees can work from neighboring EU countries for up to 40 days per year without triggering tax complications, but you need to notify cantonal authorities within 30 days of the arrangement starting.
Updated termination notice periods
Several cantons updated their employment termination rules in 2025. The most significant change affects probationary periods - they're now capped at 2 months for all positions (previously, some senior roles allowed 3-month probation periods). During probation, notice periods remain 7 days, but after probation ends, the minimum notice period increased to 2 months across all cantons.
Collective dismissal thresholds also changed. If you're laying off 10 or more employees within 30 days (down from the previous 30-day threshold for 15+ employees), you must now provide 60 days advance notice to cantonal employment offices and employee representatives.