The complete guide to offering employee benefits in Switzerland
Switzerland is well known for its high standard of living, well-compensated employees, and for being one of the world’s happiest nations. So, it should come as no surprise that Swiss employees also enjoy generous benefits and have rights that are well protected.
When hiring workers in Switzerland, you need to be aware of the mandatory employee benefits in order to remain compliant with the nation’s laws. In this guide, we’ll discuss what you need to know about creating a benefits package that meets statutory requirements, and how to establish yourself as a competitive employer in a nation with high expectations.
What employee benefits are mandatory in Switzerland?
First, it’s important to note that the legislation surrounding employee benefit entitlements in Switzerland is complex. Not only are the laws influenced by a part of the Swiss Civil Code called the Code of Obligations, but you must also adhere to the regulations placed down by the Labour Act. And that’s just at the federal level: Switzerland has 26 cantons, all of which have the right to impose their own legislation concerning employee benefits. Swiss employees are also protected by collective bargaining agreements (CBAs) and trade unions.
The bottom line: There are a lot of governing bodies to adhere to when it comes to employee benefit entitlements, and you need to tread very carefully to ensure you’re following all the laws.
The following is a list of mandatory benefits Swiss employees are entitled to. Remember: This list is the minimum you must offer, and considering Swiss employees are among the world’s best compensated, you can and likely should offer more.
One final note: This list applies to employees only. Independent contractors are not entitled to receiving benefits.
Pension plans and retirement contributions
Switzerland has a “three-pillar” pension system that provides social security benefits to support the financial and social welfare of Swiss citizens. The benefits include Old Age and Survivors’ Insurance (AHV), Disability Insurance, and Loss of Earnings benefits. Pension funds are paid for by deductions from employees’ paychecks.
Both employers and employees must pay into pension plans, and as with other things, the tax rate depends on which canton you live in. In Zurich, for instance, the rate is over 23%. In Geneva, it’s just under 10%.
Leave entitlements
Employees who have worked for the company for at least a year are entitled to at least four weeks of paid vacation each year; workers under the age of 20 are entitled to five weeks a year. This is the general rule of thumb. Although, collective bargaining agreements have established employees’ rights to longer vacations in some areas of Switzerland.
Maternity leave and paternity leave
Employees who are pregnant are entitled to 14 weeks of maternity leave and will receive 80% of their usual pay while they are gone. Fathers are only entitled to two weeks of paternity leave (which they can take anytime during the first six months of the baby’s birth), but they also receive 80% of their usual wages.
Overtime
The Swiss regulations surrounding overtime are quite different from other nations. The government caps the working week at 45-50 hours. However, employees with full-time jobs may work less than that, depending on the terms of their employment contract.
Insurance
All employers are required to purchase occupational accident insurance, which covers an employee’s bills and expenses if they are injured on the job.
Health insurance is a bit more complex. While Switzerland does offer universal health insurance, state services aren’t free and it’s legally required for everyone to have private health insurance. The government is extremely serious about this: If you don’t purchase a plan, they’ll do it for you.
Employers aren’t required to offer health insurance as part of their benefits package, but companies that want to attract top talent usually do.
Paid sick leave
Paid sick leave is determined by years of service at a company. A worker receives three weeks of paid sick leave during their first year, which begins in the fourth month of their employment. After their first year, the amount of sick leave an employee is entitled to depends on the canton they reside in. Some cantons offer as much as 10 months of paid sick time to long-time workers.
Minimum wage
There is no national minimum wage in Switzerland. Instead, salaries are determined by collective bargaining agreements. However, in a move that demonstrates the cantons’ independent decision-making powers, three cantons (including Geneva) instituted a minimum wage for residents.
If a worker’s usual working week lasted 40 hours, and then one week they worked 45, those extra five would be considered overtime. If an employee works over the federal maximum of 50 hours, that is considered extra time. Employees must be compensated either with an additional 25% added to their usual wages or with comparable time off for both extra and overtime.
Statutory holidays
Switzerland does have statutory holidays, but they differ wildly depending on the area you reside in. Each canton celebrates different public holidays, and some holidays are celebrated only by individual towns. You’ll need to learn the customs of your local area to determine which statutory holidays your employees are entitled to: There is no straightforward answer.
Understanding Switzerland’s “Three-Pillar” Pension System
Switzerland prides itself on having a strong social security system that provides support to people in their old age. Some of its benefits, such as the Loss of Earnings benefits, date back all the way to 1948, although the three-pillar system did not become a permanent part of the Federal Constitution until 1972.
It’s crucial for anyone working and living in Switzerland to understand its pension system. Below, we’ll offer a brief overview of each of the three pillars:
Pillar 1: The first pillar is the state pillar and covers Old Age and Survivors’ Insurance (OASI/AHV) and Disability Insurance (IV). Occasionally, you might hear these programs called “pensions” rather than “insurance.” Employers and employees are mandated to contribute to Pillar 1 funds through paycheck deductions at a rate of 10.6% (as of 2023) of their total earnings.
Pillar 2: The second pillar, occupational benefits insurance (BVG), is also mandatory. It helps Swiss seniors maintain their standard of living once they retire. Employers are required to pay at least 50% of the total contribution to the BVG fund, and contribution rates range depending on the employee’s age.
Pillar 3: This is the only pillar that isn’t mandatory. Those who choose to do so can save money in a personal pension fund in preparation for retirement. The Swiss government does offer incentives to those who opt to take advantage of the third pillar, including tax savings.
While the deductions may seem expensive and the system takes some adjusting to, it’s in place for a good purpose: the financial comfort and support of Switzerland’s senior citizens.
Optional Benefits Employers Should Consider
As you can see, Swiss employees receive generous benefits that cover most of their needs. However, these highly-paid and highly-skilled workers look for employers who go above and beyond the minimum. Among other things, you should consider offering company-covered private health insurance, a top-tier salary, and an employer-sponsored pension plan separate from the three-pillar system.
How to hire people overseas in minutes—with Rippling
Running a global workforce isn't easy. It can be a challenge for global companies just to keep their benefits compliant—let alone managing offer letters, equipment, payroll, and everything else global employees and contractors need.
That's why, if you're going to hire employees, contractors, or remote workers globally, you need Rippling. Rippling makes it easy to onboard, manage, and pay employees and contractors around the world—in one system that's always compliant with local employment laws and regulations.
Disclaimer: Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.
