Taxes and payrolls: the peculiarities of the Swiss labour market
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the Swiss labour market.
Even if the national currency is the Swiss Franc (CHF), the whole article is in EUR to compare easily across countries and exchange rates.
General data about the Swiss labour market
| Geneva | Zurich | |
| Minimum wage | 25.73€/h | 25.62€/h |
| Payment basis | Monthly | Monthly |
| Payment | Must be paid by the last working day | Must be paid by the 25th of each month |
| Maximum working hours a week | 40-44h | 45h |
| Maximum overtime hours | 2h/day | 5h/week |
| Working hours compensation | At 125% regular pay rate | At 125% regular pay rate |
Payroll taxes in Switzerland
Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
| Contingencies | Employer % – Geneva | Employer % – Zurich | Employee % – Geneva | Employee % – Zurich |
| Old Age, Survivors, Disability Insurance | 5.3% | 5.3% | 5.3% | 5.3% |
| Unemployment Insurance (maximum 153,072.22€) | 1.1% | 1.1% | 1.1% | 1.1% |
| Supplementary Unemployment Insurance (over 153,072.22€) | 0.5% | 0.17% -13.50% | 0.5% | 0.5% |
| Family Compensation Fund | 2.45% | 1% – 3% | ||
| Maternity Insurance | 0.043% | 0.043% | ||
| Early Childhood Contribution | 0.07% | |||
| Vocational training Fund | 32.02€ | 0.1% | ||
| Occupational Accident Insurance (maximum 153,072.22€) | 1% – 4% | 1% – 4% | ||
| Income Compensation | 0.225% | |||
| Total | 10.463% – 14.463% + 32.02€ per employee | 7.67% – 23% | 7.168% | 7.90% – 10.90% |
Once contributions are paid, employees must pay an income tax that varies depending on their gross salaries.
In Geneva, there are 17 different salary ranges with increasing income tax, from 8% to 19%.
Meanwhile, there are 13 salary ranges in Zurich with increasing income tax and a fixed part (only for single taxpayers). Reaching 13% plus 24,339.72€ for single taxpayers and only 13% for married taxpayers.
Contingencies from self-employees
As a self-employed person, you cover the full cost of social security contributions yourself. Depending on your income, your social security premiums equal between 5,196% and 9.65% of your income. You also pay an administrative fee for self-employed individuals equal to up to 5% of your social security contributions.
Example of net salary in Switzerland
As a reference, we use the average salary of a software engineer. In Switzerland, on average, software engineers earn annually 55,100€.
| Employer | Employee | |||
| % | € | % | € | |
| Gross salary (annually) | 55,100 | |||
| Old Age, Survivors, Disability Insurance | 5.3% | 2,920.3 | 5.3% | 2,920.3 |
| Unemployment Insurance | 1.1% | 606.1 | 1.1% | 606,1 |
| Family Compensation Fund | 0.17% -13.50% | 93.67 – 7,438.5 | 0.5% | 275.5 |
| Maternity Insurance | 1% – 3% | 551 – 1,653 | ||
| Early Childhood Contribution | 0% – 0.043% | 0 – 23.69 | 0% – 0.043% | 0 – 23.69 |
| Vocational training Fund | 0% – 0.07% | 0 – 38.57 | ||
| Occupational Accident Insurance | 32.02€ or 0.1% | 32.02 – 55.1 | ||
| Income Compensation | 0% – 4% | 0 – 2,204 | 0% – 4% | 0 – 2,204 |
| Total | 7.67% – 23% + 0€ – 32.02€ | 4,226.17 – 12,705.02 | 7.168% – 10.90% | 3,949.57 – 6,005.9 |
The employer contributes 4,226.17 – 12,705.02€ to social security and the employee 3,949.57 – 6,005.9€.
Unemployment regulation in Switzerland
The statutory notice periods are as follows:
| Time worked | Notice period |
| During probation period (from 1 to 3 months) | 7 days |
| Less than 1 year | 1 month |
| Between 1 and 10 years | 2 months |
| Over 10 years | 3 months |
In addition, the statutory severance payment is only applicable to employees of at least 50 years of age who have completed at least 20 years of employment and provided there is a shortfall in pension benefits.
Different kinds of leaves in Switzerland
Employees under 50 receive 4 weeks of holiday, and over 50 receive 5 weeks of holiday. There are 8 public holidays. Public holidays that fall on the weekend are usually lost.
Sick leave ranges from 3 weeks to nearly two years, depending of the time employed. It represents 80% of the salary.
There are 14 weeks of paid leave to provide care for a seriously ill or injured child.
Normally, three days to five days of bereavement leave are given in case of close relatives and one to three days in other cases.
Normally one to three days are given for wedding leave.
Paid parental leave
Maternity leave is paid at 80% of the pay rate (maximum of 202.44€/day) for 98 days.
In Geneva, maternity leave can be up to 16 weeks.
Fathers have 10 days if paid paternity leave. There are no statutory laws on parental leave.
Other common Swiss benefits
| Benefit | % of companies with this benefit |
| Flexible Working Hours | 13.6 |
| Work From Home | 13.6 |
| Diversity | 12.7 |
| Work-Life Balance | 10.0 |
| CUtting Edge Technology | 7.3 |
How to employ a Swiss worker
Companies need to be registered in the Commercial register before hiring in Switzerland.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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