Hire and manage employees in Switzerland

Employer of Record (EOR) vs. entity

To start, you need to decide if you’re going to use an EOR or set up your own entity to hire employees in Switzerland.

• Legal entity in Switzerland. You need to raise capital and obtain a Swiss residence permit if none of the investors or company directors are Swiss. Additionally, you must incorporate your company with the Commercial Registry and the FTA and find local experts who will ensure you’re in compliance with tax and labor laws.
• Swiss EOR. An EOR operates as the employer on the company’s behalf. This third-party service allows you to hire full-time Swiss employees and handles all the legal requirements for complying with Swiss laws for payroll, contracts, and benefits. It also includes services that calculate and withhold taxes, onboard and manage employees, and run payroll.

Rippling can help you compliantly hire and onboard Swiss employees in 90 seconds—learn more about EORs and the steps to hiring in Switzerland in our guide.

Classifying Switzerland workers: employees vs. contractors

In Switzerland, you must classify workers correctly because mistakes can lead to significant fines and penalties.

Our comprehensive guide lays out what you need to know about classifying Swiss employees and maintaining compliance with employment laws. The following is a brief overview of the ways Swiss law differentiates employees and independent contractors.

Work permits for Switzerland employees

You must ensure that your potential employees have the correct work authorization in Switzerland. Laws around Swiss visas are complex because they differ depending on the origin of the worker. Switzerland is a member state of the Schengen area and the European Free Trade Association, but not a member of the European Union—which adds to the nuances.

Each canton (there are 26) has a local immigration authority that issues work visas. It is the responsibility of the employer to apply to the cantonal authorities for a work visa. Keep in mind that the number of work visas in Switzerland that can be issued is capped. And only certain, highly-skilled professionals are allowed to work in Switzerland, including those with university degrees and several years of work experience, managers, and specialists or experts in certain fields. 

See our guide on work permits in Switzerland for more details on the available types of visas, applications, and eligibility.

New hire onboarding checklist

Onboarding new employees requires the completion of several tasks—from submitting paperwork to prepping for their first day. 

Onboarding is a great way to establish a strong and successful employee-employer relationship. Want to make sure you’re delivering the best onboarding experience? Here’s a quick-list of typical onboarding tasks for each stage of the process: 

Before their first day

• Run a background check. 
• Send an offer letter.
• Prepare for tax withholdings. 
• Enroll them in benefits.
• Add them to payroll. 
• Order and set up their devices. 
• Schedule their orientation.

On Day 1

• Make sure their workspace is prepped. 
• Send a welcome email. 
• Give them an agenda. 
• Schedule a meeting with their onboarding mentor. 
• Give them an office tour. 

During their first 90 days

• Schedule training. 
• Assign work and help them set goals. 
• Schedule regular check-ins. 
• Seek their feedback on how to improve the experience.

For a more thorough list of onboarding essentials, read our guide on new hire onboarding in Switzerland.

What to include in an offer letter in Switzerland

Offer letters set the stage for the employment relationship. The offer letter needs to be legally compliant and should serve as a reference point for negotiations with your potential new employee.

The following should be included in your offer letter:

• Employee and company’s names
• Title, job description, and start date
• Annual base salary
• Working hours 
• The name of the canton where the terms of the contract will be enforced
• Annual leave, holiday pay, and other paid leave
• Sick leave
• Annual pension plan
• Confidentiality agreement
• Termination policy

Check out our full guide to creating legally compliant job offer letters in Switzerland.

NDAs and confidentiality agreements in Switzerland

Non-disclosure agreements are used by employers to protect confidential information, intellectual property, and trade agreements. Swiss laws offer some protections but in order to fully protect your company’s information and intellectual property, you need an NDA.

What you need to know about NDAs in Switzerland:

• There are different types of NDAs, such as mutual non-disclosure agreements and unilateral confidentiality agreements.
• There is no specific body of legislation that governs NDAs. This means enforceability comes from provisions in the Federal Constitution, the Federal Act of Work in Industry, the Swiss Civil Code, the Employment law, and a handful of other pieces of legislation.
• Certain information must be included in Swiss NDAs. This includes duration, terms of scope and content, consequences, etc.

Learn more about NDAs and their enforceability in our primer on NDAs in Switzerland.

Running background checks on Switzerland employees

Switzerland is known for having strict privacy laws, making it even more crucial for employers to ensure they are complying with Swiss laws. Employers must receive explicit consent to run a background check on an employee or contractor.

The scope of most background checks in Switzerland is limited. A few mistakes to avoid making include:

• Not getting the employee’s written consent
• Collecting too much data
• Skipping a background check

Check out our full guide for more details and mistakes to avoid in the screening process.

Paying employees in Switzerland

Once you’ve decided between an EOR or establishing your own local entity, you’ll need to select a payroll solution.

The next steps are:

• Determine your workers’ employment status.
• Collect employee’s payroll information.
• Pay employees in the local Swiss currency (CHF).
• Run payroll.

Learn more about paying employees in Switzerland with our step-by-step guide.

Mandatory employee benefits in Switzerland

Swiss employees are compensated well and enjoy generous benefits. That said, legislation on employee benefit entitlements in Switzerland is complex. At the federal level, laws are determined by the Swiss Civil Code, called the Code of Obligation, and regulations from the Labour Act. Beyond that, the 26 cantons of Switzerland impose their own legislation, and employees are protected by collective bargaining agreements and trade unions.

Mandatory benefits include:

• Pension plans and retirement contributions. Switzerland’s “three-pillar” pension system provides social security benefits to support the financial and social welfare of Swiss citizens.
• Leave entitlements. Employees who’ve worked for a company for at least a year are entitled to a minimum of four weeks of paid vacation a year.
• Maternity and paternity leave. Pregnant employees are entitled to 14 weeks of maternity leave and receive 80% of their pay. Fathers are entitled to two weeks of paternity leave and 80% of their pay as well.

To learn about all the mandatory benefits, read our guide to offering benefits in Switzerland.

Managing remote employees’ computers and apps

There are countless factors to consider when onboarding global employees—shipping computers, establishing and securing employee accounts, and effectively managing applications throughout the entire employee lifecycle, etc.

The employer is responsible for ensuring their employees are ready on their first day with all the apps and tools they need to work with the rest of their team. 

With Rippling, you can:

• Speedily set up all your employees’ accounts
• Ensure that employees have access and permissions for all the tools they need
• Streamline the process of setting up, managing, and disabling employee applications with a centralized platform

Check out our guide to learn more about setting up and managing remote workers’ devices.

Protecting company IP in Switzerland

When giving new employees access to company applications and sensitive information, it’s necessary to take the proper precautions and get ahead of any risks. And to safeguard your company's original ideas, you need to address intellectual property protections within the employee agreement. 

This includes clearly defining ownership of IP created by the employee, establishing rights for commercial use, implementing confidentiality agreements to protect trade secrets, and incorporating any other provisions you need to ensure comprehensive protection.

Check out our beginner’s guide to IP law in Switzerland for all the information. Here’s a preview of some of the most important takeaways:

• Switzerland recently implemented new legislation via an update to the Swiss Unfair Competition Law.
• Contractors own the copyright to their work unless a written agreement is in place to override this.
• Trade secrets are not protected under Swiss intellectual property law.

Complying with Switzerland labor laws

Swiss labor laws are complex and distinct from the rest of Europe. Because Switzerland is not a member of the European Union, compliance can be trickier. Here are some must-know starter points for staying compliant with labor standards in Switzerland:

• A national minimum wage does not exist.
• There is no national statutory severance scheme.
• Swiss workers are amongst the highest paid in the world.

Get a thorough understanding of all the regulations and their nuances, from notice periods to time off, in our guide.

Terminating employees in Switzerland

In the unlucky event that you need to terminate one of your Swiss employees, it’s beneficial to be well-versed in termination requirements. Employers can lawfully terminate employees without reason if they have an open-ended employment contract. The employee, however, can still pursue wrongful dismissal for the following:

• A protected characteristic like skin color or nationality
• Involuntary military service
• Trade union activities or membership
• Claims the employee is asserting in good faith
• A constitutional right exercised 

Non-compliance with termination requirements can be costly and detrimental to your overall business health, as well as company morale. Learn more about handling dismissals in Switzerland with our full guide to terminations.

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.