How to use an Employer of Record in Switzerland

Businesses looking to hire globally and scale operations in Europe can be sure to find top talent in Switzerland. The country is home to a rapidly growing IT industry valued at $18.28 billion, and a diverse workforce comprising designers, managers, creatives, and service professionals that have been working remotely for years now.

Some may even argue that Switzerland easily beats cities like San Francisco and New York when it comes to employability, thanks to reasonable housing, attractive salaries, and healthy work culture.

Hiring in Switzerland, though, can be challenging because of the number of legal and HR processes involved. You have to open a local entity in the country, set up processes to manage and pay your workers, and ensure compliance with Swiss labor laws and regulations.

If you want to tap into Switzerland’s labor market, an employer of record (EOR) can help you hire workers legally for a fraction of the cost. An EOR can help you comply with local employment regulations, onboard new employees, manage payroll and benefits, and easily offboard employees without breaking any termination rules.

In this guide, we’ll explain how to hire talent in Switzerland with an EOR, the costs and benefits of using an EOR, and how to navigate employment in Switzerland using an EOR.

Six steps to hiring employees in Switzerland using an employer of record

There’s a lot to get right when you’re choosing an employer of record to help you expand into Switzerland: speed, pricing, service quality, and ease of use.

To find the best employer of record for your needs, you need to make a checklist of the features you want in an EOR and use it to vet potential partners.

Step 1: Weigh up the pros and cons of each potential partner.

Outline the list of features an ideal EOR should provide for your needs, such as:

• Easy self-onboarding so you can get your team set up easily

• Intellectual property security

• Payroll and benefits support

• Flat pricing for your entire workforce

• Full local compliance with owned entities.

Once you clearly understand the features and benefits you require, you can use it as a checklist to grade each EOR provider based on how well they meet your local employment needs.

Step 2: Take the time to select the most appropriate EOR service provider 

An EOR should own its own local entity in Switzerland. Some EORs rely on partner networks for some of their services. This is not ideal as you don’t have control over pricing or data security measures since you’re not directly dealing with them. Learn more about the difference between owned-entity and partner-dependent global employment services.

Additionally, make sure the EOR provides the basics required to employ in Switzerland, such as:

• A global payroll infrastructure for paying salaries

• Compliant local entities that qualify you to hire in Switzerland

• Full-stack HR infrastructure for managing onboarding, payroll, benefits, and taxes

• Solid security practices that’ll keep your data safe

• Intellectual property security that secures the right to your employees’ inventions by default

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

Reading online reviews both on their website and on third-party websites like Trustpilot, G2, and Saasworthy is a good way to understand current and previous clients’ experiences with your provider. Keep an eye out for reviews from companies in your niche who have used the product successfully to manage their international hiring ops. Better still, long-form review blogs can go into detail explaining how a product works based on personal experience.

Step 4: Ensure that the EOR solution for Switzerland will provide a best-in-class employee experience

An employer of record should do more than help you hire internationally. Consider EOR providers that offer payroll and benefits administration and an intuitive onboarding experience that doesn’t require you to depend on several other tools to hire in one country. Ultimately, an EOR will serve as your employee-facing brand image. So, make sure that an employer enhances your employees’ experience by:

• Paying salaries on time, and

• Onboarding new employees quickly and seamlessly

• Answering questions and supporting employees when needed

Step 5: Work with your partner to provide a fair and equitable compensation package 

Salaries for remote roles can vary wildly depending on market rates, location, skill level, and ultimately, demand and supply. It’s important to attract and retain the best talent by paying your employees in Switzerland (and beyond) a competitive salary and benefits.

For instance, senior developers in Zurich can expect salaries of around $144,000 annually while the same role in San Francisco would cost $166,000 per year which is roughly 15% more. (Which is why you might be looking to hire Swiss talent in the first place.)

An EOR can help you figure out competitive benefits for remote employees, factoring in specific labor laws, market rates, local living costs, as well the individual’s role, experience, and skills.

Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business

Patents and intellectual property provide leverage that can help maintain your market position and attract a higher valuation at a liquidity event, such as an IPO, a sale, or an exit.

You have to ensure that your EOR specifies clear guidelines around IP rights. Otherwise, it can lead to nasty litigation with your workers. Also, check if the EOR has the capability to protect your company and employee data by having strong compliance and security standards in place.

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What are the benefits of using an employer of record in Switzerland?

An employer of record takes on the legal responsibility of hiring and paying employees in Switzerland on your behalf and saves you the time, money, and hassle of doing it all yourself. 

Managing employees in Switzerland (and globally) also becomes easier because an EOR typically handles the various HR and administrative processes involved in global employment — onboarding procedures, employment contracts, benefits and compensation, taxes, and payroll. Importantly, an EOR helps you remain compliant with Switzerland’s complicated labor regulations. 

An EOR serves as a legal extension of your company in Switzerland that helps you:

• Create and maintain a local entity that qualifies you to hire in Switzerland

• Issue contracts that spell out terms of employment, such as salaries, working hours, vacations, termination terms, payroll policies, etc.

• Manage payroll and ensure employees are paid on time

• Ensure employees and contractors are classified accurately

• Keep up with any changing regulations

• Pay employment taxes and levies

• Navigate the termination process so that employees are only let go as the law permits

How much does it cost to use an EOR in Switzerland

EOR costs vary depending on the services offered, the number of workers you want to hire, and their location. Generally, prices can be as low as $599 to $2,000 and upwards per employee per month.

Older, legacy EOR providers offer services across a large network of countries but typically charge enterprise rates. On the other hand, smaller EOR operators offer lower rates but may not have robust security measures or the infrastructure to support your international hiring needs. You might find yourself depending on other providers for services that are not provided by small-time EORs. 

Remote offers the best of both worlds: an advanced international hiring infrastructure that helps manage talent in Switzerland, salaries, benefits, payroll and income taxes, and compliance, for an affordable, flat rate.

Don’t take our word for it, though. See how Remote compares to other EOR providers and choose the global employment solution which offers your business the best value for money.

Hiring in Switzerland

Most of Switzerland’s labor laws are contained in the Constitution, the Code of Obligations, and the Federal Labor Law. Our guide to hiring in Switzerland further explains how these laws determine salaries, benefits, vacations, holidays, and acceptable terms for letting employees go.

Employment contracts and agreements in Switzerland

Written contracts are not required in Switzerland. Any agreement to provide services for a salary legally constitutes an enforceable contract as per Swiss law. Standard written contracts should contain:

• The names of the employer and employee

• The date of commencement of the employment contract

• An employee’s duties, i.e., job description

• Salary and any allowances

• Weekly working hours

• Contract ending date, for fixed-term contracts

Contracts can either be signed in person or digitally, and employers can insert a non-compete clause or terms for regulating overtime in a contract.

Labor compliance in Switzerland

Swiss labor law stipulates many provisions employers are required to adhere to as a way to secure employees’ quality of life and prevent labor abuses. To stay compliant with Switzerland’s labor laws, employers must:

• Protect employees from any form of discrimination due to race, religion, nationality, ideology, political affiliation, sex, financial, social, or physical condition

• Ensure working hours don’t exceed eight hours daily or 48 hours per week

• Provide dignified and safe working conditions

• Make sure employees and contractors are not misclassified

• Ensure salaries are paid on time

• Permit employees to unionize

• Ensure overtime pay is compensated at the agreed hourly rate, plus a 25% premium

Payroll and payroll taxes in Switzerland

Swiss employee income taxes for 2023 is capped at 11.5%. Employer payroll taxe5 – 9%e from 11.038% – 19.438% and can be broken down as follows: 

• Pensions: 3.5 - 9% 

• Social security: 5.125%

• Family compensation: 1.2% – 3.6%

• Unemployment: 0.5 – 1.1%

• Maternity: 0.043%

• Early childhood fund: 0.07%

• Accident insurance: variable

Swiss employment benefits and compensation

Although Switzerland doesn’t have a minimum wage at the national level, there are several other provisions for mandatory employee benefits you’ll need to budget for if you’re looking into hiring in Switzerland.

Maternity and paternity leave

Maternity leave lasts for 14 to 16 weeks, with benefits (80% of the employee’s normal salary; capped at 196 CHF per day) paid by employers. Employees are required to have contributed to social security for nine months before delivery.

Employers usually offer two days of paid paternity leave, although it’s not mandatory at the national level.

Sick leave and benefits

Employees are entitled to three weeks of paid sick leave from the first year. Swiss employers commonly have benefits schemes under which employees can receive 80% of their salary for up to 720 days.

Vacation

Employees are entitled to at least four weeks of paid time off annually, plus an additional week off for employees below 20.

Holidays

There are 27 public holidays, although they’re observed differently across Switzerland’s 26 cantons.

Healthcare

Private health insurance is mandatory in Switzerland. Enrolling workers for health insurance that offers better coverage can be a significant perk for your employees.

Severance pay and employee terminations in Switzerland

Swiss employers can let workers go at will, but many are cautious not to do so, and try to provide fair reasons for termination. Notice periods can last anywhere from one to three months, depending on seniority, or the industry. Severance payments are not required unless it was stated in the employment agreement. 

More information can be found in our guide to hiring in Switzerland.

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What are the risks of employee misclassification in Switzerland?

Swiss laws make a distinction between employees and contractors. Generally, employees are integrated into the employer’s organization for the long run. The employer decides the employee’s role, wages, working hours, and location, and oversees their performance. Contractors are self-employed individuals who can work for more than one employer at a time, and decide their own schedule, performance, and place of work.

To avoid trouble with the law, you have to make sure that your workers are assigned the right worker classification. A reliable EOR has the local knowledge and expertise to classify your workers correctly and maintain compliance with Swiss laws.

Misclassifying employees in Switzerland may result in penalties, such as being required to pay outstanding social security contributions and monetized employment benefits to an employee who’s found to have been misclassified.

Remote’s global employment services include access to a team of legal experts who’re proficient in making the distinction between employees and contractors and can help you mitigate the risks of misclassification.

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Get started with an employer of record in Switzerland

As remote working transforms hiring across borders, you might be looking to expand operations and find talented workers across the world. Switzerland, with its strong economy and army of talented workers, is a great location to grow your team.

However, international hiring is not easy and takes a significant amount of time and resources. You’ll have to open a local entity in Switzerland and set up processes to hire, pay, and manage your employees compliantly. 

Trying to navigate hiring in Switzerland on your own can lead to costly mistakes that can hinder your international hiring plans. Not if partner with a trustworthy employer of record who can make hiring employees in Switzerland quick and easy.

Remote’s global employment services can help you scale remotely in Switzerland or anywhere across the globe. Using Remote’s global HR platform, you can:

• Own a dedicated legal entity that authorizes you to hire in Switzerland

• Manage payroll efficiently and ensure your workers are paid on time

• Stay compliant with changing local regulations

• Secure your intellectual property and HR data

• Classify your employees and contractors accurately to avoid penalties and fines

Find out more about how you can use Remote to take your business to the next level with our EOR services. If you’re ready to hire employees in Switzerland, get started with Remote today! 

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