Key Takeaways

  • Foreign companies looking to expand into Switzerland need to ensure compliance with labor laws and employment standards to avoid penalties and fines.
  • An Employer of Record can help such companies expand quickly and easily while being compliant with the laws.
  • Before making a decision, companies looking to work with Swiss talents via an EOR need to consider certain factors.
  • Companies should choose an EOR with expertise in Swiss labor laws to ensure efficiency and compliance.

Switzerland’s thriving economy and skilled workforce make it an attractive destination for business expansion. However, navigating Swiss labor laws, tax regulations, and employment practices can be challenging. Using an Employer of Record (EOR) in Switzerland enables businesses to hire locally without establishing a legal entity, ensuring compliance and reducing administrative burdens.

In this guide, we’ll explain how Switzerland EOR services work, the benefits of EOR, and how to choose the right provider for your Swiss hiring. 

Table of Contents show

What Is a Switzerland Employer of Record?

A Switzerland Employer of Record (EOR) is a service provider that employs personnel on behalf of foreign companies wanting to expand or operate in the Swiss market. Rather than setting up a local entity in a country known for its complex regulations and precise compliance requirements, businesses can partner with an EOR to handle hiring, onboarding, and day-to-day employment management. This arrangement grants companies immediate operational capability in Switzerland, enabling them to focus on business growth without grappling with the intricacies of Swiss labor laws, social security obligations, and payroll processes.

One of the key advantages of working with a Switzerland EOR is ensuring full compliance with local employment legislation. Swiss labor regulations require that social security contributions, pension fund payments (the “LPP/BVG”), and mandatory accident insurance be properly administered. EORs have the specialized knowledge to manage these requirements and are well-versed in navigating canton-specific policies, ensuring employees receive the correct benefits and entitlements. By handling permits for foreign workers and residency regulations, a Switzerland EOR further mitigates risks and potential legal exposures.

Partnering with a Switzerland EOR is particularly useful for businesses needing to establish a presence in Switzerland quickly—whether to explore a new market or provide local sales and support. Because the EOR manages all the administrative, legal, and HR responsibilities, expanding companies can seamlessly onboard staff and begin operations within days. This approach saves significant time, reduces upfront expenses, and lets employers devote their energy to strategic objectives and market development.

Ready to get started with a Switzerland EOR?

Let us handle the complexities of hiring, compliance, and payroll in Switzerland while you focus on growing your team.

  • Hire employees in Switzerland with a Switzerland EOR
  • No local entity is needed
  • Pricing starts at USD 199 per employee
  • Remote People can also help you find the best talent in Switzerland

👉 Get Your Customized Switzerland EOR Proposal Today!

Switzerland Employer of Record vs Legal Entity in Switzerland

When expanding into Switzerland, businesses have some different options: Two of the most popular ones are to use a Switzerland EOR or to form a legal entity in Switzerland. Each approach has its advantages, and your decision should be based on your company’s goals, schedules, and business needs. Here is a breakdown of the two options:

Establishing a legal entity in Switzerland gives your company a full presence in the country. This allows for direct supervision and control of operations, which is useful for large-scale, continuous growth activities. However, the process of establishing a legal entity typically requires many steps. First, companies must register with the Swiss Commercial Register, which involves getting the necessary permits, preparing and notarizing articles of association, and passing capital requirements. The registration fee for sole proprietorships is CHF 80, CHF 160 for joint partnerships, and CHF 160 for limited liability companies. 

With an EOR, your company can enter the Swiss market quickly and efficiently. The EOR serves as the legal employer for your employees, handling hiring, payroll, tax, and compliance issues on your behalf.  Working with an EOR helps your company to set up operations in Switzerland in a matter of days or weeks. It is responsible for ensuring that Swiss labor laws are followed, including employment contracts, benefits administration, tax payments, and compliance with local employment standards.

This protects your company from potential legal or financial problems associated with non-reduced administrative burdens. The EOR manages payroll, tax withholding, and benefits, freeing your firm from administrative responsibilities and allowing it to focus on core activities. However, while an EOR is simple and flexible, it may be more expensive per employee if your company intends to establish a long-term, large-scale presence.

Is Employer of Record Legal in Switzerland?

Yes, an EOR can lawfully manage employees on your behalf as long as it adheres to Swiss labor laws. An EOR operates as a legal business in the country, allowing it to serve as the official employer of your Swiss workforce.

Note, Switzerland, like Austria and Germany, does have a Staff Leasing Law in place which may apply to the activities of EOR companies. Staff leasing in Switzerland is governed by the Federal Act on Employment Services and the Hiring of Services (AVG/LSE), along with its ordinances. Companies wishing to engage in staff leasing must obtain a license from the State Secretariat for Economic Affairs (SECO). This legal framework mandates that leased employees receive equal treatment in terms of wages, working conditions, and social benefits as permanent staff in comparable positions. Staff leasing agencies are responsible for employment contracts, social security contributions, and ensuring compliance with Swiss labor laws, while client companies must provide safe working conditions and cannot re-lease employees to third parties.

The laws aim to protect employees’ rights and ensure fair competition among businesses. Both staff leasing agencies and client companies must adhere to collective bargaining agreements and labor regulations. Regulatory authorities monitor compliance, and penalties for violations can include fines, license revocation, and criminal charges. Certain practices are prohibited, such as leasing employees to companies involved in strikes or lockouts, and there are restrictions on leasing in sensitive sectors or for specific durations. The overall goal is to balance the flexibility needs of businesses with robust protections for workers.

Note unlike Germany, Switzerland does not place a time limit on employing staff through a leasing arrangement. It’s also unclear whether all EOR activities in Switzerland are covered by this law. 

REMOTE PEOPLE FURTHER READING

Read more about staff leasing licenses in Switzerland, Austria and Germany in our Guide to the AUG license. 

How Much Does Employer of Record Cost in Switzerland?

The cost of working with an EOR in Switzerland will depend on several factors, including the specific services that your company requires, the number of employees you want to hire and manage, the size of your company, and the duration that you will require the EOR’s services. EOR providers in Switzerland often charge a flat monthly fee (ranging from $600 to $2,500) or a percentage of each employee’s monthly income (generally between 10% and 15%).

Additionally, several EORs in Switzerland set onboarding fees to cover the initial setup of each employee. If you want an accurate quotation, it’s best to request a quote directly from the EOR provider’s website, as most suppliers offer a customized pricing tool that can accommodate your company’s needs and budget.

How Does a Switzerland Employer of Record Help with Payroll and Taxes?

An EOR in Switzerland is responsible for processing your employees’ payroll. They calculate employee salaries, including any overtime or other compensation, and make sure that they are paid on time. They also handle compulsory withholdings, such as income tax and social security contributions, and pay them to the Swiss Federal Tax Administration (FTA). In addition, Swiss companies are required to contribute to a variety of social insurance programs, such as accident insurance, pension funds, and unemployment benefits, all of which the EOR will manage for you.

How Does a Switzerland Employer of Record Help with Benefits Administration?

Switzerland enforces employee benefits such as social insurance contributions, paid vacation, pension fund contributions, and health insurance coverage. An EOR in Switzerland ensures that these benefits are provided completely in line with Swiss labor rules. The EOR calculates and manages employees’ social security contributions, which include health and accident insurance, pension funds, and unemployment insurance, among other benefits.

These social security contributions are paid to the relevant Swiss authorities, such as the Swiss Social Security Office, ensuring that employees have access to health and social services. The EOR protects employees’ retirement funds by ensuring that contributions are made to occupational pension systems. By managing these contributions and benefits, the EOR helps your company to fulfill Swiss compliance.

What Labor Laws Apply to Hiring in Switzerland?

The Swiss Code of Obligations and the Federal Labor Act define both employers’ and employees’ rights and responsibilities in Switzerland to maintain fair practices and preserve both sides’ interests. These laws govern several areas of employment, such as working hours, termination procedures, minimum pay, paid leave, and health and safety regulations. Noncompliance with these regulations may result in fines, penalties, or even legal action by Swiss regulatory authorities.

Here is a breakdown of key labor laws that companies hiring in Switzerland must comply with:

Employment Contracts

Swiss law requires that employment contracts explicitly state the terms of employment, such as job function, compensation, working hours, and employment tenure. A formal contract is not required for all roles, but it is strongly recommended for transparency and compliance. Employment contracts can be indefinite-term for ongoing assignments, fixed-term for temporary roles, or project-specific. The Swiss Code of Obligations outlines specific criteria for these contracts, including notice periods, working hours, overtime pay, and termination rights.

Working Hours and Paid Holidays

The regular workweek in Switzerland runs from 40 to 45 hours, depending on the industry and company. For example, office workers usually put in 40 hours per week, although a job in manufacturing and other sectors may require up to 45 hours. Any hours worked over these restrictions are considered overtime, and according to Swiss legislation, overtime must be rewarded at 125% of the usual rate. However, this can vary depending on specific agreements within employment contracts.

Switzerland has several national paid holidays, including Swiss National Day (August 1st), Easter, Christmas, and New Year’s Day. Employees are also entitled to paid annual leave for a minimum of four weeks per year, with younger workers (under the age of 20) receiving five weeks. Leave entitlements can increase with tenure or seniority, and many Swiss businesses provide additional paid time off depending on company rules or standards in the industry.

Social Security Contributions

Both employers and employees are required to contribute to Switzerland’s social security system, which provides benefits for retirement, family expenses, or legal aid. These contributions are calculated considering the employee’s wage and must be paid to insurance agencies. In Switzerland, health insurance is compulsory but managed separately from social security by private insurance companies, with coverage varying based on the policy chosen by the employee.

The Old-Age and Survivors’ Insurance (AHV/AVS) program offers pension benefits to employees when they reach the retirement age of 65 for men and 64 for women, provided they have continuously contributed during their working years. The pension amount is calculated based on the individual’s contribution history and salary.

Additionally, unemployment insurance (ALV) protects employees who leave their jobs by compensating a part of their previous salary. The payment is determined by their contribution history and length of service. Disability insurance (IV/AI) gives financial assistance to employees who are unable to work because of a disability, while accident insurance (UVG/LAA) covers medical expenses and provides income support in the event of job-related or non-work-related accidents. Swiss employees are covered by a comprehensive social security system as a result of their contributions, which ensures benefits throughout various life stages and conditions.

Workers’ Compensation

Workers’ compensation applies under Switzerland’s Accident Insurance Law (UVG/LAA), which provides insurance for workplace accidents and occupational sickness. Employers are required to contribute to their employees’ accident insurance to cover workplace injuries and illnesses. This insurance provides medical treatment, rehabilitation, and income replacement payments to injured workers during their recovery period. If an employee becomes permanently displaced due to an accident at work, they are entitled to a disability pension. In the event of death, the benefits are paid to the employee’s dependents.

Taxes

In Switzerland, employers are required to deduct income taxes directly from their employees’ salaries. Tax rates in Switzerland differ depending on the employee’s salary level, marital status, and area of residence, as Swiss tax rates are determined at the federal, cantonal, and local levels. The Federal Tax Administration (FTA) oversees national tax compliance, while cantonal tax offices are in charge of local tax collection and rates.

Parental Leave

In Switzerland, parental leave is controlled by the Federal Act on Family-Friendly Policies. Both mothers and fathers are entitled to parental leave after the birth of a child. Mothers are entitled to 14 weeks (98 days) of paid maternity leave, which is fully compensated at 80% of their average wages. This leave is intended to help the mother recuperate from childbirth and in the initial stages of childcare.

Fathers are also entitled to paternity leave, which includes up to two weeks of paid leave at 80% of their wage. Some businesses may provide additional parental leave benefits that are not required by law. After an employee takes parental leave, their company is expected to either keep them in their previous position or offer them an equivalent one.

Probation Periods

In Switzerland, probation periods are regulated by the Code of Obligations. The normal probation period lasts 1-3 months, during which either side can terminate the employment contract with 7-14 days’ notice. It should be reflected in the employee’s written contract. At the end of the probation period, the employer and employee usually meet for an evaluation interview to discuss the trial phase and decide whether to continue the job relationship.

Learn more about probationary period in Switzerland

Union Membership

Employees in Switzerland have the right to join unions and participate in collective bargaining under the Federal Act on Labour Unions (FALU). The State Secretariat for Economic Affairs (SECO) also regulates union activity and protects employees from anti-union discrimination.

Employment Termination

In Switzerland, employers must have just cause to terminate an employee, such as for reasons based on performance concerns or misconduct. Your company must provide written notice (minimum of 1-3 months, depending on work tenure) before termination. Companies must also respect termination protection periods (for example, maternity and paternity leave, military service) and follow collective bargaining agreements (where applicable). Wrongful termination might result in legal action and compensation claims. 

Aside from the Swiss Code of Obligations, other bodies monitor unlawful termination procedures. The Federal Act on Gender Equality (FAGE) prevents discriminatory terminations based on gender and the Disability Discrimination Act (DDA) protects employees with disabilities from unfair discontinuation of their employment contracts.

Grow Your Team in Switzerland with Remote People’s EOR Services

Hiring in Switzerland gives you access to one of the most skilled and reliable workforces in the world, but navigating Swiss labor laws and social security requirements can be tricky. That’s where partnering with a trusted Employer of Record (EOR) makes all the difference.

With Remote People’s Switzerland EOR services, you can tap into top talent quickly, stay fully compliant with local regulations, and avoid the time and cost of setting up a legal entity. Our deep understanding of the Swiss business environment ensures a smooth, efficient expansion, so you can focus on growing your business and achieving your global goals.

Ready to expand your team in Switzerland? Contact us today to discuss how an EOR can support your business expansion in Switzerland.

FAQs About Employer of Record Services in Switzerland

Yes. An Employer of Record (EOR) allows you to legally hire employees in Switzerland without setting up a local entity. The EOR acts as the legal employer for compliance purposes, while you manage the employee’s day-to-day work.

Swiss employees are entitled to benefits like pension contributions (Pillar 1 and Pillar 2 plans), health insurance coverage, paid annual vacation (usually 4–5 weeks), sick leave, and often a 13th-month salary bonus.

Switzerland’s employment laws can vary by canton (region). A knowledgeable EOR ensures that contracts, taxes, and employment terms comply with both national and local (canton) regulations, removing a major complexity for foreign companies.

With the right paperwork ready, onboarding a new hire through an EOR in Switzerland typically takes between a few days to two weeks, depending on the role and background check requirements.

Without an EOR or a local entity, you risk non-compliance with Switzerland’s strict labor laws and social security requirements, which could lead to fines, legal trouble, and reputational damage.