6 Steps To Using An Employer Of Record In Switzerland

An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers in a foreign country. This service allows companies to hire employees in Switzerland without establishing a local legal entity. The EOR handles crucial tasks such as payroll, taxes, benefits administration, and ensuring compliance with local labor laws.

With its highly skilled workforce and strong economy, Switzerland presents attractive opportunities for international businesses. The country boasts a robust IT industry valued at $18.28 billion and a diverse talent pool comprising designers, managers, creatives, and service professionals. Switzerland’s reputation for high quality of life, competitive salaries, and healthy work culture makes it an appealing destination for global companies seeking to expand their operations.

Here are the 6 steps to using an EOR in Switzerland:

1. Find talent to hire in Switzerland
2. Compare using an EOR to setting up a legal entity in Switzerland
3. Get the information needed from your talent
4. Choose an EOR provider with expertise in Switzerland
5. Communicate your hiring needs to the EOR
6. Have the EOR set up the contracts and hiring procedure

An EOR in Switzerland manages various aspects of employment, including payroll processing, tax withholding and remittance, and benefits administration. They also ensure compliance with Swiss labor laws, which can be complex and differ significantly from other countries. For instance, Switzerland has specific regulations regarding working hours, paid holidays, and social security contributions that must be carefully navigated.

When hiring remotely in Switzerland, it’s crucial to consider the country’s labor laws, governed by the Swiss Code of Obligations and the Federal Labor Act. These laws aim to balance employee rights with employer freedoms. Key considerations include the prohibition of discrimination, regulations on working hours (typically 40 to 45 hours per week), and generous leave entitlements, including a minimum of 4 weeks of paid annual leave.

The hiring process in Switzerland typically involves drafting a detailed employment contract, which should include specifics about the role, compensation, working hours, and other key terms. While verbal agreements are technically valid, written contracts are strongly recommended and required for certain employment arrangements. The probationary period in Switzerland can last up to three months, during which either party can terminate the contract with seven days’ notice.

1. Find talent to hire in Switzerland

Employers can leverage various platforms and strategies to find talent to hire in Switzerland. The country has a well-educated workforce, with many professionals fluent in multiple languages, including English, German, French, and Italian.

Online job boards are popular in Switzerland, with platforms like Jobs.ch, Monster.ch, and Indeed Switzerland being widely used. LinkedIn is also a valuable resource for professional networking and recruitment. Platforms like SwissDev Jobs and Xing are tailored to the Swiss market for more specialized roles, particularly in tech and IT.

Recruitment agencies can be particularly helpful for foreign companies unfamiliar with the local job market. Agencies like Adecco, Manpower, and Kelly Services have a strong presence in Switzerland and can assist in finding qualified candidates.

Networking events and job fairs, especially in major cities like Zurich, Geneva, and Basel, can be excellent opportunities to connect with potential employees. Universities in Switzerland often host career fairs, which can be a great way to find young, educated talent.

According to a report by the State Secretariat for Economic Affairs (SECO), Switzerland has a highly skilled workforce, with about 88% of adults aged 25-64 completing upper secondary education or higher. This high level of education contributes to a talented and competitive job market.

When searching for talent in Switzerland, it’s important to consider the country’s strong emphasis on work-life balance and quality of life. Many Swiss workers value factors like flexible working hours and opportunities for professional development alongside competitive salaries.

2. Compare using an EOR to setting up a legal entity in Switzerland

When working with employees in Switzerland, you need to consider working with an EOR to set up your legal entity. This comparison will help you make an informed decision based on your company’s specific needs and long-term goals in Switzerland.

Here’s a comparison of key factors:

Using an EOR in Switzerland offers a faster and more flexible solution for companies looking to hire a few employees or test the market before committing to a full-scale operation. It significantly reduces the complexity and risk of navigating Swiss labor laws and tax regulations.

On the other hand, setting up a legal entity in Switzerland provides greater control over operations. It may be more cost-effective in the long run for companies planning a significant, long-term presence in the country. It allows for more customization in employment terms and direct management of all aspects of the business.

The choice between an EOR and setting up a legal entity depends on factors such as the scale of your planned operations in Switzerland, your timeline for expansion, and your company’s resources for managing international operations. For many companies, starting with an EOR and transitioning to their legal entity as operations grow can be an effective strategy for entering the Swiss market.

3. Get the information needed from your talent

To hire employees in Switzerland, you need information about them to ensure compliance with local labor laws and tax regulations. This process is crucial for both the employer and the employee, as it forms the basis of the employment relationship and ensures all legal requirements are met.

To begin with, you’ll need to gather basic personal information from your prospective employee. This includes their full legal name, date of birth, nationality, and contact details. In Switzerland, it’s common for individuals to have multiple given names, so ensure you capture the complete name as it appears on official documents.

Next, collect the employee’s social insurance number (AHV-Nr./No AVS). This number is used for social security contributions and benefits. Foreign workers who haven’t previously worked in Switzerland must register for an AHV number.

For tax purposes, you’ll need the employee’s tax identification number (TIN) or tax at source number if they are subject to withholding tax. The specific requirements may vary depending on the employee’s residency status and the canton of employment.

You’ll also need to gather information about the employee’s qualifications and work experience. This includes educational background, professional certifications, and previous employment history. In Switzerland, requesting copies of degree certificates and professional qualifications is common.

For payroll purposes, you’ll need the employee’s bank account details for salary payments. In Switzerland, it’s standard practice to pay salaries via bank transfer.

You must verify the employee’s right to work in Switzerland if the employee is a foreign national. This may involve collecting information about their visa status or work permit.

Lastly, it is important to gather information about any specific employment terms agreed upon, such as salary, working hours, job title and description, and any special arrangements like remote work agreements.

Remember, when collecting and storing this personal information, you must comply with data protection regulations, including the Swiss Federal Act on Data Protection (FADP) and, where applicable, the EU General Data Protection Regulation (GDPR).

4. Choose an EOR provider with expertise in Switzerland

When choosing an EOR provider to work with in Switzerland, selecting a partner with deep expertise in the country’s employment laws, tax regulations, and business culture is crucial. This expertise can significantly impact the success of your operations and ensure full compliance with local requirements.

First and foremost, look for an EOR provider with a strong track record in Switzerland. They should have experience working with companies in your industry and be able to provide references or case studies of successful partnerships. A provider with a physical presence in Switzerland, rather than just a network of partners, can often offer more direct and responsive service.

Consider the range of services offered by the EOR provider. In Switzerland, a comprehensive EOR service should include payroll processing, tax withholding and reporting, social security contributions, and management of mandatory benefits such as holiday pay and occupational pension plans. They should also be well-versed in Switzerland’s collective labor agreements, which are common in many industries and can affect employment terms.

The EOR provider should demonstrate a thorough understanding of Switzerland’s labor laws. This includes knowledge of working hour regulations, leave entitlements, termination procedures, and anti-discrimination laws. They should be able to guide you through the nuances of Swiss employment contracts, which, while not always legally required to be in writing, are strongly recommended.

Technology and data security are also crucial factors. Look for an EOR provider that uses modern, secure systems for managing employee data and payroll. This is particularly important given the stringent data protection requirements under the Swiss Federal Act on Data Protection (FADP) and, where applicable, the GDPR.

Customer support is another key consideration. Choose a provider that offers responsive, multilingual support. Given the time difference between Switzerland and many other countries, 24/7 support can be particularly valuable.

What are the best EOR providers to use in Switzerland?

These providers have been selected based on their expertise in the Swiss market, range of services, technological capabilities, and customer reviews. However, it’s important to evaluate and choose which EOR is best based on your specific needs and circumstances.

5. Communicate your hiring needs to the EOR

Communicating your hiring needs to the EOR is important to ensure a smooth and effective hiring process in Switzerland. This step is crucial as it sets the foundation for a successful employment relationship and helps the EOR accurately represent your company’s interests.

Start by providing a detailed job description for the position you’re looking to fill. In Switzerland, job descriptions typically include the responsibilities and qualifications required and information about the company culture and values. This is important as Swiss workers value the work environment and company ethos.

Clearly outline the terms of employment you’re offering. This should include the proposed salary, which should be stated in Swiss francs (CHF), the local currency. Be aware that it’s common practice in Switzerland to pay salaries in 13 installments per year, with the 13th salary typically paid in December. Communicate whether you plan to follow this practice or stick to a 12-month payment schedule.

Specify the working hours and any flexibility options. Switzerland has specific regulations regarding working hours, with a standard workweek typically ranging from 40 to 45 hours. If you’re offering remote or hybrid work options, which have become increasingly popular in Switzerland, make this clear.

Discuss any benefits you wish to offer beyond the statutory requirements. While Switzerland has comprehensive social security coverage, additional private health insurance or pension contributions can attract potential employees.

Communicate any specific skills or qualifications essential for the role, such as language requirements. While many Swiss professionals speak multiple languages, specifying the level of proficiency needed in German, French, Italian, or English is important.

If there are any unique aspects of your company culture or working style that you want to maintain, communicate these to the EOR. This could include things like regular team-building activities or specific communication practices.

Provide information about your timeline for hiring and onboarding. Swiss business culture values punctuality and clear planning, so setting clear expectations about timeframes is important.

Lastly, be open to guidance from your EOR provider. They may have insights into local market conditions or cultural nuances that could affect your hiring strategy in Switzerland.

6. Have the EOR set up the contracts and hiring procedure

Once you have chosen which provider to work with and communicated your hiring needs, the EOR will set up the contracts and manage the hiring procedure according to Swiss labor laws and regulations.

The EOR will draft an employment contract that complies with Swiss law. While verbal contracts are technically valid in Switzerland, written contracts are strongly recommended and mandatory for certain employment arrangements, such as fixed-term contracts. The contract will typically be in German, French, or Italian (depending on the region), though an English translation may be provided for your reference.

Key elements that the EOR will include in the contract are:

• Job title and description
• Start date and, if applicable, end date for fixed-term contracts
• Salary and payment schedule (including the 13th salary if applicable)
• Working hours and location
• Probationary period (which can be up to three months)
• Leave entitlements (including the statutory minimum of 4 weeks of paid annual leave)
• Notice periods for termination

The EOR will also ensure that the contract complies with any relevant collective labor agreements, which are common in many Swiss industries and can affect terms of employment.

Next, the EOR will handle the registration process. This includes registering employees with the Swiss social security system (AHV/AVS) and the relevant cantonal tax authorities. If the employee doesn’t already have one, they will obtain the necessary social security number (AHV-Nr./No AVS).

The EOR will also set up the payroll system to ensure timely and accurate salary payments, including the correct withholding of income tax and social security contributions. In Switzerland, employers are responsible for withholding these amounts from the employee’s salary.

The EOR will assist with any necessary work permit applications if the new hire is a foreign national. Switzerland has different procedures for EU/EFTA citizens and non-EU/EFTA citizens, and the EOR will navigate these requirements accordingly.

Finally, the EOR will manage the onboarding process, ensuring that all necessary documentation is completed and the employee is properly integrated into your company’s systems and procedures.

Throughout this process, the EOR acts as the legal employer, taking on the associated risks and responsibilities while allowing you to manage the employee’s work day to day.

What help does an EOR provide in Switzerland’s payroll, taxes, and benefits administration?

The EOR will support all of of Switzerland’s payroll, tax, and benefits administration, ensuring full compliance with local regulations and timely execution of all required processes. This comprehensive service is crucial for navigating the complexities of the Swiss employment system.

Regarding payroll, the EOR typically calculates and disburses salaries every month. They manage the unique aspect of Swiss payroll, where employees receive a 13th salary payment, usually in December. The EOR ensures these payments are correctly calculated and distributed.

For taxes, the EOR takes care of income tax withholding and remittance to the relevant cantonal and federal tax authorities. They calculate the correct amount of tax based on the employee’s salary and personal circumstances, applying the progressive tax rates that can vary significantly between cantons. The EOR also handles the monthly tax declarations and annual tax returns required by Swiss law.

Regarding social security contributions, the EOR manages the employee’s and employer’s contributions to the various Swiss social insurance schemes. This includes Old Age and Survivors’ Insurance (AHV/AVS), Disability Insurance (IV/AI), Income Compensation (EO/APG), Unemployment Insurance (ALV/AC), and Occupational Pension Plans (BVG/LPP). They ensure these are correctly calculated and paid to the relevant authorities.

The EOR also administers mandatory benefits as stipulated by Swiss labor law. This includes managing annual leave entitlements (a minimum of four weeks per year), public holidays (which can vary by canton), and sick leave. They also ensure compliance with Switzerland’s robust worker protection laws, including regulations on working hours, overtime, and rest periods.

In addition, the EOR can help administer any supplementary benefits you offer, such as private health insurance or additional pension contributions. They can guide competitive benefit packages in the Swiss market.

The EOR stays updated on changes to Swiss labor laws and tax regulations, ensuring ongoing compliance. This is particularly important given Switzerland’s federal structure, where regulations vary between cantons.

Finally, the EOR provides regular reporting on payroll and tax matters, giving you clear visibility into your employment costs and obligations in Switzerland.

What labor laws do you need to consider when hiring in Switzerland?

When hiring in Switzerland, there are a few key labor laws to consider. Switzerland has a comprehensive employment legislation framework, primarily governed by the Swiss Code of Obligations and the Federal Labor Act. These laws aim to balance employee rights with employer flexibility. Switzerland tends to have less rigid employment protection than other European countries, but there are still important regulations to consider.

Employment contracts

Employment contracts in Switzerland can be permanent (open-ended) or fixed-term. While verbal contracts are legally recognized, written contracts are strongly recommended and mandatory for certain employment arrangements. The contract must specify key details such as job title, duties, salary, working hours, and place of work.

Working hours and paid holidays

The standard workweek in Switzerland is typically between 40 to 45 hours, depending on the industry and collective agreements. Employees are entitled to at least 4 weeks of paid vacation per year, and 5 weeks for employees under 20. There are also several public holidays, which can vary by canton.

Minimum wage

Switzerland does not have a national minimum wage set by law. However, some cantons have introduced minimum wage legislation, and many

collective bargaining agreements set minimum wages for specific industries or professions. It’s important to research the relevant standards for your industry and location.

Termination and severance

Swiss law allows for relatively flexible termination procedures compared to some other European countries. However, there are still important protections in place. Notice periods for termination depend on the length of service, ranging from 1 to 3 months. Employers must provide a valid reason for termination if the employee requests it. There is no statutory requirement for severance pay, except in specific circumstances for older employees with long service.

Social Security and Insurance

Switzerland employers must contribute to various social insurance schemes, including old-age and survivors’ insurance, disability insurance, unemployment insurance, and occupational pension plans. These contributions can represent a significant cost for employers and must be factored into budgeting.

Maternity and paternity leave

Mothers are entitled to 14 weeks of paid maternity leave, compensated at 80% of their salary. As of 2021, fathers are entitled to 2 weeks of paid paternity leave. Some employers offer more generous parental leave policies to attract and retain talent.

How does the hiring process work in Switzerland?

When hiring staff in Switzerland, the process typically involves several steps and considerations unique to the Swiss labor market. Initially, job openings are often advertised through various channels, including online job portals, company websites, and professional networks. Swiss companies also work with recruitment agencies, especially for specialized or senior positions.

The application process usually requires candidates to submit a CV, cover letter, and copies of relevant certificates and diplomas. Swiss employers often value education and professional qualifications, so detailed documentation is important.

Once applications are received, the screening process begins. Depending on the role, this often involves multiple rounds of interviews, including technical assessments or presentations. Swiss business culture values punctuality, professionalism, and thorough preparation, so these qualities are often assessed during the interview process.

Reference checks are standard practice for many positions, especially in larger companies or regulated industries. Some employers may also request a criminal record check.

The next step is a job offer and contract negotiation if a suitable candidate is identified. This is where the EOR can be particularly valuable, ensuring that all terms comply with Swiss labor laws and industry standards.

Once an agreement is reached, the formal hiring process begins. This includes registering the employee with social security authorities, setting up payroll, and completing all necessary paperwork. The EOR handles these administrative tasks, making the process smoother for the employer and the new hire.

Finally, the onboarding process is crucial in Swiss work culture. This often includes a thorough introduction to the company, its policies, and the specifics of the role. Many Swiss companies have structured onboarding programs to ensure new employees integrate well into the organization.

Is Switzerland a relatively easy country to hire employees remotely through an EOR?

Switzerland is generally considered a relatively easy country to hire employees remotely through an EOR. The country’s well-developed legal system, stable political environment, and highly skilled workforce make it an attractive destination for international companies looking to expand their teams.

Switzerland’s business-friendly environment and openness to international trade contribute to a relatively straightforward hiring process. The country’s strong infrastructure and high internet penetration rates facilitate remote work arrangements.

Pros and Cons of Hiring Employees in Switzerland

In conclusion, while there are some complexities to navigate, particularly around regional variations and data protection, using an EOR service can significantly simplify the hiring process in Switzerland. The country’s numerous advantages, including its talented workforce and stable business environment, make it an attractive option for companies looking to expand their remote workforce in Europe. An experienced EOR can navigate the complexities while allowing you to benefit from Switzerland’s many strengths as a business location.