«The search for appropriate new staff is often difficult. You are therefore relieved when you finally find the right employee who not only has the desired qualifications but is also a good fit for the team. However, you need to make certain arrangements before new employees can take up their posts. For example, you have to agree on the salary, negotiate a contract and register the new employee for social insurance.»
You can reach a contractual agreement in writing, verbally or implicitly. An employment contract does not legally require any specific form. However, a written contract is the safest approach for both parties, as this is the best way to avoid misunderstandings.
The Swiss Code of Obligations sets out the most important rights and obligations for both the employer and the employee. For instance, it covers work obligations, duties of due diligence and loyalty, the requirement to pay wages, care duties and the employer's obligation to continue paying wages in the event of illness. Collective and standard employment contracts also contain corresponding provisions. Employment law contains mandatory provisions on working hours and rest periods, as well as a range of protective regulations.
What should be included in an employment contract?
You do not need to include pages of regulations. It is advisable to put the following points down in writing:
- Names of the contractual parties*
- Employment start date*
- Salary, including social benefits, and all allowances such as bonuses, a 13th monthly salary and commissions*
- Any necessary assurance of a salary increase at a later time
- Area of responsibility and position in the company (find out if your company already has requirement specifications in place)*
- Weekly working hours*
- Special voluntary benefits provided by the company (e.g., more than four weeks of holiday, company cars, discounts)
* If your employee will work indefinitely or for more than one month in your company, the law requires you to inform the employee of these points in writing. The relevant document must be available within one month of the contract's entry into force.
Legal regulations cover all further aspects of the employment relationship. However, it is possible to reach individual agreements, for instance governing
- the trial period (three months maximum)
- the termination notice period
- expense allowances
- non-competition clauses
Your new employee's salary is a matter to be negotiated, subject to any minimum salary stipulated by a collective or standard employment contract. You must observe the principle of equal pay for men and women. The law requires payment of the same remuneration for equal work and work of equal value performed by both genders (in accordance with the Swiss constitution, Gender Equality Act).
If you do not agree on a specific salary, your employee is entitled to compensation customary in the relevant industry for comparable work activities.
"Salary" generally refers to the gross salary. You, as the employer, deduct the legally required social insurance contributions from this gross salary. You are free to determine whether the salary is calculated on an hourly, monthly or daily basis.
However, the salary must always be paid by the end of each month unless shorter time periods or deadlines have been agreed or are customary. Please remember that you must always provide your employee with a written statement along with salary payments.
If your employee has children, you may receive an application for family allowances. You then forward this application to your family compensation office, which will check whether your employee satisfies the requirements to receive allowances. If so, you must pay these allowances to the employee along with the salary. The family compensation office will then credit this sum to you.
The amount of allowances is determined by the Swiss Federal Law on Family Allowances. Employees and unemployed persons receive a monthly child allowance of CHF 200 for children under the age of 16, and an education allowance of CHF 250 for children under the age of 25 who are still in education or training programmes. The cantons may, however, stipulate higher allowance amounts. The law also determines which parent receives these allowances if both are employed.
Who pays which contributions?
Social insurance contributions are generally split between the employer and the employee. The following bases and rules apply (as of 2019):
|Your employee pays (as a direct salary deduction)
|Administrative expenses contribution on the AHV/IV/EO contributions total||Depends on the compensation office||-||-|
Unemployment insurance (ALV):
Contribution for a monthly salary of up to CHF 10,500 or an annual salary of up to CHF 126,000.
Unemployment insurance (ALV):
Contribution for a monthly salary over CHF 10,500 or an annual salary over CHF 126,000.
|Family allowances||Depends on the family compensation office and the canton||-||-|
|Family allowances in agriculture||2%||-||2%|
Occupational accident insurance
Accident insurance is mandatory for annual salaries up to CHF 148,200. You are responsible for paying the premium for occupational accident insurance.
|Non-occupational accident insurance||(voluntary assumption of costs is possible)||Depending on the occupation, this deduction is around 1.4% to over 2%.||-|
This is mandatory for (gross) annual salaries between CHF 21,330 and CHF 85,320. The amount of the premium depends on the employee's age and the pension fund regulations.
|Normally half of this, although a different distribution in the employee's favour may be agreed in line with the regulations.||Normally half||-|
Daily sickness allowance insurance
|At least half||Normally half||-|
At the end of the year, you must provide your employees with a salary statement required for their tax declarations. You can find the relevant forms and information on the website of the Swiss Federal Tax Administration.
For which social insurance schemes is it necessary to register?
Cantonal compensation office (Pillar 1)
Employers are obligated to register new employees with the cantonal compensation office (AHV) within 30 days. The compensation office will register them and open an individual account for them. If your employee does not yet have an AHV card, you must apply for one to be issued. With each salary payment, you deduct the contributions from your employee's pay and regularly transfer them to the compensation office along with the contributions from the other employees.
Pension fund (Pillar 2)
You must register employees aged 25 and older with a pension fund provided they receive an annual salary of over CHF 21,330 (as of 2019). Registration is also mandatory if the employment relationship has been agreed for an indefinite period or for more than three months. You are free to choose the pension fund.
When entering the employment relationship (including the trial period), all employees must be insured against accidents (medical expenses, loss of earnings and pension payment).
- If your company already has an accident insurance scheme in place, you merely need to include your new employee in the declaration of the payroll total. Insurance premiums are adjusted automatically.
- If you do not have an accident insurance scheme in place, you must promptly take out accident insurance for your new employee. You can find information on appropriate insurance solutions under Helsana for companies.
In certain sectors, employees of relevant companies are subject to the Swiss National Accident Insurance Fund (SUVA). You can find out more on the Internet platform Koordination Schweiz.
Which types of insurance may you take out voluntarily?
Daily sickness allowance insurance
Voluntary daily sickness allowance insurance covers the loss of wages if your employee falls ill
- If your company already has a scheme in place for daily sickness allowance insurance, you merely need to include your new employee in the declaration of the payroll total. Insurance premiums are adjusted automatically.
- Would you like to take out daily sickness allowance insurance for your new employee? You can find information on appropriate insurance solutions under Helsana for companies ((shortcut)).
Some special cases
Employment relationship with two or more employers
If your new employee also works for other companies, the total working hours may not exceed the maximum working hours under employment law. To avoid exceeding the maximum working hours, you are also responsible for ensuring that your employee complies with the regulations on working hours and rest periods under employment law. For this reason, you may ask your new employee to inform you of any secondary employment. For social insurance purposes, you are only responsible for the workload performed for your company.
Fixed-term employment contracts
In the event of a fixed-term employment contract, your employee is only insured for the duration of the agreed employment relationship. However, in accordance with the Accident Insurance Act (UVG), employees may also prolong their accident insurance by means of extended insurance coverage (PDF, 90KB) (for up to 180 days). You are obligated to inform your employee of this option at the end of the employment relationship.
If your new employee already receives a disability insurance pension due to illness, you must observe the following:
- If the illness causing the disability should worsen, you are only entitled to daily sickness allowance benefits for a limited duration.
- You must promptly report the aggravation of the illness to the authorities for disability insurance (IV).
If a disability caused by an accident should worsen, the daily allowance benefits are to be covered by the accident insurance scheme that paid benefits following the accident.
Family members who are paid irregular wages (e.g., an hourly wage) are insured against the loss of wages in the event of an accident or illness. As a prerequisite, their earnings must be subject to AHV.
New employees who receive an AHV pension are still entitled to their normal salary with the relevant deductions for social benefits. In this way, they are insured against accidents and illness. However, it is not possible to take out daily sickness allowance insurance if they have already reached the regular AHV retirement age at the time their employment begins. If they fall ill, you are responsible for continued payment of their salary.
Termination by the employer before the start of employment
The termination notice period only enters into force upon the start of employment. This means that the employment relationship ends with the termination notice period applicable at the start of employment. New employees who are without employment at the time of the agreed start of employment are entitled to their salary for the duration of the termination notice period applicable at the start of employment.
Example: Termination notice period of seven days; salary entitlement for eight days (first working day plus seven-day termination notice period).
What can Helsana do for you?
At the end of the year, you will receive a payroll declaration form (total of wages for all employees). You may fill this out by hand and mail it back to us. You also have the option of using the software available for submitting an electronic declaration of the payroll total.
Customised insurance solution for your company
Let our experts advise you on the best possible insurance solution for your employees. Just call Client Services at 0844 80 81 88.
Healthy working environment
A working environment that promotes health and good performance also serves to increase motivation and reduce absences. We can assist and support you in setting up a sustainable solution for occupational health management.