How to Hire Remote Employees In 

Switzerland

The Basics

Currency
Swiss Franc (CHF)
Employer Taxes
9.463%
Payroll Frequency
Monthly
Official Language
German, French, Italian and Romansh

Employment in 

Switzerland

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Switzerland

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Switzerland can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Switzerland, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Switzerland.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Switzerland is not the same as paying workers in your own country. Employees have to be paid using Switzerland's employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Switzerland

 Specific Information

Working Hours

Contractually agreed working hours are 40 or 42 hours per week. Depending on the field of work, the maximum number of working hours a week is either 45 or 50 hours. 

Overtime

Overtime work is compensated at 125% of the regular pay rate, or time off is given in lieu of payment.

Payroll Tax

Employer

  • 9.463% - Employer Contributions

Minimum Wage

In Geneva, the hourly wage is 23 CHF across all industries.

Payroll

Pay Cycle

Employees must be paid monthly by the last working day, however, the pay date is typically by the 25th of the month.

Leave

Paid Time Off (PTO)

Employees over the age of 20 receive 4 weeks of paid holiday. Under the age of 20, they receive 5 weeks of paid holiday.

Public Holidays

Geneva has 9 public holidays.

Sick Days

Employees are entitled to continuous salary payments for a certain period of time depending on their years of service (three weeks during the first year of service). Alternatively, employers may take out a daily benefits insurance scheme, under which employees usually receive 80% of their last salary for a maximum of 720 days.

Maternity Leave

Maternity allowance is given to employees who have contributed to the OASI for at least 9 months preceding the delivery and have worked for at least five months.

Mothers (both full-time and part-time employees) are paid 80% of their wages in the form of a daily allowance for 98 days (up to a maximum cap of SFr 196 per day). However, Geneva law provides an additional two weeks, amounting to a total of 16 weeks.

Paternity Leave

Fathers in Switzerland are entitled to 10 days of paid paternity leave. They can take paternity leave in a single period or as individual days but must use the leave within six months after the baby’s birth. 

Paternity leave benefits will equal 80% of the employee’s average salary prior to the baby’s birth but will be capped at a total of CHF2,744, or CHF196 per day. 

Termination

Termination Process

Termination in Switzerland has the principle of freedom of dismissal, making it possible to terminate a contract of employment without there being an important reason, provided that such termination is not discriminatory or abusive. The reason for the dismissal must be explained when the other party requests it. Even if the dismissal is valid through oral termination, it is advisable to do so in writing for evidentiary purposes.

Notice Period

Termination is considered legally valid from the moment the recipient receives it.

The statutory notice periods are as follows:

  • 7 days during the trial period
  • 1 month during the first year of service
  • 2 months during the second to the ninth year of service
  • 3 months from the tenth year of service

Alternatively, the parties can contractually agree on a notice period.

A fixed-term employment contract ends on the expiry of the agreed period.

Severance Pay

An employee is entitled to severance pay if it is stated in their contract, or if they are over the age of 50 and have worked in the company for at least 20 consecutive years. Severance payment is two month’s of salary.