Switzerland Employee Benefits
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Switzerland might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Switzerland including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.
What are the Employee Benefits in Switzerland?
Benefits and entitlements for Switzerland’s employees are based mainly on the Code of Obligations, part of the Civil Code, which incorporates most aspects of employment legislation relating to employee contracts, including dismissals, redundancies, notice periods and collective agreements. The Federal Labor Law’s role in the private sector deals with the details of working hours and breaks, holidays, maternity, and paternity leave, for example.
These provisions are complicated in Switzerland, as the 26 individual cantons can also apply minimum requirements. Additionally, Collective Bargaining Agreement (CBAs) and trade union arrangements also provide safeguards and entitlements for the workforce.
Minimum guaranteed benefits, either from legislation or agreements, include such as:
- Minimum wages
- Paid vacations
- Working hours
- Termination, severance, and notice periods
- Sick leave
- Maternity allowances and benefits
Therefore, the responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.
What Compensation Laws exist in Switzerland?
Most of the legislation concerning the rights of employees and obligations of employers are drawn together under the Code of Obligations and the Federal labor Law. Collective Bargaining Agreements (CBAs) play a leading role in improving employees’ entitlements, alongside measures introduced by trade unions in negotiations with employer associations. Legislation includes:
- The Code of Obligations: These deals mainly with employment legislation concerning employee contracts, dismissals, redundancies, notice periods and collective agreements
- Federal Labor Law: This relates mainly to the private sector and deals with such as working hours and breaks, holidays, maternity, and paternity leave among other workplace issues
- The Federal Act on Gender Equality: The Act applies to hiring, work role and conditions, pay, training, promotion, and termination. It decrees that discrimination cannot be based on marital or family status, including pregnancy
- The Federal Act on Workers’ Participation: This gives employees the right to information and consultation and, in the case of companies with more than 50 employees, the right to representation
- The Occupation Benefits Act: The Act stipulates that any employee earning at least CHF 19,350 (€18,530, US$21,054) must enroll with the second tier BVG pension scheme
- The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Legislation and binding collective agreements apply to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours.
Drawing up contracts is tricky enough, but in Switzerland it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Contracts can be verbal or implied but some provisions that differ from statutory regulations, such as overtime or notice periods, are valid only if confirmed in writing
Compensation, entitlements, and benefits include the following, all of which can be improved by collective agreements, but not diminished.
- National Minimum Wages: Switzerland has no ‘national’ minimum wage, with rates varying between the 26 cantons. For example, the hourly minimum in Jura is CHF 20 (€19.30, US$21.80). Rates also depend on the type of work and the employees’ skills. Geneva canton, which includes Geneva city, has an hourly basic minimum wage of CHF 23 (€22.17, US$25), which can be upgraded for experience and qualifications – reputedly the highest hourly minimum in the world. This equates to a monthly minimum of CHF 3,772 (€3,636, US$4,108). The annual salary would be CHF 45,264 (€43,640, US$49,297).
- Sick Leave and Benefit: The Code of Obligations states that employees unable to work through illness are entitled to sickness benefits depending on length of service. Entitlement is three weeks during the first year after working for four months, with proportionately extended periods for longer service. Employers can take out sick leave insurance to indemnify them against payments to their employees, who are also able to take out individual sickness insurance. Employees generally are paid 80% of their salary. Entitlements vary between the 26 cantons.
- Working Hours and Breaks: Under the Federal Labor Act, industrial workers, office, technical and sales staff are limited to 45 hours maximum, with 50 hours the upper limit for other employees, including overtime. Employees receive 15 minutes break after working 5.5 hours; 30 minutes for working seven hours and one hour within a daily working stretch of nine hours. These breaks are paid if employees are not allowed to leave the workplace. Employees have a minimum 11 hours’ rest per day, possibly reduced to eight hours if the 11-hour minimum is averaged over two weeks. The Code of Obligations stipulates at least one day off per week, generally a Sunday. Employees can agree to two half-days off instead of a full day.
- Overtime: The two categories are overtime and extra hours. ‘Overtime’ applies when working hours exceed the contracted maximum of 45 or 50 per week. Employees are paid 125% of their normal hourly rate, with time off in lieu an option. Overtime must exceed 60 hours annually for technical, sales staff and those in large retail outlets to be eligible. ‘Extra hours’ apply when statutory maximum hours of 45 or 50 per week are exceeded. Extra hours should not be more than two per day, 170 each year for a 45-hour week and 140 annually for a 50-hour week. Employees receive 25% above their normal hourly rate for the extra hours. Time off in lieu can be agreed
- Paid Vacations: Full and part-time workers receive a minimum four weeks paid vacation annually. Employees up 20 years old are entitled to five weeks and over-50s can also receive more than the statutory minimum. CBAs or individual contracts can improve entitlement. Vacation days can be postponed if employees fall ill or suffer injury during their vacation. Outstanding days can be taken during notice periods unless it is agreed to take payment in lieu.
- Maternity Benefit and Leave: Leave is 14 weeks with six before birth and a minimum of eight post-natal. In Geneva the total allowance is 16 weeks. Benefit is 80% of average salary capped at CHF 196 (€190, US$213) per day but mothers must have worked at least the previous five months and be insured via the AVS fund. Benefit is salary, so contributions are deducted for social insurance funds. Employees are paid by their employer, while self-employed and unemployed access benefit through the AVS
- Paternity Benefit and Leave: As of January 1, 2021, fathers are entitled to two weeks’ paid leave within six months of the birth of their child. Paternity leave is funded through the earnings compensation scheme (EO). Leave can be taken in one block or in separate days, including weekends; therefore, the total allowance of 14 days comprises 10 workdays. Paternity leave is in addition to annual leave and any notice period must be extended to allow the full quota of paternity leave. Compensation is 80% of average salary prior to the birth to a maximum of CHF 2,744 (€2,645, US$2,987) over the 14 days
- Termination and Severance: All employees are subject to legislation applying to termination, which is not allowed while the employee is unable to work through illness or injury (for specified periods increasing with seniority); is pregnant or in the 16 weeks after giving birth; on military service, among other reasons. Statutory entitlement to severance applies only to employees over the age of 50 with 20 years’ service and if there is a shortfall in pension contributions. In this case, severance payments equal from two to eight months’ pay, but packages are usually contractually agreed.
- Notice Periods: Unless contractually agreed or governed by collective agreements, notice periods are a minimum of one month following the end of the current calendar month. Two months’ notice applies between the second and ninth year of service and three months thereafter. The first month of employment is considered a trial period, which can be extended to three months, if confirmed in writing, and terminated at any time with seven days’ notice