With the immediate benefits of economic growth, a central location, and a strong business environment, Switzerland is a great choice for businesses and investors looking to enter the European market. In this post, we provide some information on employing a worker in Switzerland.
Capital GES created our postcard series to help businesses that are considering expansion and employing global staff. In this postcard series, we provide helpful tips on international employment. Below, we discuss employment law in Switzerland.
Switzerland Overview
For companies looking to expand into Europe, Switzerland is a great choice.
Known for its political stability and strong business environment, Switzerland is one of the world’s wealthiest countries. Its standard of living, industrial productivity, and quality of education and health care are among the highest in Europe. The Swiss economy is extremely open to foreign trade and is considered one of the most competitive economies in the world. As well as being the global finance centre, Switzerland offers a wealth of business opportunities for investors in many sectors including Pharma, Healthcare, Research, Technology, and IT.
Employing a worker in Switzerland – Employment Laws to know
However, expanding into an unfamiliar country can be challenging, and Switzerland is no different. Therefore, it is vital to have local knowledge when expanding a business and employing workers in Switzerland. Below, we discuss the most common questions asked by clients regarding employment in Switzerland.
1. Contracts
Can I trial a worker using a fixed-term employment contract, as I am not sure whether it will work out in the long term?
Fixed-term contracts are available in Switzerland. However, Swiss legislation requires that they can only be used for a specific task and must be justified. In Switzerland, fixed-term contracts may only be renewed once. It is important to note that any renewal may deem the employment relationship to be indefinite. To ensure your worker stays fully compliant in Switzerland, it is best to discuss your contract options with a local partner.
2. Termination Rules and Costs
What do I need to know about termination and severance pay in Switzerland?
In Switzerland, both parties (employer and employee) may terminate a working relationship. The employer can terminate by either giving notice or by paying an indemnity in lieu of notice. In the latter case, the contract is terminated with immediate effect.
Fixed-term contracts can be terminated during their term by mutual agreement or in circumstances justifying summary termination with just cause.
Notice Period
The notice period during probation is 7 calendar days. Where there is no probation, notice periods start from one month during the first year of employment; two months between the second and ninth year of employment, and three months after the tenth.
Severance Pay
Severance payments must only be paid if the employee affected is over the age of 50 and has worked for more than 20 years for the same employer.
The statutory minimum severance payment is equal to two months’ salary. If the employee receives or will receive, payments from a social security scheme that has totally or partly been funded by the employer, there is no obligation to make severance payments.
3. Statutory Benefits
What are the statutory employee benefits in Switzerland?
Statutory paid holiday
In Switzerland, employees are entitled to 20 days of paid leave. Public holidays are not included.
Maternity
In Switzerland, mothers are entitled to 14 weeks or 16 weeks (in the Canton of Geneva) maternity leave. Mothers must take a mandatory eight weeks leave following the birth. During maternity leave, employees are entitled to an allowance equal to 80% of the average salaries funded by the State. The allowance is capped at CHF196 per day and paid by the employer who may supplement the income up to 80% or 100% of the employee’s usual salary.
Paternity
From 2021, fathers working in Switzerland will be entitled to two weeks of paternity leave. This leave must be taken within the first six months of the child’s birth.
The employer is not obliged to pay salary to the employee during paternity leave. However, the employee is entitled to receive a state benefit provided that they have been insured with the state old-age pension and disability scheme.
Because of the different rules for entitlement to paternity leave and paternity benefit, an employee may be entitled to paternity leave but not to paternity benefit.
Parental
Employees with family duties have a statutory right to stay away from work for up to three days to take care of sick children. Statute does not provide other special rights for parents or carers.
Sick Pay
In Switzerland, employers and employees can take out insurance which will partly cover an employee’s loss of earnings when they are unable to work due to sickness. Where there is a daily sickness benefit insurance, this covers 80% of the employee’s salary for 720 or 730 days in a 900-day period. It is also possible for the insurance to cover to 100% of the employee’s salary if the company adopted this condition. At least 50% of the cost of such insurance is borne by the employer.
In the absence of a daily sickness benefit insurance, the employer must pay the employee full salary. Salary is paid if the employment relationship has lasted at least 3 months and is paid at100% from the first day of sickness. Sick pay periods are determined according to seniority from three weeks for one year of employment to 17 weeks for 11 years of employment with a maximum limit of between six months to one year. There is no recovery of sick pay from the state.
How Capital GES Can Help You Expand and Employ Workers in Switzerland
If you are a business that is looking to expand internationally and employ workers in Switzerland, Capital a People2.0 company can help.
To establish what services you require, contact our sales team – phone +41 32 732 9700 or fill in the form below.
