Employment laws in Switzerland

For businesses to hire employees in Switzerland, it is important to have a clear understanding of the country’s unique employment framework. 

Switzerland has 26 cantons, and the nation does not have a minimum wage enforced across all cantons. For instance, Geneva offers around CHF24.32 per hour, and other cantons like Ticino and Jura have lower thresholds. 

Employees are also entitled to other benefits like annual leave, sick leave, etc., the provisions for which are left at the discretion of the employer and the canton in which the employee is working. 

If you are an employer, all these things may seem overwhelming to remember and navigate compliance with the labor laws in Switzerland. 

A workforce management company like Payoneer Workforce Management can help streamline the operations for you, helping you carry out your business in a smooth manner.

Read on to understand the laws that typically secure employee rights in Switzerland.

Key employment laws in Switzerland 

Here are a few key employment laws in Switzerland: 

1. Swiss Code of Obligations (CO / OR) (Art. 319-362): This is the primary legal source that regulates all aspects of employment, like employment contracts, salary systems, rules about termination, probation period, and many more. 
2. Swiss Labor Law: This law outlines the rights and obligations of both employers and employees within the legal framework. It helps ensure compliance with key regulations such as working conditions, contracts, and worker protections, which are essential for maintaining fair and lawful employment practices. 
3. Federal Act on Gender Equality (GEA/GIG): This law prohibits any kind of discrimination at the workplace based on gender. Employees, irrespective of their gender, shall get equal opportunity in terms of promotion, payment, and other aspects of growth in employment. 

Contract employment laws in Switzerland

Switzerland has contract employment laws that fix the terms between the employer and the employee. 

Types of contract

Here are a few different types of employment contracts in Switzerland: 

1. Individual employment contract: This is an individual employment contract that is signed between an employer and an employee. It may either be for a fixed term or for an indefinite term. 
2. Collective employment agreement: This is an agreement between the workers’ union and the employers’ association that sets minimum working conditions that ensure the safety and well-being of employees in a specific sector. 
3. Standard employment contract: This kind of contract is established by cantonal or federal authorities where there is no collective employment agreement. There are fixed laws about working conditions and minimum wages so that employees are treated fairly. You, as an employer, cannot offer terms below these standards. 

Essential contract terms

An employment contract should contain the following information:

1. The employer’s and the employee’s name
2. The date of commencement of the employment 
3. The roles and responsibilities of the employee 
4. The salary, other allowances, and benefits that the employee is entitled to
5. The employee’s weekly working hours
6. If the contract is for a fixed term, the end date of the employment contract
7. Overtime rules

Minimum wage in Switzerland

There is no fixed minimum wage that is followed all across the country. The minimum wage in Switzerland varies from one canton to another. For instance, the minimum wage in Geneva per hour is CHF24.32, that in Neuenberg is CHF20.08, CHF20 for Jura, and CHF19 for Ticino. 

Working hours in Switzerland

The minimum working hours for employees in Switzerland are 40 hours a week. If needed, you may request them to work overtime. However, you have to pay your employees a 40% supplement for overtime work. 

Mandatory benefits

In addition, employees in Switzerland have access to various benefits designed to help them achieve a better work–life balance. 

Annual leave

Employees in Switzerland shall get 20 annual leaves in the first year of their service. After 1 year, they get 25 annual leaves. 

Sick leave

The Swiss labor law does not specify any fixed number of leaves for employees on account of sickness that should be followed across all cantons. However, you may define the provisions for sick leave in the employment contract that you issue to the employee. 

Typically, the employer pays for 15 days, and the national insurance pays the employee after that.

Social security benefits

Switzerland has a strong social security system funded by mandatory contributions from both employers and employees. 

Some contribution rates are fixed, while others vary based on factors like salary, age, and job-related risk. 

These contributions help provide benefits such as pensions, accident insurance, and unemployment support. Employers contribute 5.3% toward social security.

Maternity leave

Female employees in Switzerland are entitled to a maternity leave of 14 weeks. 

If the employee is insured under the AHV scheme for 9 months before the birth of the child, has worked for at least 5 months during pregnancy, or is employed at the time of childbirth, they are entitled to benefits from the social security system.

Paternity leave 

You must allow your male employees to take a paid paternity leave for 2 weeks within 6 months of childbirth. 

Public holidays

There are 12 public holidays in Switzerland. They are determined at the cantonal level, which results in variation across different regions. Nevertheless, some holidays like New Year’s Day, Christmas Day, and Ascension Day are observed as public holidays nationwide. 

Additional leaves

Some types of leave are particularly important for personal needs, allowing employees to attend to specific matters in their private lives. 

• Compassionate leave: Employees shall get 1-3 days of compassionate leave on the death of their parents, husband, wife, a registered partner, children, siblings, grandparents, etc. 
• Wedding leave: You must allow 3 days’ holiday on account of an employee’s wedding and 1 day’s leave on account of the marriage of the employee’s parents, children, or siblings. 
• Military recruitment: For military recruitment processes, employees can take leave up to 3 days. 
• House relocation: Employees shall get 1-2 days of leave for relocating their household, based on the distance of the place to which they are relocating. 
• To look for a job after cancellation: Once an employment contract is terminated, employees must be given 2 days to support them in searching for new employment. 

Termination

According to the termination laws in Switzerland, you should have a valid reason to terminate an employment contract. 

Types of termination scenarios 

Listed below are some scenarios under which termination of an employee may be considered valid. 

1. Ordinary dismissal, or dismissal due to a specific reason 
2. The employee’s decision to dissolve an employment contract 
3. The automatic termination of a fixed-term employment contract 
4. Mutual decision between you and the employee to dissolve the employment contract 

In case of unjustified termination of the employment contract, you have to pay 6 months’ salary to the employee as indemnification. 

You should keep the termination in writing so that both parties have an official document to refer to. 

Probation period 

The minimum mandatory period is 1 month, but you may keep an employee on probation for up to 6 months to assess their performance. The probation period in Switzerland shall, however, not exceed 6 months. 

Notice period

• When an employee is dismissed during probation, a 14-day notice period has to be observed. 
• If you or your employee decides to dissolve an employment contract after the completion of the probation period, a notice period ranging between 1 and 6 months has to be observed based on the employee’s seniority.

Severance pay

According to the rules about severance pay in Switzerland, if the employment contract with an employee, who is older than 50 and has worked for at least 20 years, is dissolved, you have to pay a severance equal to the employee’s two months’ salary. 

Navigate employment laws in Switzerland with trusted support

Staying compliant with labor laws in Switzerland is essential for employers to reduce legal risks, penalties, and fines. A clear understanding of local employment regulations is therefore crucial for managing a compliant workforce.

Using a workforce management platform, such as Payoneer Workforce Management, can help simplify this process by helping businesses navigate complex labor laws. 

It helps you manage key functions like payroll and tax management, employee onboarding and offboarding, and the administration of leave and benefits, making workforce management more efficient.

Book a demo now! 

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