Hiring in Switzerland: Do You Need an EOR?

Switzerland is a top choice for global businesses because of its stable economy, strong legal system, and strategic location in Europe. It’s an ideal hub for companies looking to expand with a skilled workforce and business-friendly regulations. If you're looking to establish a presence in Switzerland, here's everything you need to know.

The Swiss Advantage

Switzerland has one of the world’s most competitive economies, ranking consistently high in global innovation and ease of doing business. Its GDP per capita, around CHF 92,000 in 2025, reflects a prosperous and economically elite market.

The country also offers a multilingual, highly educated workforce—fluent in German, French, Italian, and English—giving employers access to diverse talent across key sectors. Cities like Zurich, Geneva, and Zug are global hubs for finance, technology, and crypto, home to industry leaders such as Novartis, UBS, and the Ethereum Foundation.

With 50% of adults holding tertiary degrees, Switzerland’s labor market is exceptionally skilled. Unemployment remains low (~2.5%), and productivity is high, though labor costs average around CHF 65/hour.

Strategically located in the heart of Europe, Switzerland offers seamless access to over 500 million EU consumers—making it a prime base for logistics and trade. Its political neutrality and strong legal framework further boost its appeal.

Taxes in Switzerland

Switzerland’s tax system is business-friendly but layered, with federal, cantonal, and municipal taxes. Corporate tax rates vary by canton (e.g., Zug: ~12%, Geneva: ~14%), averaging 14.6% federally.  

Employer Contributions

Employers must cover social security contributions, which depend on employee roles and cantons:

• Old-age, survivors, and disability insurance (AHV/IV/EO): 5.3%, funding retirement and parental leave. ‍
• Occupational pension (BVG): 3.5%–9%, mandatory for salaries ≥CHF 22,380/year. ‍
• Accident insurance (UVG): 0.17%–3%, covering workplace incidents. ‍
• Unemployment insurance (ALV): 1.1%, capped at CHF 148,200/year. ‍
• Family allowance (FAK): ~1.3%, varying by canton (e.g., 2.5% in Geneva).

Total contributions range from 11.37% to 19.7%, based on pension and accident rates.

Employee Contributions

Employees also contribute, with deductions including:

• AHV/IV/EO: 5.3%. ‍
• BVG: 3.5%–9%. ‍
• Non-occupational accident insurance: 1%–4%. ‍
• Unemployment insurance: 1.1%. ‍
• Health insurance (KVG): CHF 300–600/month, mandatory but employee-paid.

Personal Income Tax

Employees face progressive federal taxes, plus cantonal and municipal rates (e.g., Zug: ~6%, Geneva: ~15%). For 2025, federal rates for single taxpayers range from 0% (≤CHF 18,575) to 11.5% (>CHF 794,950). Married taxpayers or those with children benefit from lower rates.

Navigating these complexities requires precision to avoid penalties, such as CHF 2,000 for contract errors. Consulting the Swiss Federal Social Insurance Office (FSIO) or a tax advisor is advisable for the latest rates.

Understanding Swiss Labor Laws

Switzerland’s labor laws, governed by the Swiss Code of Obligations (CO) and Federal Labour Act (ArG), balance employee protections with employer flexibility, but compliance can be complex due to cantonal and industry variations.

Working Hours

Most employees in Switzerland are subject to federal limits on weekly working hours:

Overtime in Switzerland is strictly regulated. Employees can work up to 2 extra hours per day, but total overtime is capped annually—170 hours for those on a 45-hour workweek, and 140 hours for 50-hour roles.  

By law (ArG), overtime must be paid at a minimum of 1.25× the regular rate. However, in some sectors like retail, collective agreements (GAVs) require 1.5× to 2× pay, especially for work done on weekends or holidays. Employers may also offer time off instead of payment, on a 1:1 basis, if agreed upon with the employee.

Employment Contracts

Types of Swiss Employment Contracts

Swiss employment contracts can be either fixed-term—commonly used for project-based roles (e.g., 6-month assignments)—or open-ended, which are the standard for permanent positions. Regardless of type, contracts typically outline job duties, salary, working hours, vacation entitlements, and termination terms. Notice periods are progressive: one month during the first year, two months from years 2 to 9, and three months from the 10th year onward.

Probation Period

Most contracts include a probation period lasting 1 to 3 months, during which either party can terminate the agreement with just 7 days’ notice. Employees are still entitled to their full salary and benefits throughout this period.

Collective Labor Agreements (GAVs)

Around 50% of employees in Switzerland are covered by collective labor agreements (GAVs), which set industry-specific standards for working conditions, including hours, vacation, and benefits. For example, in the construction sector, a typical GAV mandates a 43-hour workweek and five weeks of paid vacation.

Contract Language and Format

To avoid misunderstandings—especially with international hires—written contracts are strongly recommended. They should be provided in a language the employee understands, such as English, and in some regions like Zurich, a German version may also be required for legal clarity.

Non-Compete Clauses

Non-compete clauses are common in industries like finance but must remain reasonable in both scope and duration. In cantons such as Zurich, these clauses are often limited to a maximum of one year.

Salaries and Payroll

Switzerland offers some of the highest salaries in Europe, especially in skilled industries. Mid-level roles typically earn between CHF 80,000–120,000 per year, making the country a top destination for talent. However, payroll management can be complex due to cantonal differences and strict compliance rules—this is where an Employer of Record (EOR) adds value.

Average Salaries by Role and Sector (2025)

Employees are typically paid monthly, with salaries disbursed around the 25th of each month, usually via direct deposit (used by ~90% of employers). Payslips must detail the gross salary, mandatory deductions (such as AHV/IV at 5.3%), and the resulting net pay.

Bonuses are also common: around 60% of employers offer a 13th-month salary (e.g., CHF 8,000 for someone earning CHF 96,400 annually), while performance bonuses range from 5% to 20% of base salary. All bonuses are subject to federal income tax, with rates ranging from 0.77% to 13.2%, and must be properly reported.

How an EOR Can Help

Partnering with an Employer of Record like Knit streamlines your expansion into Switzerland by ensuring full payroll accuracy and legal compliance across all cantons. Knit takes care of everything from mandatory deductions and payslip management to salary benchmarking and bonus reporting, so you don’t have to worry about costly errors.  

Leave Policies

Switzerland’s leave policies are indeed attractive for talent, balancing generous entitlements with flexibility. Here's a concise breakdown of how they enhance appeal:

• Annual Leave: A minimum of 4 weeks (20 days), with tech and finance sectors often offering 5–6 weeks, supports work-life balance, appealing to professionals seeking downtime to recharge or pursue personal interests. ‍
• Sick Leave: 3 weeks to 3 months (based on tenure) at 80%–100% pay ensures financial security during illness, reducing stress and fostering loyalty among employees. ‍
• Maternity Leave: 14 weeks at 80% salary (capped at CHF 220/day) provides new mothers adequate time to bond with their child while maintaining income stability. ‍
• Paternity Leave: 2 weeks within 6 months of birth offers fathers flexibility to support their families, aligning with modern expectations for shared parenting. ‍
• Public Holidays: Varying by canton (e.g., New Year’s Day, Swiss National Day, Christmas), these add to overall time off, enhancing cultural engagement and rest.

Benefits to Attract Talent

Mandatory Benefits in Switzerland

Employees are protected by a strong system of mandatory benefits, funded through shared contributions:

Optional Benefits  

In competitive industries like pharma and tech, offering more than the legal minimum is key to retaining top talent. Here are some commonly used incentives:

• Supplementary health insurance (e.g., CHF 500/year for dental) – especially popular in Basel ‍
• Flexible work arrangements – ~40% of employees work remotely part-time, especially in IT hubs like Zug ‍
• Company cars – e.g., CHF 15,000/year for a Sales Director in finance ‍
• Training budgets – e.g., CHF 2,000 per employee in SaaS firms ‍
• Childcare subsidies – e.g., CHF 500/month per child in family-focused cantons like Zurich

Work Visas and Immigration

Hiring in Switzerland involves navigating different rules based on the candidate’s nationality.

For EU/EFTA Citizens (including Croatia)

These hires benefit from Switzerland’s Agreement on the Free Movement of Persons (AFMP) and face minimal restrictions.

Permit types:

• L Permit: For contracts between 3–12 months ‍
• B Permit: For contracts over 12 months; renewable, valid for 5 years ‍
• C Permit: Granted after 5 years of residence; allows permanent stay

EU/EFTA citizens must register with the cantonal authorities within 14 days of arriving in Switzerland if they plan to stay longer than three months. Once registered, the residence permit is typically processed within 2 to 4 weeks.

For Non-EU/EFTA Citizens (including UK nationals)

Stricter rules and annual quotas apply for non-EU/EFTA hires, including those from the UK.

2025 Permit Quotas

Additional requirements:

• Labor market test to prove no local or EU/EFTA talent is available
• Application must go through cantonal and federal SEM approval
• Processing time: 8–12 weeks

Hiring non-EU/EFTA talent in Switzerland comes with several required costs. A Schengen D visa costs CHF 80 for adults, CHF 40 for children aged 6–12, and is free for children under 6. In addition, residence permit fees range from CHF 50 to 150, depending on the canton. All foreign employees must also have Swiss health insurance, which typically costs between CHF 300 and 600 per month.

Why Partner with an EOR for Swiss Expansion

Expanding into Switzerland offers immense opportunities, but its complex regulations—taxes, labor laws, and immigration—can be daunting. An Employer of Record (EOR) simplifies this process, acting as the legal employer for your staff while you retain operational control. Here’s why an EOR is worth considering:

• Compliance Made Easy: EORs handle payroll, tax filings, and social security contributions, ensuring adherence to federal and cantonal rules. They mitigate risks like fines (up to CHF 30,000 for payroll errors) or disputes over contracts. ‍
• Streamlined Hiring: From drafting compliant contracts to managing visas, EORs navigate Switzerland’s immigration and labor laws, saving you time and resources. ‍
• Cost Efficiency: By optimizing payroll and benefits, EORs reduce the administrative burden of high labor costs (~CHF 65/hour), letting you focus on growth. 、
• Flexibility for Growth: Whether hiring in tech hubs like Zug or finance centers like Geneva, EORs adapt to your needs, supporting rapid expansion without the need for a local entity.

For companies new to Switzerland, an EOR offers a low-risk, efficient way to tap into its talent pool and market potential. To explore this option, contact Knit to learn how tailored payroll, compliance, and hiring solutions can simplify your Swiss expansion.