Swiss Payroll explained

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Pension


All employees of Swiss companies are obliged to contribute to a pension fund if their employment lasts longer than three months.


For those employees that do have to contribute then this is how it works; the pension is made up of two elements, the savings element and the risk element. The risk element is non-recoverable and provides death and disability benefits should the employee suffer an accident whilst in our employment.


The savings element is only recoverable as cash if living outside the EU on leaving Swiss employment or if buying a house (primary residence), where the funds may be used for that purpose. Otherwise the pension should be seen as part of a retirement plan.

Holiday benefit


Swiss employment law demands that Swiss employers enable employees to take a statutory 20 days holiday per annum. Therefore an amount of 8.33% of the global salary, representing holiday pay, is shown separately on the salary statement. This is considered as a pre-payment of your statutory holiday pay.



Payments


It's important to mention that our Swiss payroll operates on a monthly basis.

Employee costs

Swiss payroll is relatively complex, however this explanation aims to give a simple overview of the figures contained in our salary examples and statements issued to Swiss employees.

First of all we calculate the gross monthly pay which is normally a number of days or hours multiplied by the daily or hourly rate.

Next we deduct the appropriate expatriate allowance against social security granted by the canton in which the employer is based, which gives us the “basis salary”.

We then calculate the employer costs which are made up of the items found in the table on the right:

  • AHV
  • This is the basic Swiss social security contribution paid at 5.15% on the employer side
  • Solidarity Fund
  • Solidarity Fund of 0.5% only on income over 10,500 CHF per month
  • ALV
  • Unemployment Insurance (ALV) a contribution of 1.1 % on the employer side up to a maximum of 10,500 CHF per month (126,000 CHF annually)
  • Accident Insurance
  • Professional 0.652% up to 10,500 CHF per month
  • Social Security
  • Social security administration 2% of the total social security contributions.
  • BVG
  • Pension contributions (BVG) made up of both savings and risk (If applicable)
  • Administration costs
  • Administration costs (if the contractor is paying these)

Employer costs

The total employer costs are deducted from the base total rate. From this figure the following employee deductions are made:

  • AHV
  • AHV as above but on the employee side at the same rate
  • ALV
  • Unemployment Insurance (ALV) as above at the same rate
  • Accident Insurance
  • Accident Insurance – non-professional at 1.88% up to 10500 CHF per month
  • Tax
  • Tax at source

Permit types


Permit categories are awarded according to contract length and type (open or closed). GCA has no influence over what type of permit is awarded, or the speed at which permits are processed. When employment ends, individuals can normally apply for a three month residency extension while they search for new employment (subject to local Cantonal rules). Generally, permits are awarded as follows:

  • Type
  • Qualification
  • Benefit
  • Disadvantage
  • L
  • For any contract stating a termination date
  • Expenses allowances apply
  • Lesser status for phone rentals and car leasing
  • B
  • Open ended contracts agreements
  • Easier to obtain lease/rental
  • More controls on tax free alloance
  • C
  • At 5 years from time of entry to CH(EU), at 10 years from time of entry to CH (non-EU)
  • Status as per Swiss citizins…
  • …other than no right to vote in elections
  • G
  • Living outside Switzerland with Swiss work contract
  • Dependant on personal circumstances
  • Tax and social insurances of country of residence may apply
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