Hiring an employee in a foreign country usually means setting up a local legal entity, which can be both expensive and time-consuming. If you only want to onboard a handful of workers, it’s almost certainly not worth the effort. Another option is to engage workers as independent contractors. However, this always comes with a risk of misclassification, which could land you with fines, penalties, and other legal consequences. The solution? Hire employees in Switzerland through an employer of record, or EoR.
An employer of record is an organisation that hires workers on behalf of other organisations. Legally speaking, an EoR becomes the official employer of the workers they engage on your behalf. They also handle key HR processes like payroll, benefits administration, and onboarding. But in all other senses, you’re in charge: you’re still in control of your company’s day-to-day operations and the work your employees do, for example. Using an EoR in Switzerland can be a speedy and cost-effective way to hire Swiss workers.
In Switzerland, labour leasing is tightly regulated, both to protect workers and to control the labour market. That means that any business operating as an employer of record in Switzerland is legally obliged to obtain a licence from the local authorities. As an employer, you’ll need to ensure that any EoR you choose to work with is properly licensed to avoid trouble for your business.
Whether or not you work with an employer of record, you’ll need to understand certain key concepts before you can hire employees in Switzerland. For example, you should be aware of the major labour laws that apply, as well as the role of trade unions and collective bargaining agreements. If you do choose to use an employer of record in Switzerland, having this base knowledge will help you to ensure the provider you choose is competent and trustworthy. In this guide, we’ll explore everything you need to know about hiring employees in Switzerland — with or without an EoR.
Switzerland is known for its strong and stable economy and favourable tax conditions, making it an attractive destination for international expansion. Swiss workers are also some of the most highly educated people in the world: Switzerland boasts the highest number of tertiary-educated adults among all OECD countries. Plus, Switzerland’s workforce is highly proficient in English and other languages thanks to the country’s multilingual education system.
However, like all countries, Switzerland has its own set of labour laws, regulations, and norms, which employers need to know about. It’s also a country with a complex tax system, thanks to its 26 individual cantons (states), which all have their own unique rules and regulations. Read on to learn what you need to know before hiring in Switzerland.
The main pieces of legislation shaping the labour market in Switzerland are the Code of Obligations and the Labour Act. Case law also plays an important role. Generally, labour law in Switzerland is liberal and more favourable to employers than in other European countries. One of the key principles is freedom of contract, which allows employers and employees to agree on terms and conditions of employment to a significant extent as long as certain minimum standards are met. Some elements of labour law, including minimum wage, are set at the local level in each of the country’s 26 cantons.
Trade unions are active in Switzerland, with around 20% of employees belonging to a union. Collective agreements between unions and employers (or employers’ associations) set key rules on working conditions including wages and hours of work, which may apply to just one company or across an entire sector. However, collective agreements play a much smaller role in Switzerland than they do in other European countries. That means there’s more flexibility and freedom of negotiation between employers and employees.
Employers hiring in Switzerland are required to provide employees with certain key conditions of employment in writing, including their job function, salary, and working hours. They must provide this information within one month of hiring. However, it’s best practice to provide every employee with a comprehensive employment contract before their start date to ensure both parties understand their rights and obligations.
Both employers and employees in Switzerland pay various contributions to the country’s social security system based on the employee’s wages. This pays for things like pensions, unemployment insurance, and disability insurance.
Employer payroll contributions usually amount to between 8% and 23% on top of the employee’s salary. Employee contributions add up to between 8% and 11% of their pay. Employees also pay income tax on their earnings, but this is usually not deducted at the source in Switzerland.
Companies hiring in Switzerland should bear in mind that the country has some of the highest salaries in the world, which could significantly impact your hiring budget. Additional costs for each employee vary according to their age, salary, and the canton they live in. Generally, employers should account for at least an additional 10–20% of each employee’s salary.
Employers around the world frequently conduct background checks on potential employees to verify information and confirm their suitability for a job. Conducting background checks is permissible and common in Switzerland.
However, employers do need to be careful when conducting background checks in Switzerland because of the country’s strict privacy laws. Also, the culture in Switzerland is one that values privacy and respect for personal information. That means that excessive background checks may not be well-received by potential employees in Switzerland.
Employers hiring employees in Switzerland need to verify that they have the right to work in the country prior to hiring. For non-Swiss nationals, this means checking that they have the relevant work permit. However, since permits are generally easily granted to citizens of EU or EFTA countries, these people are usually allowed to start working as soon as they have filed a request for a work permit.
In some cases, other types of background checks may be required by law in Switzerland depending on the nature of the position. For example, criminal record checks might be required for legal roles, and credit reference checks are usually compulsory for bank executives and other roles that involve significant responsibility for a company’s finances.
Here are some other employment background checks you could conduct on potential employees in Switzerland:
Employers must always have a candidate’s consent before conducting a background check in Switzerland. Though this can technically be given orally, it’s best practice to get consent in writing.
The processing of a candidate’s personal data must also be justified by a legitimate purpose, such as assessing their suitability for a job. The scope of any background check conducted must be relevant to the job in question. For example, a credit check may be conducted on applicants for financial roles but would not usually be allowed for other positions.
Swiss employers must also be careful to ensure that the background checks they conduct don’t introduce the possibility of discrimination. That means it’s not permissible to screen candidates based on protected characteristics that are not relevant to the job. Employers also can’t conduct invasive checks into a candidate’s private life.
Before hiring employees in Switzerland, you’ll need to consider whether this is the best option for your company. For example, if you only need a worker for a limited period of time to work on a set project that’s not related to your business’s core activity, engaging them as an independent contractor might be more suitable. Below, we’ll talk about some of the different options for hiring workers in Switzerland.
Here are the options you’ll have to choose from when hiring workers in Switzerland:
Labour laws generally don’t apply to freelancers or independent contractors in Switzerland, and employers of independent contractors don’t have to pay most of the social security contributions that they would for an employee. For these reasons, some companies try to deliberately pass off people who are really employees as independent contractors — which the Swiss government takes very seriously.
Even if it’s not done on purpose, employee misclassification can land a company with fines, penalties and other legal repercussions — not to mention reputational damage. When assessing an employee classification case, labour courts look not just at the written agreement in place, but factors such as the level of control the employer has over the worker and the degree to which the worker is integrated into the company’s operations. The Swiss Federal Social Insurance Office provides resources and support to help employers correctly classify their workers.
There are no statutory requirements for the language of contracts and other employment documents in Switzerland. However, it’s recommended to draw up contracts in a language that is understood by both parties.
Switzerland has three main languages: German, French, and Italian. The language that people speak is based on the region they live in, with the majority of the population living in German-speaking Switzerland. English is also fairly widely spoken in Switzerland, with the country ranking 30th out of 113 countries in the EF English Proficiency Index 2023.
Although some companies may hire English speakers, it’s strongly recommended to have some proficiency in the relevant language for the region before working in Switzerland. Moreover, since 2019, workers entering Switzerland are required to have a certain level of proficiency in the local language to obtain a work permit. The specific requirements are different depending on the canton and the type of work permit applied for.
A foreign entity can legally engage employees in Switzerland, assuming the employees have the necessary work permits. However, they must pay taxes and social charges, and register with the local authorities, which can be time-consuming and complex.
Payroll setup in Switzerland carries several registration requirements, whether the company is local or foreign. Companies wanting to hire and pay employees in Switzerland must complete the following registrations:
There’s generally no need to register for payroll tax in Switzerland, since income is not usually deducted at source. The exception is for temporary residents in Switzerland. Employers can also choose to take out additional insurance to cover sickness benefits.
There’s no formal requirement to open a local bank account in order to set up payroll in Switzerland. Payments to both employees and local authorities can be made from foreign accounts.
Hiring employees in Switzerland usually means setting up a legal entity, which can be costly and time-consuming. Employers can avoid this hassle by working with an Employer of Record (EoR), like CXC.
Through our EoR solution, you can confidently hire employees in Switzerland, without worrying about compliance issues. We’ll handle everything from payroll to benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.
Companies can hire employees in Switzerland through their own Swiss entity, use an eligible foreign-employer arrangement, or hire through a licensed Employer of Record (EOR).
With a Swiss entity, the company employs workers directly and manages employment contracts, payroll, social security, pension contributions, accident insurance and other employer requirements itself. The employing entity must also address applicable cantonal tax and family-allowance requirements, collective employment agreements and any sector-specific employment conditions.
A foreign company without a Swiss establishment may, in certain circumstances, employ someone directly and arrange Swiss social security obligations without incorporating locally. This is sometimes described as an employer without a place of business in Switzerland arrangement. It is not the same as staff leasing and does not remove the foreign employer’s Swiss payroll, social-security, tax, employment-law or possible permanent-establishment obligations. The suitability of this route needs to be assessed for the particular employment setup.
Another option is an Employer of Record in Switzerland. The EOR becomes the legal employer and manages local employment, payroll and statutory administration while the client manages the employee’s day-to-day work.
Importantly, Swiss EOR arrangements can fall under the country’s regulated staff-leasing rules, so businesses should use a provider with the required Swiss licences.
No. A foreign company does not always need its own Swiss legal entity to hire employees in Switzerland.
One option is to use a licensed Employer of Record in Switzerland. The EOR employs the worker locally and manages the employment contract, payroll, social security, pension and other employer responsibilities. This allows the client company to build a Swiss workforce without first establishing its own employing entity.
Certain foreign employers may also be able to employ workers without incorporating in Switzerland, provided the appropriate Swiss employment and social security arrangements are established. Companies that already have a Swiss entity can hire employees directly through that entity.
Switzerland places specific licensing requirements on businesses that lease employees to client companies. A Swiss staff-leasing provider needs a cantonal licence, with an additional federal SECO licence required for cross-border activity. The relevant federal legislation is the Federal Act on Employment Services and the Hiring of Services (AVG/LSE), together with its implementing ordinances. Licence scope should be checked against the actual service model and cantons involved.
Hiring in Switzerland can take days or several weeks when the local employment setup and right to work are already in place, but several weeks or longer if the company first needs to establish a Swiss entity or obtain a work permit.
A company entering Switzerland for the first time may need to establish its local business, register as an employer, arrange payroll, social insurance, occupational pension and accident insurance before it is ready to hire directly.
A licensed EOR in Switzerland can shorten this setup stage because the local employment and payroll arrangements are already established. Work-authorised employees can potentially be onboarded more quickly once due diligence, employment terms, payroll information and documentation are complete. Any stated onboarding time should be treated as an operational estimate rather than a guaranteed legal timeframe.
Nationality can significantly affect the timeline. EU/EFTA nationals have easier access to the Swiss labour market. For EU/EFTA nationals employed in Switzerland for no more than three months, the employer can generally use the online notification procedure and must ordinarily submit the notification no later than the day before work begins. Employment exceeding three months generally requires registration and an appropriate residence permit. Third-country nationals generally require employer-sponsored approval and are subject to qualification requirements, labour-market tests and annual quotas.
In summary, hiring can take less time with an established local employer and an already work-authorised employee, while entity formation or immigration requirements can extend the process considerably.
Companies should consider EOR services in Switzerland when they want to hire locally without establishing their own Swiss employing entity or building local payroll and HR operations.
An EOR can work well for a first Swiss hire, a specialist employee, a local team or an enterprise business that wants to manage Switzerland as part of a wider international workforce. It may also support a market-entry project, a time-sensitive hire or a company evaluating whether a permanent Swiss entity is commercially justified.
It can also be useful when hiring needs to begin before the company is ready to establish its own entity. The EOR already has the local employment setup required to issue contracts, run payroll and manage statutory employer obligations.
Switzerland requires extra care when selecting an EOR. Staff leasing is regulated under the Federal Recruitment Act (AVG). Providers carrying out staff leasing in Switzerland require the appropriate licence, and direct staff leasing from a foreign provider into Switzerland is prohibited.
Employer of Record services in Switzerland are generally priced as a fixed monthly fee per employee, a percentage of payroll or a tailored enterprise rate. Published market ranges can be useful for initial budgeting, but they are not official Swiss tariffs and may not reflect the complete service or employment risk.
The EOR fee is separate from the employee’s gross salary and Swiss employer costs. Employers also need to budget for social security, unemployment insurance, occupational pension contributions, accident insurance and cantonal family allowance contributions. Depending on the arrangement, other costs may include daily sickness-benefit insurance, pension-plan administration, expense processing, benefits, deposits, immigration support, onboarding and termination fees.
Pricing can also vary according to the employee’s salary, canton, benefits, pension arrangement and whether immigration or additional HR support is required.
When comparing EOR services in Switzerland, businesses should check whether the quoted price covers payroll, statutory filings, pension and insurance administration, HR support and offboarding.
Companies choose an EOR provider in Switzerland to hire employees without setting up their own local entity and to have Swiss employment, payroll and statutory requirements managed locally.
A licensed EOR becomes the legal employer and can manage employment contracts, payroll, social security, occupational pensions, accident insurance, statutory leave and required employment administration. The EOR can also coordinate locally compliant onboarding, payroll reporting, source-tax withholding where applicable and end-of-employment administration.
This is particularly useful for international businesses because Swiss employment costs and requirements can vary by canton, employee age, salary and pension arrangement. Immigration requirements also differ significantly between EU/EFTA and third-country nationals.
A licensed EOR also gives businesses a compliant local structure for arrangements that fall within Switzerland’s regulated staff-leasing rules.
In summary, companies use an EOR to combine a local legal employer with payroll, HR and compliance support without having to build those functions themselves in Switzerland. The model can reduce market-entry complexity while giving the business a consistent way to manage international hiring.
An EOR in Switzerland can support the work permit or notification process required for the employee, but the requirements differ significantly between EU/EFTA nationals and workers from other countries.
For EU/EFTA nationals, employment of up to three months can generally use the online notification procedure rather than a residence permit. For a person hired by a Swiss-based employer, the notification is generally due no later than the day before the first day of work. For employment lasting longer than three months, employees generally register locally and obtain an L permit for shorter employment or a B permit for longer-term employment.
An L EU/EFTA permit generally corresponds to an employment contract lasting from three to twelve months, while a B EU/EFTA permit generally applies to employment of at least one year or indefinite duration. A G permit may be relevant for qualifying cross-border commuters.
For non-EU/EFTA nationals, the requirements are stricter. The employer must apply to the relevant cantonal authority before employment begins. Permits are generally limited to highly qualified workers and are subject to annual quotas and labour-market requirements. The employer may need to show that a suitable Swiss or EU/EFTA worker could not be recruited.
An EOR can prepare and coordinate the employer side of the application, but it cannot guarantee that Swiss authorities will approve a permit.
An Employer of Record in Switzerland handles the local employer responsibilities for employment contracts, payroll, social security, occupational pensions, insurance, leave and employment administration.
As the legal employer, the EOR typically manages salary payments and payroll deductions together with AHV/IV/EO social insurance, ALV unemployment insurance, BVG occupational pension requirements and mandatory accident insurance. Occupational-accident premiums are borne by the employer. Employees working at least eight hours per week for the same employer must also be insured against non-occupational accidents; those premiums are generally chargeable to the employee unless the employer provides more favourable terms.
The EOR can also manage source-tax withholding where applicable, statutory leave, benefits administration, employee records and the employment documentation required when an employee joins, change’s role or leaves.It should also apply mandatory collective employment agreement terms where the staff-leasing sector or the relevant assignment is covered.
For foreign employees, the EOR can also support the relevant work-authorisation or notification process. EU/EFTA and third-country nationals are subject to different Swiss immigration requirements.
A compliant Swiss EOR must also meet the licensing requirements that apply where the arrangement constitutes staff leasing under the AVG.
Using an unlicensed EOR in Switzerland can expose both the provider and the client company to regulatory penalties because commercial staff leasing is a licensed activity under Swiss law.
A company that regularly employs workers and makes them available to clients for work assignments generally requires a cantonal staff-leasing licence. Cross-border activity also requires a federal licence issued by SECO.
Businesses should be particularly careful with EOR providers attempting to employ Swiss workers entirely through a foreign company. Direct staff leasing from abroad into Switzerland is prohibited under Article 12 of the Federal Recruitment Act (AVG).
SECO guidance and the AVG provide for sanctions where a Swiss company knowingly using an unauthorised foreign staff-leasing provider including a fine of up to CHF 40,000 for the hiring business in the circumstances specified by law. Providers can face separate and potentially higher sanctions, together with licensing and contractual consequences. The precise exposure depends on the conduct and statutory offence.
Before choosing an EOR in Switzerland, businesses should verify that the provider has the licences required for the employment arrangement.
Companies choose CXC as their Employer of Record in Switzerland for our local employment expertise, more than 30 years of workforce management experience and ability to support international workforces across multiple countries.
CXC brings employment, payroll and HR administration together in one service. We manage locally compliant employment contracts, payroll, statutory contributions, pensions and insurance, leave and ongoing employee administration. We can also support work-authorisation requirements where applicable.
Our local capability is particularly important in Switzerland, where EOR arrangements need to account for regulated staff leasing, cantonal requirements and different rules for Swiss, EU/EFTA and third-country workers.
For global and enterprise companies, CXC also provides a consistent way to manage employees across Switzerland and other markets without building separate employment and payroll operations in every country.
Speak to our team to learn more about hiring and managing employees in Switzerland with CXC.
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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