Switzerland is a desirable place to hire talent. The country is known for its high standard of living, innovation, and reputation as one of the world's happiest nations. Switzerland is also home to a highly skilled workforce in banking, insurance, commodity trading, and electrical engineering, among other industries.
To attract top talent in Switzerland, employers must offer competitive benefits packages that meet statutory requirements and align with Swiss employees' expectations.
The following guide discusses the mandatory and supplemental employee benefits in Switzerland and how to offer a comprehensive, compliant, and competitive benefits package.
Mandatory employee benefits in Switzerland
Employees are entitled to various statutory benefits in Switzerland. Swiss employers must pay social security taxes and payroll contributions that cover employee retirement, work-related injuries, unemployment, family allowances, and mandatory leave.
Switzerland has 26 cantons or federal states, and statutory entitlements may differ from canton to canton. Employers seeking to hire Swiss employees must perform due diligence to understand the country’s mandatory benefits and each canton’s unique requirements.
Switzerland’s pension system has three pillars that provide social security benefits to support the financial and social welfare of Swiss citizens.
The first pillar is the state’s mandatory pension, which covers Old Age and Survivors’ Insurance and Disability Insurance. Employees over age 20 must contribute 5.3% of their salary to the pension. Employers share the contribution at 5.3%, for a total pension contribution of 10.6%.
The second pillar is the occupational pension scheme. This pension is mandatory for all Swiss employees aged 17 and older earning a minimum wage of CHF 21,150 annually. The occupational pension complements the first pillar system and allows the individual to build up capital and maintain their standard of living.
Employer contributions must be at least equal to the employee’s contribution, but they can choose to contribute a larger share. The statutory contribution ranges from 7% to 18%, depending on the individual’s age.
The third pillar is an optional private pension option that employed individuals can contribute to in order to build additional assets desired or required after retirement. Employers do not contribute to this pension system.
Occupational accident insurance
Employers in Switzerland are required to purchase occupational accident insurance for employees. Occupational accident insurance provides financial support in the event of an accident or occupational disease and ensures employees have access to medical care.
Occupational accident insurance also covers non-occupational accidents for employees working at least eight hours per week.
Employers must provide all Swiss employees with unemployment insurance, which provides financial support to eligible employees who have lost their jobs. Swiss unemployment insurance allows up to 400 daily allowances over a two-year period.
The employer and employee share unemployment contributions equally at 2.2% each for wages up to CHF 148,200 and 1% for wages above CHF 148,200.
Switzerland’s child benefits program is one of the most generous in the world. Parents are entitled to receive family allowances on an ongoing basis if they live and work in Switzerland and receive at least CHF 587 each month. Family allowance ensures parents have the necessary funds and resources to care for their children.
The parent's employer pays family allowances, which break down into several types, including birth and adoption allowance, education allowance, and general child allowance.
Unemployed parents can still receive family allowances from the government as long as each parent’s annual taxable income does not exceed 42,300 CHF.
Beyond the federal stipulations, Switzerland’s 26 cantons each define their own regulations for family allowance.
Mandatory leave in Switzerland
Switzerland has one of the most generous mandatory leave policies worldwide, ensuring employees have adequate time to rest, recharge, and care for their families. Mandatory leave in Switzerland includes the following:
Annual and holiday leave
Individuals in Switzerland employed for at least one year are entitled to a minimum of four weeks of annual paid vacation. Employees under the age of 20 are entitled to five weeks of annual paid vacation.
Employees are also entitled to between five and fifteen paid holidays per year depending on the canton, including Swiss National Day, public holidays, and local holidays.
Maternity and paternity leave
Pregnant Swiss employees are entitled to 14 weeks of paid maternity leave. Fathers are entitled to two weeks of paid paternity leave within six months of the child's birth. Parents receive 80% of their usual wages during their parental leave, up to a maximum of CHF 196 per day.
Paid care leave
In addition to maternity and paternity leave, employees can take up to 14 weeks of paid childcare leave to nurse sick or seriously injured children.
Employees may also take paid care leave to care for a family member with a health impairment for three days at a time and a maximum of 10 days per year.
Paid sick leave
Paid sick leave is determined by years of service at a company. Employees receive three weeks of paid sick leave during their first year, which begins in the fourth month of their employment.
After their first year, the amount of sick leave an employee is entitled to depends on the canton they reside in. Some cantons offer as many as 10 months of paid sick time to long-time workers.
Common employee benefits in Switzerland
While Swiss employees enjoy a wide range of statutory benefits, talent also expects various supplemental benefits from their employers, such as private health insurance coverage, competitive salaries, and 13th-month pay.
Health insurance is mandatory for all Swiss citizens and residents; however, employers are not required to provide health insurance to their employees. If their employers choose not to provide healthcare, employees and their dependents must cover their own healthcare plans through private insurance.
Employers who offer private health insurance to Swiss employees as part of their employee benefits package show they value their employees’ health and well-being. As a result, they improve talent attraction and retention and remain competitive in the Swiss hiring market.
Swiss salaries are among the highest in the world, with the average salary in Switzerland almost twice the global average. According to the Organization for Economic Co-operation and Development (OECD), the average annual salary in Switzerland is around CHF 65,000.
Switzerland does not have a federal minimum wage; however, a statutory minimum wage exists in a few cantons. Employers and employees typically determine salaries through collective bargaining agreements or mandatory standard employment contracts.
Swiss employees expect high salaries, so employers must offer competitive salaries to attract and retain talent. Offering competitive salaries also leads to a more motivated and engaged workforce, increasing the company’s overall productivity, growth, and success.
Although 13th-month pay is not mandatory in Switzerland, it is a customary bonus compensation to a Swiss employee’s regular salary. Many companies provide this extra month of pay in December or split it up by paying half in July and the other half in December.
Additional perks to attract top talent in Switzerland
Companies may also consider adding other perks, or fringe benefits, to their employee benefits packages to attract and retain employees in Switzerland. Fringe benefits help enhance an employee’s quality of life.
Additional perks to attract top talent in Switzerland include the following:
- Flexible and remote working hours. Flexible and remote working hours give employees more control over their schedules and work-life balance, which may lead to increased productivity and satisfaction. Companies offering flexible and remote schedules also attract more high-quality talent.
- Housing subsidies. Switzerland is a notoriously expensive country to live in, so housing subsidies can help reduce the cost of living for employees. Housing subsidies are also an added incentive to employees who need to relocate to Switzerland for work.
- Childcare subsidies. Childcare subsidies can help employees pay for childcare, make it easier for them to work, and reduce their cost of living. Employers providing childcare subsidies demonstrate their commitment to supporting their employees and their families.
- Equity compensation. Equity compensation allows employees to own a piece of the company they work for. Employers may grant equity awards, giving employees a small stake in the business and motivating them to contribute to the company's success.
- Travel allowance. A travel allowance is a valuable tool to help ease the cost of living for an employee who commutes or travels frequently for the company. Travel allowances may include a stipend for an employee’s travel to and from work or cover travel expenses for an employee to relocate.
- Gym membership or wellness funds. Providing a gym membership or wellness funds allows employees to improve or maintain their health and well-being. As a result, employers offering wellness perks may experience increased employee productivity, satisfaction, and engagement.
Provide compliant employee benefits in Switzerland with Velocity Global
To hire talent in Switzerland, companies must comply with all mandatory benefits. However, to attract and retain top talent, employers must also understand what additional benefits and compensation Swiss employees expect to receive to remain competitive in the global market.
Fortunately, you don’t have to go it alone when you partner with an employer of record (EOR) like Velocity Global.
Our Global Benefits solution helps companies provide compliant benefits in Switzerland. Rely on our team of experts to create market-specific benefits packages that comply with all local minimum requirements.
Ready to build a top-tier Swiss team with competitive global benefits? Contact Velocity Global to learn how we can help you grow and retain talent in Switzerland and more than 185 countries.
Disclaimer: The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. © 2023 Velocity Global, LLC. All rights reserved.