Hire employees in Switzerland
Everything a foreign company needs to know before employing people in Switzerland: whether you need an entity, what an employee really costs under AHV and BVG, how cantonal payroll and Quellensteuer work, which leave is mandatory, and why the canton of work drives wage floors, holidays and family allowances. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first, answered directly. Detail follows further down the page.
Do I need a local Swiss entity to hire?
No. Foreign companies can engage talent in Switzerland through three routes:
- Employer of Record. Dryft Global employs the person through compliant local infrastructure. Dryft issues the contract under the Code of Obligations, registers with the AHV compensation office, arranges BVG and UVG cover, runs monthly payroll and Quellensteuer where required, and carries primary statutory employer liability. You direct the day to day work.
- Direct local entity (AG, GmbH or branch). You incorporate or register a branch, open a Swiss bank account, affiliate with the competent AHV office and pension foundation, and run Swiss payroll yourself.
- Independent contractor. Lawful only for a genuinely independent specialist who sets their own pricing and hours and serves multiple clients. See the contractor section below.
When should I use an EOR instead of setting up a Swiss AG or GmbH?
An EOR makes commercial sense when you are:
- Onboarding people in days rather than waiting on incorporation, banking and AHV affiliation for a first Swiss hire.
- Testing Zurich, Geneva, Basel or Zug with a small finance, life-sciences or engineering team before committing to a permanent presence.
- Avoiding cantonal payroll, Quellensteuer and BVG plan administration while you still decide whether Switzerland is a permanent hub.
A local entity becomes the right answer when headcount grows sustainably, when customers require a local contracting party, or when the control and permanence profile of the work justifies a Swiss AG or GmbH.
What does an employee actually cost beyond salary?
Do not multiply salary by a single national percentage. Employer OASI/AHV is 4.35%, disability (IV/AI) 0.7%, and income compensation (EO/APG) 0.225%, each matched by the employee. Unemployment (ALV/AC) is shared and rate-capped. Family allowances are employer-only and canton-dependent. Occupational pension (BVG) is plan-specific, with the employer paying at least half. Occupational accident insurance is employer-paid. Full breakdown below.
How difficult is termination in Switzerland?
More flexible than most of Western Europe, but not at-will in the US sense. Default trial is one month and can be extended in writing up to three months, with notice commonly seven days during trial. After trial, statutory notice is 1 month in year 1, 2 months in years 2 to 9, and 3 months from year 10, usually effective at month-end. Abusive dismissal, protected periods (pregnancy, certain illness or service windows) and discrimination create real remedies. Summary dismissal needs a serious ground.
Can Dryft Global legally employ my team in Switzerland?
Yes. Dryft supports employment in Switzerland through compliant local infrastructure, reviewed against Swiss labor-leasing rules where they apply. We issue the CO contract, affiliate staff with AHV, arrange BVG and UVG, withhold Quellensteuer where required and administer leave and notice, while you direct the work.
Hiring routes compared
Here is how the three routes stack up on speed, presence, cover and risk.
| Factor | Direct entity (AG / GmbH) | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Speed to onboard | Weeks for incorporation, bank and AHV affiliation | Days once the agreement is signed | 1 to 5 days, with high misclassification risk |
| Local entity required | Yes, Swiss AG, GmbH or registered branch | No, employed through Dryft's local infrastructure | No, direct commercial services agreement |
| Payroll, AHV and BVG | You run Swiss payroll and pension affiliation | Fully managed through Dryft payroll | Worker self-files; you face AHV and PE audits |
| Canton of work | You set wage floor, holidays and family fund | Managed to the employee's work canton | Irrelevant until reclassification |
| Permanent establishment risk | Direct Swiss tax presence | Substantially mitigated for non-sales-closing roles | High if the contractor negotiates or binds you |
| Termination exposure | You are the defendant in labor litigation | Managed by Dryft under CO notice rules | Claims reclassify as employment with back contributions |
| Best fit | Sustained headcount and local contracting needs | Market testing and initial headcount | Discrete, specialised, project-based work |
What an employee costs in Switzerland
Swiss employer on-cost is a stack of federal social insurance, canton-dependent family allowances, plan-specific BVG pension and accident premiums. Official guidance specifically warns that a single national percentage is misleading.
| Component | Employer share | Notes |
|---|---|---|
| Old-age / survivors (OASI/AHV) | 4.35% | Matched by employee 4.35%; on gross salary |
| Disability (IV/AI) | 0.7% | Matched by employee 0.7% |
| Income compensation (EO/APG) | 0.225% | Matched by employee; rates subject to change |
| Unemployment (ALV/AC) | Variable / shared | Rates and ceilings change; confirm current schedule |
| Family allowances | Employer only | Canton and fund dependent |
| Occupational pension (BVG) | At least half of plan rate | Mandatory above entry threshold; rates rise with age |
| Occupational accident (UVG) | 100% employer | Non-occupational accident usually employee-borne |
| Statutory subtotal | AHV stack + BVG + UVG | Before market benefits or thirteenth salary |
| Total burdened cost | Line-item, not a single % | Ask for a canton- and plan-specific model |
For a professional hire in Zurich, Geneva or Basel, budget AHV/ALV, the actual BVG plan rate, UVG and any contractual thirteenth salary on top of gross. Ask us for a country-specific cost model with current ceilings and the work canton's family fund applied.
Payroll and tax
Swiss payroll runs monthly. The employer registers with the competent OASI/AHV compensation office and arranges required occupational pension and accident cover before the first pay run. Every employee receives an itemised payslip and, where applicable, a wage certificate for tax.
Federal, cantonal and Quellensteuer
Personal income tax is levied at federal, cantonal and communal levels. Many foreign nationals are taxed at source (Quellensteuer). Whether payroll must withhold source tax depends on canton, permit, family status and other circumstances. Do not assume all residents are taxed the same way.
Statutory minimum wage
There is no nationwide statutory minimum wage. Cantonal hourly floors for 2026 include Geneva CHF 23.00, Basel-Stadt CHF 21.00, Neuchâtel CHF 20.00, Jura CHF 20.00 and Ticino CHF 19.00. Sector collective agreements can set a higher floor. Market salaries in Zurich, Basel and Geneva sit well above any canton floor.
Thirteenth salary
A thirteenth salary is not a universal statutory entitlement. It is enforceable when promised in the employment agreement or required by an applicable collective agreement or standard employment contract.
Leave and mandatory benefits
- Paid vacation. At least four weeks per year for workers aged 20 and over, and five weeks for workers under 20. At least two consecutive weeks normally need to be granted. Unused vacation at termination is compensated.
- Public holidays. Federal and cantonal calendars differ. Set the payroll calendar by the actual work canton.
- Sick pay. Where an employee cannot work through no fault of their own, Swiss law can require continued salary for a limited period. Many employers buy daily sickness allowance insurance with specific waiting periods.
- Maternity. Birth mothers have a statutory 14-week maternity allowance framework.
- Working time. Under the Labour Act, statutory maximum weekly hours commonly distinguish 45 hours for industrial, office, technical and large-retail sales staff, with a higher ceiling for other covered workers. Daily rest is at least 11 consecutive hours; weekly rest is at least one full day, usually Sunday.
- Health insurance. Compulsory basic health insurance is ordinarily arranged and paid by the individual resident, not as a universal employer health-plan charge.
Termination and notice periods
Default trial is one month and may be extended by written agreement up to three months. During trial, notice is commonly seven days unless valid terms alter it. After trial there is no broad US-style cause requirement for ordinary notice, but abusive dismissal, improper timing, discrimination and protected periods create remedies.
| Completed service | Statutory notice |
|---|---|
| First year | 1 month |
| Years 2 to 9 | 2 months |
| Year 10+ | 3 months |
- Month-end effect. Notice is usually effective at month-end, subject to a valid contract or collective agreement.
- Protected periods. Pregnancy and certain protected windows during illness, accident or service can restrict ordinary termination.
- Summary dismissal. Immediate termination requires a serious ground.
- Final settlement. Calculate unused leave and any prorated thirteenth salary at exit.
Can I use independent contractors?
Only for genuinely independent specialists. If the person is integrated into your workflows, uses your tools, reports to your managers or earns most of their income from you, Swiss authorities can reclassify the arrangement as employment. Reclassification triggers retroactive AHV, BVG and accident contributions, interest and penalties. An EOR is the compliant alternative for anyone who works like an employee.
The legal framework in brief
Switzerland is not an EU or EEA member. Bilateral agreements govern free movement with the EU; it is a Schengen member and outside the Eurozone. The instruments you will hear most:
- Swiss Code of Obligations (CO). Individual employment contracts, notice and termination.
- Labour Act (ArG). Working time, health and safety for covered workers.
- Collective agreements and standard employment contracts. Sector wage and condition rules.
- Cantonal law. Public holidays, source tax, family allowances and certain procedures.
- Revised Federal Act on Data Protection (FADP). With an EU adequacy decision in place.
- Federal Social Insurance Office (FSIO / BSV) and SEM. Social insurance and migration.
Where the talent is
Switzerland combines Federal Institutes of Technology, cantonal universities and a deep multinational base. German, French, Italian and Romansh are official; English is common in multinationals. Employment documents and filings follow the language of the work canton. CET / CEST aligns with much of Europe.
| Region | Talent and industry concentration |
|---|---|
| Zurich | Finance, fintech, insurance, enterprise software, professional services |
| Geneva | International organisations, commodity trading, wealth management, NGOs |
| Basel | Life sciences, pharmaceuticals, biotech, chemical R&D |
| Lausanne | Sports business, tech and EPFL-linked deep tech |
| Zug | Corporate holding, crypto and commodity trading hubs |
Switzerland is not in the EU or EEA, so free-movement rights rest on bilateral agreements rather than the free-movement directive itself. Schengen membership still shapes border and short-stay practice. When a hybrid employee works material days from France, Germany or Italy, coordinate social-security affiliation and tax before the pattern hardens. Labor-leasing rules can also constrain how an EOR or staffing model is structured for particular duties, so route selection needs a facts-based review rather than a generic "hire without an entity" assumption.
Use a line-item budget: mandatory employer social insurance (OASI/AHV, IV/AI, EO/APG, unemployment), occupational pension above the BVG entry threshold, occupational accident premiums, canton family allowances, and any contractual thirteenth salary. Revisit entity economics once headcount approaches five, ten or twenty workers, comparing recurring EOR fees with AG or GmbH administration, local directors, audit and corporate tax.
Variable compensation needs clear drafting: state whether a bonus is discretionary or earned, how commission is measured, and whether amounts are pensionable under the BVG plan. Expense reimbursements need documented business purpose. Compulsory basic health insurance is arranged by the individual resident, so do not assume a US-style employer medical plan is a statutory Swiss cost. Screen immigration and collective-agreement applicability before the offer letter goes out.
Switzerland Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step. Built from Dryft's own onboarding checklist for Switzerland.
- Step-by-step implementation checklist, from EOR vs AG/GmbH selection to first payroll
- Canton-of-work checklist: wage floor, holidays, Quellensteuer and family fund
- AHV compensation office affiliation and BVG plan enrolment steps
- UVG occupational accident and optional daily sickness insurance configuration
- Trial period wording: one-month default and three-month written cap
- Notice schedule and month-end effect with protected-period flags
- Thirteenth salary and collective-agreement screening
- FADP data protection and cross-border transfer wording
This guide is general information, not legal, tax or immigration advice. Swiss employment, tax, social insurance and cantonal rules change through federal and cantonal adjustment and court interpretation. Confirm current figures with a qualified adviser or with Dryft before acting. Last reviewed September 2026.
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