Mandatory social insurance for the employer (AHV, ALV, BVG)

Anyone who hires staff in Switzerland becomes responsible for the correct accounting and payment of social contributions. It is not just a matter of cost: it is a matter of personal liability, because the employer is answerable even for the employee’s share. Here is the map of mandatory insurance.

The first pillar: AHV/IV/EO

The AHV (old-age and survivors’ insurance), together with the IV (disability insurance) and the EO (loss-of-earnings compensation for service and maternity), forms the first pillar. It is mandatory for all workers and finances basic pensions and benefits.

The contribution is shared equally: half borne by the employer, half by the employee. The employer withholds the worker’s share from the salary and pays it, together with its own, to the compensation fund.

Unemployment insurance: ALV

The ALV (unemployment insurance) is also mandatory and shared equally. It applies to salary up to an annual ceiling set by law; above that threshold the ordinary contribution does not apply. Here too the employer withholds and pays.

Family allowances and the FA contribution

Through the compensation fund, the employer also pays the contribution for family allowances (FA), which finances child and training allowances. This contribution is, as a rule, entirely borne by the employer. The rates vary from canton to canton.

The second pillar: BVG

The BVG (occupational pension) is mandatory for employees whose salary exceeds an annual entry threshold and who have reached a certain age. It covers old age, disability and death and is added to the first pillar.

Key points:

The employer must join a pension institution (pension fund).
The contributions are calculated on the coordinated salary (the part of salary between a coordination deduction and an upper limit).
The employer must pay at least half of the total contribution; many pay more.
The rates increase with the employee’s age.

Accident insurance: UVG

The UVG covers occupational accidents and occupational illnesses for all employees, and non-occupational accidents for those who work at least a minimum number of hours per week.

Typical split:

the premium for occupational accidents is borne by the employer;
the premium for non-occupational accidents is, unless otherwise agreed, borne by the employee (the employer withholds it).

Optional but frequent: sickness benefit

The daily benefit in the event of illness is not mandatory by law (unless a CLA provides for it), but it is very widespread: it allows the employer to transfer to the insurer the obligation to continue paying the salary during illness. It is strongly recommended.

Who pays what: the overall picture

AHV/IV/EO: shared equally (employer and employee).
ALV: shared equally, up to the ceiling.
Family allowances (FA): as a rule, employer only.
BVG: at least half borne by the employer, rates by age.
UVG occupational: employer. UVG non-occupational: employee.

The employer’s operational duties

The employer must:

register with an AHV compensation fund and a BVG institution;
account for the contributions on each salary and withhold the employee’s shares;
pay the amounts by the deadlines;
carry out the annual salary statement.

Failure to pay exposes you to interest, recovery of the contributions and, for the share withheld from employees, personal liability of the corporate bodies. This is not an area for improvisation.

How we help you

SIH ONE’s Payroll division manages the affiliations, statements and payment of social contributions, keeping salaries, funds and pension institutions aligned. Entrust us with your payroll.