Hiring your first employee in Switzerland

Your first employee is a threshold. Until that point you manage only yourself; the moment you sign an employment contract you become an employer, with specific obligations towards the employee and towards the state. It isn’t complicated, but it has to be done in the right order and before the person starts working. Here is the map.

First of all: the employment contract

The employment relationship in Switzerland is governed by the Code of Obligations. A written contract is not always mandatory, but it is strongly recommended and lets you set the terms that would otherwise follow the statutory default rules.

The contract should define at least:

• role, place of work and start date;
• salary (gross) and payment frequency;
• weekly working hours and holidays (legal minimum four weeks);
• probation period and notice terms;
• any application of a collective labour agreement (CLA).

Watch the salary carefully: in some cantons and sectors there are binding minimum wages. Check them before making an offer.

Registering with the social insurance funds

Before the employee starts, the employer must be compliant with the social insurance schemes. In practice this means:

• registering with an AHV compensation fund (state pension), which manages AHV/IV/EO, ALV (unemployment insurance) and family allowances;
• joining a pension fund (BVG, occupational pension) if the salary exceeds the annual entry threshold;
• taking out accident insurance UVG with an insurer.

On each salary the employer withholds the employee’s share and adds its own, paying the total to the funds. AHV/IV/EO and ALV are on an equal-split contribution basis; for BVG the employer pays at least half; occupational accident cover is borne by the employer, non-occupational accident cover as a rule by the employee.

If the employee is foreign: permit and withholding tax

If you hire someone of foreign nationality, check their residence and work title. Depending on the permit, a notification or an authorisation may be required before the activity starts.

Many foreign workers without a settlement permit are subject to withholding tax: the employer deducts the tax directly from the salary and pays it to the cantonal tax authority. It is an employer obligation, not an option.

Payroll accounting and the payslip

At each payment the employee is entitled to a payslip (salary statement) that shows the gross salary, the deductions (AHV/IV/EO, ALV, BVG, non-occupational UVG, any withholding tax) and the net amount paid. At year-end a salary certificate is issued, a tax document that the employee attaches to their tax return.

The employer must also carry out the annual reconciliation of salaries with the compensation fund and the other institutions.

The right order of operations

To avoid finding yourself exposed, proceed like this:

1. define the role, gross salary and conditions;
2. check minimum wages and, where relevant, the sector CLA;
3. verify the work permit and any withholding tax;
4. register with the AHV fund and join BVG and UVG;
5. sign the written contract before the start;
6. set up a monthly payroll accounting process.

The mistakes that cost you

• Hiring before registering with the funds: contributions remain due anyway, with interest.
• Forgetting UVG: without cover, an accident becomes the employer’s problem.
• Ignoring withholding tax: responsibility for the deduction lies with the employer.
• Confusing gross and net in the offer: in Switzerland you negotiate the gross figure.
• No written contract: in the event of a dispute, statutory rules apply, not your intentions.

It isn’t just a cost, it’s a responsibility

Becoming an employer means taking on a responsibility: the employer is also answerable for the share withheld from the employee and for its correct payment. A systematic error is not an accounting detail, it is a personal risk for whoever runs the administration.

How we help you

The Payroll division of SIH ONE puts the whole cycle in order: contract, registrations, monthly statements, withholding tax and annual reconciliation, so that your first employee starts fully compliant from day one. Entrust us with your payroll.