To help your business grow, you need employees. But if you want to hire employees, you need to know how the hiring process works and what to keep in mind. In this guide, you’ll learn everything there is to know about hiring employees.
Hiring Employees: The Employment Contract
When hiring an employee, the first step is to enter into an employment contract. Under current Swiss law, an employment contract may be entered into verbally, in writing, or by implication.
Upon execution of the employment contract, the employer agrees to pay wages, make social security contributions, and provide paid leave. The employee agrees to perform the work specified by the employer. In addition, upon conclusion of the contract, the employee is subject to a duty of loyalty and a duty of care.
The employment contract should include at least the following points:
- Name and address of the employee and employer
- Employee’s Position: Area of Responsibility, Duties, Role, etc.
- Start Date (For fixed-term employment contracts, the end date must also be specified)
- Wages: Wages can be calculated either based on time periods or on the amount of work performed (time-based or piece-rate wages).
- Notice period: The notice period may be agreed upon between the employer and the employee, provided that the provisions of Swiss Code of Obligations (OR) Art. 335a et seq. are complied with. If no notice period is specified, the general provisions of the law apply.
- Working Hours and Workload
- Vacation Policy
Another important consideration regarding employment contracts is whether your company is subject to a collective bargaining agreement (CBA). If so, the provisions of the CBA must be followed. You can find out which provisions apply by contacting labor unions, your employers’ association, the cantonal employment office, or the State Secretariat for Economic Affairs (SECO).
What types of employment are there?
Anyone who wants to hire an employee must, among other things, decide whether the employment relationship should be for a fixed term or indefinite. This means determining whether the employment relationship will be established for an indefinite period or will last only until a certain point in time.
If you need an employee only to temporarily fill in for another employee or for the duration of a project, a fixed-term employment contract is recommended. If you want to retain an employee for a longer period, a permanent employment contract is recommended.
Furthermore, a decision must be made regarding the employee’s type of employment, as there are various options available in this context.
Full-time
The full-time employment model is the “typical” type of employment. It involves a workload of 90–100%. Employees who work full-time for the company usually have a permanent employment contract.
Part-time
In general, there is no standard definition of part-time work. However, the Swiss Labor Force Survey (SAKE) defines it as a primary job with a workload of less than 90%. Part-time work is therefore a reduced version of full-time work.
Side job
Similar to part-time work, a side job involves a reduced workload. However, there is one important difference: a side job is performed in addition to a primary job. Many employment contracts require the employer’s approval if an employee takes on a side job.
Work-Study Student
A “working student” is a student who works at a company while pursuing a degree. The work is usually in the same field as the student’s studies.
Minijob
In Switzerland, minijobs are also defined as marginal employment. A minijob is defined as an employment relationship in which the annual wage does not exceed the threshold of CHF 2,500 (as of 2025).
Internship
Internships are designed to give students a closer look at a company and the professional world for a limited period of time. Interns usually have little prior specialized knowledge, but they also incur fewer costs. In the long run, interns can develop into valuable employees.
Hiring Employees from Abroad
If you wish to hire foreign employees, you must first check whether there is a requirement to register or obtain a permit.
Reporting Requirement
As a general rule, employees from EU/EFTA countries are required to register, provided that their period of employment does not exceed 90 days per year. Registrations must be submitted via the website of the State Secretariat for Migration (SEM).
Requirement for Authorization
If a foreign employee from an EU/EFTA country works for more than 90 days per year, a work permit is required. For employees from third countries, a work permit is required regardless of the duration of employment. The employer is responsible for submitting the permit application, which must be filed with the relevant cantonal labor market authority.
If a foreign national has a permanent residence permit (Permit C), no permit is required.
How does withholding tax work?
Anyone who hires foreign employees residing in Switzerland (or foreign nationals without a C permit) or employees residing abroad must address the issue of withholding tax.
Unlike regular taxes, withholding tax is not paid directly by the taxpayer but by the employer. Withholding tax is deducted from wages before they are paid. The employer is required to report the employment of individuals subject to withholding tax to the relevant tax authority within 8 days of their start date.
For more information on withholding tax in Switzerland, see our guide.
How much does it cost to hire an employee?
Growing companies cannot avoid the issue of hiring employees. Sooner or later, new employees will be needed. What is often overlooked in this process, however, is that hiring employees involves costs.
To provide a little more clarity on this matter, we’ve put together a rough overview of the potential costs you may face when hiring a new employee. To keep it easy to understand, the costs are broken down into direct and hidden costs.
Direct Costs
- Labor Costs
- Social Security Costs
Hidden Costs
- Costs for job postings and recruiting expenses
- Onboarding / Training Costs
- Administrative Costs
- Costs for additional office supplies, office furniture, and office space
As can be seen from the overview, there are some costs that aren’t immediately obvious. This raises the question of whether leaving a position vacant generates more costs than hiring a new employee.
Register an Employee
Compensation Fund
People who are employed in Switzerland must pay contributions to the first pillar (AHV, IV, and EO). The obligation to pay contributions begins on January 1 following one’s 17th birthday. If a person stops working, the obligation to pay contributions ceases.
AHV contributions are split equally between employees and employers. The employee’s share is deducted directly from their wages and paid along with the employer’s share.
In addition to contributions to the AHV, IV, and EO, contributions to unemployment insurance (ALV) must also be paid. These contributions are also split equally between employees and employers.
Employees must be registered with the appropriate compensation office for the calculation of AHV, IV, EO, and ALV contributions. It is possible to register employees online via the website of the appropriate compensation office. The employer is responsible for registration.
Family Allowances
Employees who have children are entitled to family allowances. The income threshold varies from canton to canton. It is the employer’s responsibility to apply for family allowances with the family allowance fund. In most cases, the family allowance fund is administered by the employer’s AHV compensation fund.
BVG
Employees who are subject to AHV, are at least 17 years old, and earn more than CHF 22,680 (as of 2025) annually are required to participate in the occupational pension plan. The amount of contributions to the pension fund depends on the employee’s salary and age, as well as the employer’s pension plan.
UVG
Anyone who works in Switzerland is required to have accident insurance. Employees who work more than 8 hours a week for the same employer are insured not only against work-related accidents but also against non-work-related accidents.
KTG
Unlike UVG insurance, KTG insurance is not mandatory for employees. In most cases, KTG insurance is worthwhile for employers. This is because employers are legally required to continue paying employees’ wages for a certain period of time in the event of illness (Basel, Bern, and Zurich scales). Without KTG insurance, the employer bears the risk of having to pay wages without receiving any work in return.
Payroll for Employees
As soon as you hire employees, you have to handle payroll. There are several legal requirements in this area that must be followed.
- Payday: Unless otherwise specified in the employment contract, wages must be paid to the employee at the end of the month.
- Payroll Deductions: The employer is responsible for deducting the employee’s share of social security contributions.
- Pay stubs: The law stipulates that employees have the right to receive a written pay stub. The managing director is therefore required to prepare a pay stub. However, the preparation of pay stubs may be outsourced.
Easy Payroll Processing with payroll+
Payroll accounting takes time, money, and patience. The payroll+ payroll platform combines software, payroll processing, and insurance in one: By entering the gross pay, SMEs can handle all payroll-related tasks and also benefit from our attractive insurance plans.
Hiring Employees: The Process
To help you stay on top of the topic of employee onboarding, we’ve summarized the process step by step.
- Step 1: Job Posting / Recruiting and Selecting Candidates
- Step 2: Drafting the Employment Contract
- Step 3: Register with the compensation fund
- Step 4: Take out BVG, UVG, and, if applicable, KTG insurance
- Step 5: Submit a registration or authorization application
- Step 6: Withholding Tax Registration
- Step 7: Applying for Family Allowances
- Step 8: Payroll Disbursement
- Step 9: Reporting Wages to the Compensation Office
- Step 10: Transferring the contributions
- Step 11: Preparing the Pay Statement
Important: There are specific deadlines for steps 5 and 6. Details can be found on the website of the State Secretariat for Migration (SEM) and on the website of the State Secretariat for Economic Affairs (SECO).
More information on the individual steps involved in hiring an employee can be found on the federal government’s website.