When employing staff, there are non-wage labor costs in addition to the actual salary. These include various social security contributions, occupational pension contributions, and other expenses. To give you an overview, we have compiled the key percentages for non-wage labor costs (as of 2025):
- Old-Age and Survivors’ Insurance (AHV): 8.7%
- Disability Insurance (IV): 1.4%
- Income Replacement Scheme (EO): 0.5%
- Unemployment Insurance (ALV): 2.2%
- Occupational Pension Plan (BVG): Varies depending on the pension fund (e.g., 7% to 18%)
- Accident Insurance (UVG): Varies depending on the industry and risk assessment
In this article, we will discuss the various aspects of non-wage labor costs in detail and provide you with a comprehensive overview of statutory payroll deductions.
Personnel Costs and Social Security Contributions
Non-wage labor costs include all additional costs incurred for an employee beyond their salary. These include contributions to social security and occupational pension plans, as well as other cost items such as accident insurance and any other related expenses. By accurately calculating non-wage labor costs, employers gain a clear picture of an employee’s total labor costs.
Social security contributions are a major component of payroll deductions in Switzerland. These include contributions to the Old Age and Survivors’ Insurance (AHV), Disability Insurance (IV), Income Replacement Scheme (EO), and Unemployment Insurance (ALV). Each of these insurance programs has its own percentage rate, which is applied to income to calculate the corresponding contribution. These contributions serve to create a social safety net for employees and provide them with protection in various life situations.
In the context of employment, employers in Switzerland are required to make contributions to various social insurance programs. The most important social security contributions in Switzerland and their rates are:
- Old-Age and Survivors’ Insurance (AHV): The AHV contribution rate is currently 8.7% of gross wages. Employers and employees each pay half of this contribution.
- Disability Insurance (IV): The IV contribution amounts to 1.4% of gross wages and is also split equally between the employer and the employee.
- Income Compensation Scheme (EO): The contribution to the EO is 0.5% of gross wages and is split equally between the employer and the employee.
- Unemployment Insurance (ALV): The contribution to ALV is 2.2% of gross wages for annual wages up to 148,200 CHF and is split equally between the employer and the employee.
- Family Allowance Fund (FAK): FAK contributions vary by canton and family allowance fund and are generally paid by employers. Only in specific circumstances (e.g., employers not required to pay contributions) do employees pay contributions themselves.
In addition, there are other potential cost items, such as accident insurance (UVG), daily sickness benefit insurance (KTG), and the pension fund (BVG). The exact percentages and contributions may vary depending on the insurance provider and individual agreements.
Occupational Pension Plan (BVG)
Occupational pension plans are another important component of non-wage labor costs. They include the contributions made by both the employer and the employee to fund a supplemental retirement pension. The exact percentages and rules for calculating the contributions depend on various factors, such as the employee’s age and the insured wage. Occupational pension plans ensure that employees have additional income in retirement to maintain their standard of living.
Accident Insurance and Other Expenses
In addition to social insurance for employees, there are other cost items that are part of non-wage labor costs. One important component is accident insurance (UVG), which covers employees against occupational and non-occupational accidents. The exact percentages and regulations for accident insurance can vary depending on the industry and employment situation. In addition, other cost factors such as fringe benefits, bonuses, or potential training costs can influence non-wage labor costs. It is important to take these cost factors into account when calculating an employee’s total labor costs.
Non-Wage Labor Costs: Withholding Tax and Rates Based on Age
Withholding tax is another important component of non-wage labor costs. It primarily affects foreign employees working in Switzerland. The exact amount of withholding tax depends on various factors, such as the employee’s place of residence, family circumstances, salary level, and other individual circumstances. It is important to comply with the relevant rules and regulations regarding withholding tax in order to meet tax obligations and avoid potential penalties.
In addition, non-wage labor costs may vary depending on the employee’s age. For example, there are special contribution rules for the AHV and IV for older employees.
For more information on withholding tax in Switzerland, see our guide.
Calculating Non-Wage Labor Costs and Tools
Accurately calculating payroll-related costs can be complex, as various factors must be taken into account. However, there are online calculators and tools that can help employers and employees make a rough estimate of payroll-related costs. These tools factor in the relevant percentages and allow employers to make a realistic assessment of non-wage labor costs. However, it is advisable to consult an expert or a specialized agency, such as the tax administration, for detailed calculations and specific questions regarding non-wage labor costs.
Frequently Asked Questions About Non-Wage Labor Costs
When it comes to non-wage labor costs, questions often arise such as: How high are non-wage labor costs in Switzerland? What percentage of the total payroll do non-wage labor costs account for? How much does an employee cost the employer in terms of non-wage labor costs? It is important to note that payroll-related costs can vary depending on the individual situation and the terms of employment. Detailed information about specific payroll-related costs can usually be obtained from the tax authorities or a payroll expert.
What percentage do non-wage labor costs account for?
The percentage of non-wage labor costs varies depending on the factors mentioned, such as social security contributions and individual agreements. It is advisable to check the current percentages and calculate the total labor costs of employing a worker accordingly.
How much do employees cost employers in Switzerland?
The cost of an employee to the employer consists of the employee’s gross annual salary and non-wage labor costs. The exact amount depends on various factors, such as the salary level, social security contributions, and other cost items.
How much do employees cost, including non-wage labor costs?
An employee’s total labor costs to the employer consist of the employee’s gross pay and non-wage labor costs. It is important to calculate non-wage labor costs correctly in order to obtain an accurate picture of the total labor costs associated with employing a worker.
What will non-wage labor costs be in 2022?
The exact percentages and amounts of non-wage labor costs may vary from year to year. It is advisable to check the current figures with the relevant authorities to determine the exact non-wage labor costs for 2022.
Understanding non-wage labor costs and calculating them correctly are crucial for employers to understand and plan the total labor costs associated with employing a worker. A thorough understanding of social security contributions, withholding tax, and other cost factors enables accurate budgeting and responsible human resources management.
Other Aspects of Non-Wage Labor Costs
In addition to the points mentioned above, there are other factors that should be taken into account when calculating non-wage labor costs. These include potential contributions to pension plans, daily sickness benefits, and the cost of work clothing. The exact composition of non-wage labor costs can vary from industry to industry and from company to company. It is advisable to familiarize yourself with the specific requirements and regulations in the relevant industry in order to calculate non-wage labor costs correctly.
In summary, non-wage labor costs are a significant component of an employee’s total labor costs. Employers should familiarize themselves with the various aspects of non-wage labor costs and take them into account appropriately when planning budgets and processing payroll. Employees, in turn, can develop a better understanding of the various contributions and insurance policies that affect their pay. Through transparent communication and clear information about non-wage labor costs, employers and employees can work together to create a solid foundation for a fair and reliable employment relationship.