Hiring Employees in Switzerland: Contracts & Law

Hiring the first employee is the point where a Swiss company’s obligations expand substantially. Beyond the salary itself, the employer becomes responsible for social insurance contributions, accident insurance, pension fund affiliation, withholding tax administration, and compliance with the Federal Labour Act. The cost of getting it wrong ranges from back-contributions with 5% interest to personal liability for directors under OR Art. 52.

This guide covers the employment law framework that applies to every GmbH and AG in Switzerland. For the specific social insurance contribution rates and registration process, see our social insurance guide. For ongoing filing deadlines, see annual compliance.

What law governs employment in Switzerland?

Swiss employment law is split across three primary sources:

1. Code of Obligations (OR Art. 319-362). The core private law governing the employment contract: formation, obligations of both parties, salary, working time, holidays, termination, and claims. These rules apply to all private-sector employment relationships and can be modified by individual contract only where the OR explicitly permits it.

2. Federal Labour Act (Arbeitsgesetz, ArG). Public law governing working conditions: maximum working hours, rest periods, night and Sunday work, health and safety. The ArG applies to most employees but exempts senior management and certain categories (agriculture, domestic work, public administration). Enforcement is through cantonal labour inspectorates.

3. Collective Labour Agreements (Gesamtarbeitsvertraege, GAV). Sector-specific agreements negotiated between employer associations and trade unions. A GAV may set minimum wages, extended holiday entitlements, additional notice periods, and supplementary insurance obligations. When the Federal Council declares a GAV generally binding (allgemeinverbindlich), it applies to all employers in the sector regardless of union membership. Over 40 GAVs are currently declared generally binding, covering approximately 1.2 million workers.

For a company founder: the OR is the baseline. Check whether your industry has a generally binding GAV — if so, its terms override the OR minimums. The list is maintained by SECO.

Must an employment contract be in writing?

No. Under Swiss law, an employment contract can be formed orally or even by implied conduct (the employee starts working, the employer pays). However:

OR Art. 330b requires the employer to confirm the following in writing within one month of the start of employment:

• Names of the parties
• Start date
• Function / role
• Salary and any supplements
• Weekly working hours

Failure to provide written confirmation is not a criminal offence but creates evidentiary problems if a dispute arises — and courts will generally interpret ambiguity in favour of the employee.

Best practice: always use a written contract signed before the start date. It should cover at a minimum:

Is there a minimum wage in Switzerland?

Switzerland has no federal minimum wage. A national initiative to introduce CHF 22/hour was rejected by 76% of voters in May 2014. Wages are set by agreement between employer and employee, or by applicable GAV/NAV.

Four cantons have enacted cantonal minimum wages:

In cantons without a minimum wage, many industries still have wage floors through generally binding GAVs. Examples:

For a GmbH or AG hiring office staff, consultants, or tech workers: there is typically no binding wage floor. The market rate applies. Salary benchmarking tools such as the SECO wage calculator (Salarium) provide median wages by role, industry, and canton.

What are the rules on probation periods?

Default: one month from the first day of work (OR Art. 335b). The contract can extend probation to a maximum of three months. It cannot exceed three months even if both parties agree.

During probation:

• Either party can terminate with seven days’ notice
• No reason needs to be given
• Protection periods (Sperrfristen) for illness, accident, pregnancy, and military service still apply — but they suspend the probation period rather than preventing termination

Practical points:

• The seven-day notice during probation can end on any day — it does not need to align with the end of a month
• If the employee is ill for two weeks during a three-month probation, the probation extends by two weeks
• A probation period of zero is valid if explicitly stated in the contract — the employee then immediately enters the standard notice period regime

What are the standard working hours?

The Federal Labour Act sets maximum weekly working hours:

These are legal maximums, not typical contractual hours. Most Swiss employment contracts specify 40 to 42.5 hours per week. The difference between contractual hours and the ArG maximum creates the distinction between overtime (Ueberstunden) and excess hours (Ueberzeit):

• Overtime (contractual hours up to ArG maximum): compensated at +25% or with time off, unless the contract waives the surcharge
• Excess hours (above ArG maximum): always compensated at +25%, cannot be waived

Night work (23:00-06:00) and Sunday work require a cantonal labour inspectorate permit and carry additional surcharges (25% for regular night work, 50% for temporary night work).

Senior management exemption. Directors and senior executives (hoehere leitende Angestellte) are exempt from the ArG’s working time provisions. This typically includes the GmbH managing director and AG board members in executive roles. They are still covered by OR rules but not by the ArG’s maximum hours, rest period, and overtime regulations.

How much holiday must an employer provide?

Many companies and GAVs provide five weeks from age 50 or for all employees regardless of age. Five weeks is increasingly the market standard for professional roles.

Key rules:

• Holiday accrues proportionally for part-year employment (start or end of contract mid-year)
• At least two consecutive weeks must be taken as a block once per year (OR Art. 329c)
• The employer sets the timing after consulting the employee, but must consider the employee’s wishes
• Holiday cannot be replaced by payment during ongoing employment — the employee must take the days
• Unused holiday is paid out upon termination
• Holiday entitlement during illness or accident: if the absence exceeds two months, the employer may reduce holiday by 1/12 per additional full month of absence (OR Art. 329b)

Public holidays. Federal law recognises only 1 August (Swiss National Day) as a paid public holiday equivalent to a Sunday. All other public holidays are set by cantonal law. Most cantons recognise 8-9 public holidays per year. The contract should specify which cantonal holidays apply.

What notice periods apply in Switzerland?

These are the statutory minimums under OR Art. 335c. The contract can specify longer periods (common for senior roles: three or six months from the start). Shorter periods than the OR minimums are only valid if set by a generally binding GAV.

Notice must be received by the other party before the reference date. A termination letter sent on 30 September but received on 1 October counts as October notice — the period runs from 1 November.

Garden leave. Swiss law permits the employer to release the employee from work during the notice period while continuing to pay salary. This is common for senior positions and roles with access to confidential information. The employee remains bound by the duty of loyalty during garden leave.

How does termination work under Swiss law?

Swiss employment law follows freedom of termination (Kuendigungsfreiheit). Either party can terminate with proper notice, without giving a reason. There is no concept of “unfair dismissal” in the UK or German sense — but there are limits:

Abusive termination (OR Art. 336)

Termination is abusive (missbraeuchlich) if the motive falls into one of these categories:

• Personal characteristics: race, nationality, gender, sexual orientation, religion, political opinion
• Exercising legal rights: filing a wage claim, reporting to authorities, joining a union
• Preventing claims: terminating before a bonus vests, before long-service benefits accrue
• Whistleblowing: reporting illegal conduct in good faith
• Military or civil service obligations

Consequence: abusive termination does not make the dismissal void — the employment still ends on the notice date. But the employee can claim compensation of up to six months’ salary (OR Art. 336a). The claim must be filed within 180 days of the end of employment.

Protection periods (Sperrfristen, OR Art. 336c)

The employer cannot terminate during certain protected periods:

If notice has already been given and a protection period begins, the notice period is suspended and resumes after the protection period ends, running to the end of the next calendar month.

Immediate termination (OR Art. 337)

Either party can terminate immediately (fristlos) for serious cause — a breach so fundamental that continuation of the employment is unreasonable. Examples: theft, fraud, physical violence, persistent refusal to work, serious breach of confidentiality. The burden of proof is on the terminating party. Unjustified immediate termination entitles the other party to compensation equal to the salary that would have been earned during the ordinary notice period, plus potential damages.

What social insurance must the employer arrange?

Before paying the first salary, the employer must have:

The combined employer cost of social insurance adds approximately 10-12% on top of gross salary. See our social insurance guide for the full rate breakdown and a worked cost example.

What are the rules for hiring foreign nationals?

The rules depend on the employee’s nationality:

EU/EFTA citizens

Under the Agreement on the Free Movement of Persons (FZA/AFMP), EU/EFTA nationals have the right to work in Switzerland. The employer must:

1. Report the hire to the cantonal migration office within 14 days (or before start for stays over 90 days)
2. The employee applies for a B permit (residence permit for gainful employment) — issued as a right, not at discretion
3. Short-term work under 90 days per calendar year requires only an online registration (Meldeverfahren), no permit

Processing time for EU/EFTA B permits: typically two to four weeks.

Non-EU/EFTA nationals (third-country nationals)

Hiring from outside the EU/EFTA is restricted. The employer must demonstrate:

1. Priority of resident workers (Inlaendervorrang): the position was advertised and no suitable Swiss or EU/EFTA candidate was found
2. Salary and working conditions meet local standards
3. The employee is a qualified specialist (manager, specialist, or highly qualified)

The employer applies for a work permit through the cantonal labour market authority. Annual quotas apply — the Federal Council sets a limited number of permits each year (currently approximately 8,500 B permits and 4,000 short-stay L permits for third-country nationals).

Processing time: four to eight weeks. The employee cannot start work until the permit is granted.

Cross-border commuters (G permit)

EU/EFTA nationals living in a neighbouring country (France, Germany, Italy, Austria, Liechtenstein) who commute to work in Switzerland receive a G permit. No labour market test is required. The employer registers the commuter with the cantonal migration office. Social insurance obligations are identical to resident employees — see our social insurance guide for the Grenzgaenger rules.

What does it cost to employ someone in Switzerland?

Total employer cost for a mid-level employee (CHF 100,000 gross salary, age 35, Zurich):

Add recruitment costs (typically 15-25% of annual salary if using an agency), workplace costs, equipment, and any relocation support. The fully loaded cost of an employee in Switzerland typically exceeds the gross salary by 15-20% before workspace and equipment.

Why you can trust this guide

This guide is written by Florian Rosenberg, a former fiduciary office manager who has handled employment contract setup, social insurance registration, and HR compliance for Swiss GmbH and AG formations. All legal references cite the governing acts — OR Art. 319-362, ArG, and AIG. Verify any point against the primary source before making employment decisions.

Frequently asked questions