A Swiss employer is fully liable to social security contributions in respect of its employees. This system, however, only applies to resident employers and non-resident enterprises having a permanent establishment in Switzerland. The contributions are borne fifty-fifty by both employer and employees. However, the employer contributes insurance premiums for occupational accidents and diseases. He can deduct insurance premiums for non-occupational accidents (as well as the employee’s share for pension, sickness and unemployment insurance) from the employees’ salary. The rates are, in general, based on the gross salary.
Healthcare and Insurances
The mandatory Accident Insurance (UVG) contributes to the costs of medical treatment and gives financial support after accidents and occupational diseases. All employees occupied in Switzerland are covered. Sickness allowance insurance compensates for loss of salary due to incapacity for work caused by illness or pregnancy. All employees in Switzerland who have not yet reached the legal retirement age must be covered by unemployment insurance, subject to certain conditions.
If you become involuntarily unemployed, you are entitled to 70% of the average earnings paid into your unemployment insurance in the previous six months. If you have a child or your daily allowance falls below a predetermined minimum, you are entitled to 80% of the average earnings in the last six months.
The unemployment benefit is allocated as a daily allowance covering five days per week. Entitlement begins after a waiting period of five days of proven unemployment. Unemployment benefits provide up to 400 daily allowances to be received in a two-year period. Employees over 55 and having made unemployment insurance contributions for at least 18 months are permitted up to 520 daily allowances in the same period.
Holidays and Annual Leave
The minimum paid annual holiday entitlement in Switzerland for all employees is four weeks. Young employees up to the age of 20 are entitled to five weeks of holidays per year. Vacation must be used and cannot be compensated by payment; compensation of vacation by payment is admissible only at the end of an employment relationship. For the duration of their holidays, employees are entitled to the same pay as if they were working. Part-time employees and employees paid on an hourly basis are entitled to pro-rata holiday time.
In addition, and depending on the canton in which they work, employees enjoy between five and fifteen public holidays per year. Whenever a public holiday falls on a work-free day, employees are not entitled to a substitute day off. A public holiday is not deducted from the vacation entitlement whenever it falls within the vacation of an employee.
Maternity and Paternity Leave
Maternity leave lasts 98 days (or 14 weeks) from the day it starts. Both full-time and part- time employees are entitled to maternity leave. Women who return to work earlier lose their entitlement to compensation. Mothers are paid 80% of their wages in the form of a daily allowance up to the maximum of CHF 196 per day. Cantonal provisions, staff rules and collective labour agreements may provide additional solutions. Women must not work during the first eight weeks after the birth.
Paid Paternity Leave (new legislation as per 1 January 2021): fathers must take the new two-week paid paternity leave within six months after the child’s birth. They can either take such leave days consecutively or as individual days. Employers must apply to the relevant social security authorities for loss of income compensation, as it is not paid out automatically. The amount of compensation is the same as under the maternity insurance: 80% of the average earned income before the birth of the child, up to a maximum of CHF 196 per day.
Paid Care Leave (new legislation as per 1 January 2021): in addition to paternity leave, the new so-called care leave legislation introduces an obligation on the employer to continue to pay the salary for the care of a family member or partner with a health impairment, during a short-term absence of a maximum of three days per specific impairment, up to a maximum of ten days per year (329h CO).
Care Leave for the Care of Seriously Ill Children (new legislation as per 1 July 2021): newly introduced is a childcare leave if an employee’s child is seriously impaired in health due to illness or accident. The leave is limited to a maximum of 14 weeks (329i CO). Salary continuation is governed by the Swiss Federal Act on Income Compensation for Service Providers and for Maternity, which amounts to 80% of the salary and is capped at CHF 196 per day.
Pensions: Mandatory and Typically Provided
The Swiss pension system rests on three pillars:
- the first pillar provides old age pensions as well as benefits for widowers and orphans. The ordinary age of retirement is 65 years for men, 64 for women. It can be anticipated or postponed, with financial consequences. It is an PAYGO system, financed by contributions from employees and employers (4.2% of the employee’s income each) and shall cover the basic living expenses.
- the occupational pension scheme (2nd pillar) shall, together with the Old-age, Survivors’ and Invalidity Insurance, enable the insured person to maintain his or her previous lifestyle in an appropriate manner. It is a funded pension plan. It is compulsory for employees and is financed by both employees and employers. The sum of the contributions of the employer should be at least equal to the sum of the contributions of his employees. The second pillar offers old age pensions. The pension funds also provide benefits in case of invalidity and benefits to survivors in case of premature death. Under certain conditions, the second pillar can be used before retirement to buy a principal home or to start an independent activity.
- the third pillar consists of private pension schemes provided by the private sector. It is optional and financed entirely by the individual.