Switzerland leads the world in business competitiveness as affirmed by its ranking in the 2017 index of Global Innovation and Economic Freedom. A GDP of $659.83 billion and openness to foreign investment has made the country a lucrative destination for investment. Foreign trade is a key trading component for Switzerland as the combined value of imports and exports of the country equals 115% of GDP. The banking sector is highly developed and offers a diverse range of instruments for business financing.
Currency: Swiss Franc
Principal language: German
Government: Parliamentary Democratic Federal Republic
Capital City: Bern
Major Cities: Geneva, Zurich, Basel, Lausanne
Most employees in the private sector of Switzerland sign an employment contract that specifies the terms of their employment. In case there is a collective agreement, it can also include these terms.
The Code of Obligations mandates written employment contracts for some category of employees before they start working, such as traveling salespersons. For other employment relations, there can be an oral employment contract. When in probation period, either party may end the contract by giving 7 days' notice.
There is no specific duration for fixed-term contracts, although if the same parties sign successive employment contracts without a particular reason, a Swiss court may declare it to be an employment agreement for an unlimited period.
The Federal Labor Act specifies the weekly work schedule with 45 work hours as the maximum for office personnel, industrial workers, sales staff in large retail stores and some others. The weekly limit for other employees is 50 hours. Employees get a minimum rest break of 15 minutes when the workday is between 5 and half and 7 hours, a minimum of 30 minutes if the workday extends for 7 hours up to 9 hours, and 1-hour break if the workday is more than 9 hours.
Employees are entitled to receive 25% additional pay for their overtime hours, or compensatory time off if provided. The daily limit for overtime is usually 2 hours, and the annual limit is 170 hours for workers whose regular workweek is 45 hours long and 140 hours for those whose normal workweek is 50 hours. Employees who need to work on Sundays or public holidays take home 50% higher pay. Overtime pay may be waived in agreements or compensated with paid leaves for at least the same period.
Public holidays in Switzerland are mostly determined on the Cantonal level, as there is only one national holiday—National Day on August 1. Cantons often vary in declared public holidays based on the religious affiliation of the canton (Catholic or Protestant). Employees must receive paid leave on these holidays, while paid-by-the-hour workers receive paid leave as specified in their employment contract. However, all employees must receive paid leave on the National Day.
Usually, employers need to provide 4 weeks of paid vacation days to employees every year. However, employers need to provide 5 weeks of paid leave annually to workers who are below 20 years of age. Employers need to allow employees to take a minimum of 2 weeks’ leave consecutively and cannot pay workers in lieu of vacation.
Additionally, if an employee does not come to work for longer than a month in a year, the employer may lessen the holiday entitlement by 1/12 for each full month of absence, unless the absence is due to certain unavoidable circumstances.
All female employees receive maternity leave for 14 weeks after childbirth. Under the compulsory insurance program that provides covers for "loss-of-earnings," employees who have worked for an employer for a minimum of 3 months may receive 80% of their regular pay as a daily allowance for 14 weeks after childbirth subject to the highest amount of 196 francs per day.
In case an employee is not eligible for this program, she is entitled to leave under the sick leave provisions of the Code of Obligations. There are no specific provisions for maternity leave before childbirth, but pregnant employees can take sick leave in this duration if they are unable to work. A woman is not allowed to return to work for the first 8 weeks after the birth of a child. When a new mother resumes work, the employer:
- needs to ensure that the performance of the job does not pose a risk to the employee's health,
- cannot make her work overtime, and
- needs to provide adequate paid time for breastfeeding.
Employers may not dismiss pregnant workers or new mothers during the first 16 weeks post-childbirth.
Swiss law does not mandate paternity leave. Still, male workers typically receive 2 or 3 days’ leave after the birth of their child, although this decision is at the discretion of employers.
All persons gainfully employed or residing in Switzerland are entitled to sickness benefits. The insured pay premiums, which vary on the basis of the fund, type of benefits, the age of first insurance, and the canton. The law does not make it mandatory for employers to contribute, but some collective agreements necessitate that the employer must share employees' membership fees.
The Swiss law mandates employers to continue paying employees who cannot work due to illness subject to certain conditions. Cantons specify limits of sick leave after the first year of an employee.
Employees under 30 years of age are entitled to 1 week’s leave without pay per year to volunteer for a social or cultural organization. In addition, employers must provide leaves of absence to employees for the performance of their compulsory military duties.
Switzerland maintains 3 “pillars” for supporting an income for retired employees: the social security old-age pension, occupational pension plans, and voluntary private pensions. The objective of old-age pension plus the occupational pension is providing eligible retirees about 60% of their last income before retirement.
Old-age and survivors' insurance, disability insurance, and unemployment insurance are funded partially through employer and employee contributions (each contributes 5.15% of salary). Men at 65 years of age and women at 64 may retire and be eligible for an old-age pension once they contribute into the system for a minimum of 1 year. The amount of the pension is dependent on employees’ duration of contributions and their income.
Occupational Pension Plan
This type of plan is sponsored by the employer and established and governed as an entity separate from the old-age pension. An employer is required to register its employees with an occupational retirement plan, and both the employer and the employee make contributions, the amount of which depends on the plan and the salaries to be insured.
Work Injury Insurance
Employers are required to get accident insurance (workers' compensation), which covers all the employees in Switzerland, including apprentices and volunteers. Suva (the Swiss National Accident Insurance Fund), an independent non-profit company under the public law, and other private insurance carriers provide the compensation, and the employer and the employee pay premiums for different parts of the coverage.
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With our Global PEO/Employer of Record services, companies can expand into Switzerland and hire their employees without having to establish a branch office or subsidiary in Switzerland.
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