Complete Guide to Employee Benefits and Compensation in Switzerland

What are Employee Benefits?

Employee benefits refer to the extra perks the employees receive in addition to their salaries. The primary purpose of employee benefits is to increase job satisfaction, attract top talents, and retain employees in the company for a long time. These benefits can be monetary or non-monetary, depending on the company’s compensation policy. 

Every company provides mandatory and supplemental benefits to their employees depending on the size of the organization and the budget they have set aside for these benefits. These benefits are a part of the compensation structure. Their monetary value is calculated and added to the CTC of the employee. 

All the employees working in Switzerland are entitled to mandatory benefits as decided by government laws. They might also avail supplementary benefits based on the company’s benefits policy clauses. Mandatory benefits include minimum wages, overtime payments, etc. Apart from the monetary benefits, employees also enjoy the right to take different leaves as per the federal laws of Switzerland. They might also have access to allowances like food, fuel, etc. 

You must consider different compensation laws laid down by the government and start drafting your compensation and benefits policy for Switzerland. 

Compensation Laws in Switzerland

Before you finalize the employee compensation and benefits in Switzerland, you must go through all the labor laws decided by the Government.

Several compensation laws in Switzerland govern a company’s compensation and benefits policy. Some of these laws include:

• As per Article 9 of the National Labor Law, an employee must work for a maximum of 45 hours a week if they work for an industrial company. All other employees can work for a maximum of 50 hours weekly.
• According to Article 329A, all workers can take four weeks of paid leaves in a year. This increases to 5 weeks if the employee’s age is below 20.
• Article 35 LT of the Labor Law states that pregnant women and breastfeeding mothers should not be entrusted with responsibilities that can endanger their health and well-being. 
• Employers cannot employ people below 15 years of age in a company that operates in Switzerland as per Article 30.3 LT. 
• As per the Labor Law, companies cannot discriminate against their employees based on race, religion, gender, etc.

How to Design an Employee Benefits Program for Employees in Switzerland?

Establishing a benefits plan takes time. Employers must consider both the qualitative and quantitative elements while designing a compensation package in Switzerland. You must choose an acceptable budget, consider different benefits, and create a compensation plan that meets the needs of employees at large.

Let’s look at some basic steps in designing employee compensation and benefits in Switzerland.

Step 1: Set a budget and decide your goals

Before you start crafting your compensation and benefits policy in Switzerland, you must get a budget from the top management. With a fixed budget, you can pick the benefits for all employees in the organization. Along with the budget, you must also enlist the objectives you want to meet with a benefits plan. 

Some of the objectives can be:

• Engaging and motivating the current employees and attracting new employees with better perks 
• Keeping the budget under consideration while deciding on the benefits for all employees
• Adhering to all the federal labor laws applicable in Switzerland

Step 2: Keep a tab on the industry standards and fathom the employees’ expectations

While having a budget is essential, you must also have an idea of the kind of benefits that other companies working in the same industry offer to their employees. This will help you benchmark your benefits to those offered by your competitors. 

Try to understand the expectations of the employees and the kind of benefits they want in the new benefits plan. For this, you must conduct an internal survey and invite all the employees to participate in the survey. Use the survey results to identify the benefits employees are looking for. 

Step 3: Create a flexible pay structure

Different employees have different needs. Hence, when you finalize the workers’ compensation in Switzerland, consider the diversity among the employees. You can use the employee survey results to customize the benefits package. 

A flexible compensation package will help you accommodate the varying needs of your employees. Also, it gives you room for any changes in federal laws or the company’s internal policy.

Step 4: Collect feedback

Seeking feedback is an integral step when creating a benefits plan. Once you prepare the first draft of your benefits plan, share it with stakeholders to go through it. You can document all the feedback you receive and review them later.

You can incorporate the feedback if it adds value to the plan and is under the allocated budget. Also, if you realize that a particular benefit will remain unused, you can modify it or remove it to save money. 

Step 5: Analyse the plan and release the draft

Reviewing compensation and benefits plans before you release it is crucial to ensure that the benefits plan survives in the dynamic business environment. You must create a benefits plan that stays relevant across the years. Additionally, you should allow flexibility so businesses can make some amends to the plan based on changes in the economy or the prevailing labor laws in Switzerland.

You must make sure there are no potential errors before releasing the employee compensation policy in Switzerland. Examine each component of the benefits plan before beginning the implementation process. You must develop a few measures and performance metrics to assess the plan’s efficiency and the entire activity. These metrics will help you track the implementation and make corrections to the strategy in real time.

Types of Guaranteed Benefits in Switzerland

All employees working in Switzerland have access to employee benefits in Switzerland. You must try to know the clauses that govern these mandatory benefits before you start drafting your benefits plan. Some of these mandatory benefits include:

Minimum wage

• There is no minimum wage requirement as per the federal laws of Switzerland. However, there are several collective agreements in place that dictate the minimum wages for employees in Switzerland.
• The hourly wage in Switzerland ranges between CHF 19 to CHF 23 per hour for all industries. Most companies in Geneva pay their employees a minimum of CHF 4,000 per month.

Working hours and overtime

• The employees must work 45 hours a week per the country’s federal laws.

• However, this can extend for 2 hours daily for up to 170 hours in total in a year if the work demands additional hours.

• The maximum number of working hours can go up to 50 based on the collective agreements for a particular role or employer.

• Employees who work beyond the hours decided by the collective agreements are entitled to overtime pay.

• The employees receive 125% of their regular pay as overtime if they work beyond their normal hours.

Paid leaves

• The employees in Switzerland can take paid leave for up to 4 weeks once they complete a year in the organization.
• Out of these four weeks, employees should take at least two weeks of leave consecutively.
• Employees who have not completed a year in the company get paid leaves based on pro rata.
• Also, employees below 20 years of age can take five weeks of paid leaves in a year. 
• The paid leaves must be utilized within a year, the employees cannot use them in consecutive years, and the employers will not pay for unused leaves.

Public holidays

• The 26 states of Switzerland release their list of public holidays, and the employees must adhere to the list released by the state where they are employed.
• August 1 is declared a national holiday, and employers across the states must ask their employees to take day off.
• In most states, there are nine legally recognized holidays. These holidays include New Year’s, Good Friday, etc. 

Sick leaves

• All employees in Switzerland can apply for sick leave if they are unwell or seek medical assistance.
• The number of sick leaves an employee gets depends on the years the employee has been with the organization.
• The employees can take sick leave of 3 weeks during their first employment.
• Also, the employees who avail of sick leaves get a payment equivalent to 80% of their average salary.

Maternity leaves

• Female employees can take a maternity leave of up to 14 weeks if pregnant.
• However, they get access to maternity leaves if they have made regular contributions to the Office for Social Insurance for the last nine months before availing of the leave.
• The employees receive an amount equivalent to 80% of their salary as a daily allowance. The office makes these payments for Social Insurance.

Paternity leaves

• Male employees can avail of a paternity leave of 10 days post the child’s birth. However, the number of leaves has increased to 30 in the case of employees who work for the government.
• Employees can take these leaves together or get a break on non-consecutive days.
• However, the employees can take paternity leave only within six months after the child’s birth.
• Fathers get a salary equivalent to 80% of their regular pay for up to CHF 196 per day if they take paternal leave.

Annual Bonus

• While there are no government regulations for bonus payments, most companies have a bonus policy.
• Most employers in Switzerland pay an annual bonus on Christmas or at the end of the financial year.
• Employees who leave the company before the bonus payments are released might receive a pro-rata bonus based on the months they have worked for the company.

Employee Benefits for Expatriates

The same privileges are available to Switzerland residents and ex-pats who travel to the country for employment. Ex-pats receive both primary health coverage and supplementary health insurance. Additionally, the employer pays a portion of all employees’ travel expenses. As part of the benefits provided to ex-pats, the employers also pay the following costs:

• Relocation costs
• Traveling costs
• Expenses for lodging

These perks could vary from one employer to another. The employment contract does, however, mention the terms of these perks.

How are Employee Benefits Taxed in Switzerland?

Employers must consider bonuses, leave payments, and other perks when calculating an employee’s take-home pay because most benefits are included in taxable income. Each employee’s paycheck must have the appropriate amount of tax withheld by the employer.

Switzerland has a system of graduated taxes in effect. As a result, the tax rate rises with the rise in gross income. The monetary value of the benefits provided to the employees is also included in their gross compensation. The tax rate ranges from 0% to 19%.

Restrictions for Switzerland Benefits and Compensation

Most benefits are taxable in Switzerland, just like in other economies. You need to know the monetary worth of these benefits to calculate how much tax an employee will owe. The employer must send all monthly tax payments on time to the country’s tax authorities.

Make sure your firm is lawfully formed in Switzerland  and you have the right to conduct business before establishing a compensation structure. The benefits and compensation package must also adhere to Switzerland labor laws. You must pay overtime to the employees working additional hours to serve your company.

Supplemental Benefits for Employees in Switzerland

Switzerland is a country that offers several supplemental benefits to employees working here. These benefits create an additional pull and help you attract exceptional talent from all over the world. Let’s look at some supplemental benefits offered by different companies in Switzerland.

Care leaves

The employees in Switzerland are entitled to 14 weeks of paid leave if they are attending to their child who is either sick or injured. They are paid 80% of their regular salary during these leaves. The employees must furnish a medical certificate as proof of the condition. 

Car benefits

The employees working in Switzerland have access to car benefits. The amount the employee receives as car benefits is equivalent to 0.8% of the car’s value. This amount is paid every month to the employee. However, this calculation does not include the VAT.  

Supplemental health insurance

While employees in Switzerland have access to healthcare and health insurance, the primary insurance does not cover the cost of dental treatments and eye care. The employer might decide to provide its employees with these health benefits. 

Education

The company might repay the education costs of employees. For this, employees must provide proof of education to get a reimbursement for the same.

How Multiplier Can Help with the Benefits Management in Switzerland 

Setting up a business in Switzerland can successfully attract talented employees to your organization. You can do this by offering top-notch employee benefits in Switzerland.  If you curate the benefits package step-by-step and incorporate the local labor laws, you may easily get around it. A global PEO platform like Multiplier can assist you in creating a successful benefits plan.

Multiplier assists you in comprehending Switzerland’s labor rules and onboarding educated and skilled workers that may contribute to expanding your business. With the aid of Multiplier, you can begin building a workforce in Switzerland without opening a company there. The PEO will assist you in managing employee expenditures associated with mandatory and supplemental benefits while helping you stay within your budget.