Payroll in Switzerland is decentralised and layered: federal social insurance contributions, an occupational pension negotiated per employer, accident insurance priced by sector, and family allowance rates that vary by canton. The Federal Social Insurance Office confirms the basic split: the employer pays half of the first-pillar contributions and withholds the employee's half from salary. There is no single national payroll account; an employer registers with a compensation fund, a pension foundation and an accident insurer separately, which is why companies without a Swiss entity usually run the first hires through an employer of record or a local payroll provider.
The first pillar: AHV, IV and EO, plus unemployment insurance
The first pillar covers old-age and survivors' insurance (AHV/OASI), disability insurance (IV) and income compensation (EO). The combined contribution is 10.6% of gross salary, split equally: 5.3% from the employer and 5.3% from the employee, deducted at source and remitted by the employer to its compensation fund. Unemployment insurance (ALV) adds 2.2% on annual salary up to CHF 148,200, again shared between the parties. The Federal Social Insurance Office's own overview states the principle plainly: the employer pays half of the OASI/AI/IC and unemployment contributions. These are floors set by law, not negotiable line items, and a payroll quote that omits them is quoting salary, not cost.
Second pillar pension, accident insurance and family allowances
The occupational pension (BVG) is the second pillar and the biggest variable: contributions commonly run from roughly 7% to 25% of the coordinated salary depending on the employee's age and the pension fund chosen, and the employer must fund at least half. Accident insurance splits by type: occupational accident premiums are paid entirely by the employer, typically a fraction of a percentage point up to a couple of points depending on sector risk, while non-occupational accident cover is normally deducted from the employee. Family allowances are financed by the employer through a cantonal fund at rates that differ by canton. The practical consequence is that total employer cost above gross salary varies meaningfully by canton, sector and workforce age, so it has to be computed per hire rather than assumed.
What else a foreign employer has to get right
Wages are paid in Swiss francs, and a thirteenth monthly salary is a widespread contractual norm that must be budgeted where agreed. Foreign employees who do not hold a permanent settlement permit generally have income tax withheld at source through payroll rather than settling it by their own annual filing, which puts another calculation on the employer. Some cantons have their own minimum wages even though there is no federal one, so the applicable floor depends on where the employee works. An employer of record carries all of this under its own Swiss registrations; a company opening its own entity should expect to register with a compensation fund, contract a pension foundation and an accident insurer, and set up withholding before the first payday.
Questions people ask about payroll in switzerland
What does an employer pay on top of gross salary in Switzerland?
At minimum: 5.3% for AHV/IV/EO, a share of the 2.2% ALV unemployment contribution up to the CHF 148,200 ceiling, at least half of the occupational pension contribution, occupational accident insurance premiums, and cantonal family allowance contributions. The pension and accident components vary by fund, age and sector, so the true on-cost is per-hire arithmetic.
Is there a minimum wage in Switzerland?
There is no federal minimum wage. Several cantons have introduced their own cantonal minimum wages, and collective labour agreements set binding minimums in some sectors, so the applicable floor depends on the canton and industry of the role.
Who withholds the employee's social contributions?
The employer. It deducts the employee's half of AHV/IV/EO and ALV from each payslip and remits both halves to the compensation fund, and for many foreign employees it also withholds income tax at source.
Can I employ someone in Switzerland without a Swiss entity?
Not directly as their legal employer for ordinary local employment. The usual routes are an employer of record that already holds Swiss registrations, or incorporating and registering with a compensation fund, pension foundation and accident insurer yourself. Policy and contract documents control in every case; nothing here is legal or tax advice.