SwissLLC
Hiring & Employment

Hiring Employees in Switzerland: Contracts and Social Insurance in 2026

Taking on your first employee in Switzerland? Here is what employers must know about contracts, AHV, unemployment insurance, pensions, accident insurance and payroll in 2026.

By Amos Hope Jnr · · 4 min read

Illustration of two hands shaking above a desk with an employment contract and a laptop, with a mountain picture on the wall

Hiring your first employee is a milestone for any business. In Switzerland it also brings new obligations: employment contracts, payroll and several types of social insurance. The system is well organised, but it has its own vocabulary and thresholds.

This guide gives an overview for small employers. Figures are for 2026 and are taken from PwC Switzerland's published key figures on social insurance.

Employment contracts

Swiss employment law is set out mainly in the Code of Obligations. Contracts can legally be oral, but a written contract is strongly recommended. It should cover:

  • job title and duties;
  • start date and working hours;
  • salary and how it is paid, including any 13th-month salary;
  • holidays: at least four weeks a year by law, five weeks for employees under 20;
  • probation period: one month by default, which can be extended up to three months in writing;
  • notice periods.

Some industries are covered by collective labour agreements (GAV/CCT) with minimum wages and extra rules, and a few cantons, such as Geneva, Neuchâtel and Ticino, have cantonal minimum wages. Check whether these apply to your business.

Switzerland has no general national minimum wage.

The social insurance system

As soon as you pay a salary, including to yourself as managing director of your own GmbH, the business has to be registered with an AHV compensation office. Through it you pay the core contributions.

AHV/IV/EO: old-age, disability and loss of earnings

  • total contribution: 10.6% of gross salary;
  • split equally: 5.3% paid by the employer and 5.3% deducted from the employee's salary.

There is no upper salary limit for these contributions.

ALV: unemployment insurance

  • 2.2% of salary up to CHF 148,200 a year;
  • split equally between employer and employee.

Family allowances

Employers also pay contributions to a family compensation fund, which pays child and education allowances. The rate depends on the canton and the fund and is paid by the employer alone (with an employee share in Valais).

BVG: occupational pension

Employees earning more than the entry threshold of CHF 22,680 a year must be insured in an occupational pension fund. Key 2026 figures:

  • coordination deduction: CHF 26,460;
  • maximum coordinated salary under the BVG minimum: CHF 64,260.

Contributions depend on age and the pension fund's plan. The employer must pay at least half of the total. Small companies usually join a collective foundation offered by an insurer or bank.

UVG: accident insurance

Employers must insure their staff against occupational accidents and illnesses. Employees working at least eight hours a week are also covered for non-occupational accidents. The insured salary is capped at CHF 148,200. Premiums for occupational accidents are paid by the employer; premiums for non-occupational accidents can be deducted from salary.

Sickness benefit insurance

Daily sickness benefit insurance is not compulsory under federal law, but many employers take it out, sometimes because a collective agreement requires it. Without it, employers must keep paying salary for a limited period during illness.

Payroll basics

Each month you must:

  • calculate gross salary;
  • deduct the employee's share of AHV/IV/EO, ALV, BVG and non-occupational accident insurance;
  • for some foreign employees, deduct withholding tax (Quellensteuer) and pay it to the canton;
  • pay net salary and keep payslips.

At year-end, you provide each employee with a salary certificate (Lohnausweis) for their tax return and report salaries to the compensation office and insurers.

Many small businesses use payroll software or a fiduciary for this.

Hiring foreign workers

Hiring citizens of EU/EFTA countries is generally straightforward. Hiring people from other countries is limited to qualified specialists, requires proof that no suitable candidate could be found in Switzerland or the EU/EFTA, and is subject to quotas. See our guide for foreign founders.

Working time and records

Under the Swiss Labour Act, most employees may work a maximum of 45 hours a week in industry, offices and large retail, or 50 hours in other sectors. Employers must keep records of working time for most staff, and overtime must generally be compensated with time off or extra pay. Sunday and night work need special permission in most cases.

Keep personnel files, contracts, payslips and insurance documents in order. Compensation offices and insurers can carry out checks.

Costs to budget

On top of gross salary, a Swiss employer typically pays roughly 10% to 20% extra in social insurance and related costs, depending on age, pension plan, industry and canton. Remember that these costs are deductible for corporate tax purposes.

Why it matters

Getting payroll and social insurance right from the first employee protects both you and your staff. Directors can be held personally liable for unpaid AHV contributions, so it pays to set up the system properly.

If you are still choosing your structure, compare the GmbH and AG, open your business bank account and check your VAT obligations. For your specific case, your AHV compensation office or a Swiss fiduciary can help.

Further reading

Keep reading