Imagine you’re eager to expand your business into Switzerland, a country known for its economic stability, skilled workforce, and business-friendly environment. But as soon as you start facing the complexities of Swiss employment laws, tax regulations, and compliance requirements, it feels like you’re in a labyrinth with no exit in sight. Partnering with an Employer of Record (EOR) can be a game-changer for your business in this situation.

An EOR in Switzerland manages all employment-related responsibilities, such as payroll, contracts, and compliance with local laws, so your business can focus on growth without setting up a legal entity. This article explores how an EOR can simplify hiring in Switzerland, reduce risks, and help your business expand efficiently.

Understanding the Employer of Record (EOR) model

An Employer of Record (EOR) is a third-party organisation that takes on the legal responsibilities of employing staff on behalf of your company. Essentially, while your business controls the employees’ day-to-day activities, the EOR handles payroll, taxes, employee benefits, and compliance with Swiss employment laws.

This makes the EOR particularly attractive for businesses looking to enter the Swiss market without the complexity of setting up a legal entity. 

In Switzerland, an EOR takes care of specific requirements such as employment contracts, social security contributions, and health insurance management, reducing your administrative burden and lowering the risk of legal complications.

Streamlining talent selection and employment setup with an EOR

One of the first steps when expanding into Switzerland is selecting the right talent. Whether you’re relocating staff from headquarters, hiring local Swiss talent, or bringing in experts from abroad, you can choose the perfect mix for your team. Once your ideal team members are identified, the Employer of Record takes over the legal and administrative process.

The EOR prepares legally compliant employment contracts per Swiss labour laws and manages work visas for non-Swiss employees. 

This includes drafting contracts, setting up benefits, and ensuring employees are registered for social security. One of our biggest challenges one of my clients’ faced when hiring in Switzerland was managing the contract management and onboarding for new employees. By outsourcing these functions to our EOR partner, they were able to reduce administrative costs and focus on core business activities significantly.

Benefits of using an EOR in Switzerland

1. Navigating complex labour laws

Switzerland has a highly regulated labour market with strict laws governing employment contracts, working hours, employee benefits, and termination procedures. 

These regulations can vary significantly depending on the canton (region) you operate. For example, work hours, notice periods, and overtime rules are tightly regulated and can differ across regions. 

An EOR helps navigate these complexities, ensuring your company complies with all relevant national and regional laws. This includes drafting employment contracts that meet Swiss standards and managing any collective bargaining agreements that may apply in your industry.

2. Simplifying payroll and tax compliance

Switzerland’s tax system can be complicated, considering federal, cantonal, and municipal taxes. Employers must also handle social security contributions for pensions, health insurance, and other benefits. 

Each canton has its own tax rates and regulations, making payroll management even more challenging. 

An EOR handles these complexities for you by managing payroll, calculating tax withholdings, and ensuring social security contributions are correctly made. This minimises the risk of errors and provides your business is compliant with local tax laws, reducing the chance of penalties.

3. Reducing employment risks

Hiring in Switzerland involves various risks, including legal disputes, misunderstandings of local laws, and managing a diverse workforce. An EOR helps mitigate these risks by acting as the legal employer and providing local expertise. 

For example, Swiss laws have strict guidelines on termination processes, notice periods, and employee rights. A UK-based company attempted to terminate an employee in Switzerland without understanding the local regulations. They didn’t realise that Swiss law requires a formal warning and a justified reason before ending employment, and this misstep led to a costly legal dispute. 

After partnering with an EOR, the company was guided through the proper procedure, including documentation and employee notice periods, which ensured compliance and avoided further legal complications. The EOR’s knowledge of local employment laws protected the business from fines and preserved its reputation in the Swiss market.

4. Faster market entry

Setting up a legal entity in Switzerland is a complex and time-consuming process, involving registration with local authorities and tax offices and setting up a local office. 

By partnering with an EOR, businesses can bypass these lengthy procedures and enter the market quickly. The EOR already has the legal structure and expertise, allowing you to hire employees and start operations immediately. This speed benefits companies looking to capitalise on market opportunities or rapidly establish a presence in Switzerland.

5. Flexible workforce management

An EOR provides the flexibility to adjust your workforce based on business needs. Whether you’re hiring full-time employees, contractors, or temporary staff, the EOR can manage different employment arrangements and ensure compliance with local laws. 

This flexibility is precious in Switzerland, where labour regulations can vary greatly depending on the type of employment contract. The EOR’s ability to manage these variations helps your business remain agile and responsive to changing demands.

The EOR hiring process in Switzerland

The hiring process with an EOR in Switzerland involves several key steps, each designed to ensure compliance with local regulations and smooth employee onboarding.

1. Needs assessment and consultation: The process starts with a detailed consultation between your business and the EOR to assess your hiring needs, including the number of employees, job roles, and timeline.
2. Employment contract preparation: The EOR prepares employment contracts per Swiss laws, covering salary, benefits, working hours, and termination clauses. The contracts are tailored to protect both the employer and the employee.
3. Payroll and benefits setup: The EOR sets up a compliant payroll system to manage salary payments, tax withholdings, and social security contributions. Employee benefits like health insurance and pension plans are also arranged according to Swiss regulations.
4. Employee onboarding: The EOR handles onboarding, including collecting necessary documents, setting up work permits (if required), and ensuring employees understand their rights and responsibilities under Swiss law.
5. Ongoing management and support: The EOR provides ongoing support, including payroll processing, compliance monitoring, and HR support. They manage any issues that arise, such as contract amendments, employee disputes, or terminations.
6. Regular reporting and communication: The EOR provides regular reports on payroll, compliance, and employee performance and maintains open communication with your business.

Start reducing risks & simplify hiring in Switzerland

Expanding into Switzerland offers significant business opportunities, but navigating the country’s complex labour laws and compliance requirements can be challenging. An Employer of Record in Switzerland can be a valuable partner, providing expertise, reducing risks, and simplifying the hiring process.

If you’re considering expanding your business into Switzerland, contact the Swiss Employer of Record experts today to discuss how they can support your expansion and help you navigate the complexities of the Swiss market.