Salary management in Switzerland

Thu, 28.09.2023, 11:00

Switzerland, where even salaries are strictly managed! As a Swiss entrepreneur, managing the salaries of your employees requires great precision. You have to comply with certain rules and particularities, such as declaring salaries on time, including all necessary information in pay slips and respecting collective labour agreements. Don't worry, we are here to guide you! Effective payroll management of your employees is an effective way to motivate and retain them.

Understanding a pay envelope
Pay slips can be complex, as they vary from country to country. In Switzerland, for ease of reading, they are organised under headings that include information such as gross salary, social deductions and net salary.
 
Gross monthly salary
This first line of the pay slip indicates the salary, fixed or variable depending on the employment contract. This basic information allows you to understand your salary and take stock of your finances. Are you ready to find out your monthly income?
 
The amount of family allowances
Your pay slip also shows the family allowances you receive as an employee. The amount varies depending on the canton in which you work, but generally family allowances for children up to the age of 16 are at least CHF 200 per month, and for children up to the age of 25 who are studying are at least CHF 250 per month. However, some cantons may offer higher amounts than the federal law and some companies may offer higher amounts. Be sure to check your family allowances to make sure you are benefiting from all your entitlements!
 
OASI and DI contributions
OASI and DI contributions are compulsory social deductions in Switzerland and are essential for the social protection of workers. OASI provides a partial pension in the event of retirement, disability or death, ensuring financial security for you and your family. OASI contributions are the same for all workers and are set by the Swiss Confederation.
 
DI (Disability Insurance) finances the rehabilitation of workers who are unable to work due to disability. It provides pensions or daily allowances to financially support workers in case of inability to work. This insurance provides essential social protection throughout a career.
 
Military loss of earnings insurance
Military insurance for loss of earnings is a form of protection introduced by the Swiss Confederation for all workers. It is designed to compensate for loss of earnings due to accidents and illnesses that occur during periods of military service. This insurance provides financial security in the event of unforeseen circumstances and helps maintain peace of mind at work.
 
Unemployment contributions
Unemployment contributions are a kind of insurance that protects you in the event of involuntary job loss. It is a bit like paying car insurance, only it is for your job. And yes, as with all insurance, there is a cap on the amount you can receive. So if you earn more than this ceiling, don't get carried away too quickly, because if you become unemployed, your benefit will only be calculated on this maximum amount. But don't be pessimistic, that will never happen, will it?
 
The pension fund
The pension fund is like your savings account for the future, but for your working life! It is the system that will allow you to supplement your pension and insure yourself in case of disability. If you earn more than CHF 19,890 per year, you will have to pay a contribution. But don't worry, your employer will also be involved, contributing at least as much as you. And if you are lucky, your company may even offer you an even better policy!
 
Insurance against non-work-related accidents
The non-work-related accident insurance, compulsory for employees working more than 8 hours per week, covers accidents outside the workplace. The rate depends on the company and the sector, so high-risk professions may have higher rates. But it's worth it if you want to enjoy extreme activities with peace of mind, such as parachute jumping at the weekend!
 
Withholding tax
With withholding tax, your employer assumes the role of tax collector, deducting the corresponding amount from your salary each month. This method is not suitable for all employees, as it only applies to foreign workers. Swiss citizens living in their own country are not affected by this tax deduction. On the other hand, if you are Swiss living in exile, be prepared for this eventuality. Once the money has been collected, your employer must pay it to the cantonal tax office every quarter.
 
Net pay
Net pay is the amount an employee receives directly after all compulsory deductions, such as tax deductions, social security and insurance contributions. It is the amount that appears on the employee's bank account at the end of the month and represents the real remuneration for his or her work.

The role of collective agreements in wage management
Collective labour agreements are a kind of secret code for employers and employees. They define all the rules for a harmonious employment relationship between the two parties, from recruitment to the end of the contract. They also specify minimum wages, bonuses, paid holidays, protection against unfair dismissal and compensation in case of illness or other situations. In short, it is like a well-stocked toolbox to keep everyone happy and working in a good mood.
 
How can IFJ help you?
As we have already mentioned in this post, there are many things to consider when it comes to payroll. If you need help, IFJ offers a trust service in cooperation with a partner. Take a look if you are interested!