Swiss Employment Law Glossary
Swiss employment law uses specific abbreviations and concepts that are unfamiliar to many international professionals and newcomers. This glossary explains the 20 most important terms — from AHV to the work reference — clearly and practically.
Social Insurance and Pensions
- AHV (Old-Age Insurance), Switzerland's mandatory first-pillar state pension. Contribution: 10.6% of gross salary, split equally. Maximum pension in 2026: CHF 2,520/month.
- Pension Fund (BVG), second pillar of Swiss pensions. Mandatory from an annual salary of CHF 22,680. Employer and employee contribute jointly; rates increase with age (7–18%).
- ALV (Unemployment Insurance), provides up to 400 daily allowances (520 for over-55s) on job loss. Contribution: 2.2% of salary (1.1% employer + 1.1% employee).
- UVG/LAA (Accident Insurance), mandatory for all employees from day one. Occupational accidents fully covered by employer; non-occupational accidents covered if working at least 8 hours/week.
- Maternity Leave, 14 weeks (98 days) statutory entitlement from birth. Compensation: 80% of salary via APG, capped at CHF 220/day (2026). Paternity leave: 2 weeks since 2021.
Pay and Taxes
- Wage Certificate (Lohnausweis), mandatory annual document issued by the employer (FTA standard form). Contains gross salary, social security deductions, fringe benefits. Due by end of February.
- Withholding Tax (Quellensteuer), direct salary deduction for foreign employees without Permit C. Rate varies by canton, salary, and marital status.
- Withholding Tax Adjustment (NOV), subsequent ordinary assessment for withholding-taxed employees. Allows claiming deductions; deadline: end of March of the following year.
- 13th Month Salary, equals 1/12 of annual salary (8.33%). Not universally mandatory, but standard in Switzerland; mandatory under applicable GAV, employment contract, or established practice.
- Continued Wage Payment during illness, statutory obligation under Art. 324a OR (Berne scale). With daily sickness allowance insurance (KTG): 80% of salary for up to 720 days.
Employment Contract and Working Conditions
- Employment Contract, may be oral or written (no mandatory form). Written form strongly recommended. Cannot fall below OR statutory minimums or applicable GAV terms.
- GAV/CCT (Collective Bargaining Agreement), collective contract between employer associations and unions. Sets minimum conditions for an industry; takes precedence over individual contracts (principle of favourability).
- Probationary Period, 1 month by law, extendable to 3 months by contract. Notice period during probation: 7 days for both parties.
- Notice Periods, 1 month (year 1), 2 months (years 2–9), 3 months (from year 10). Period commences at month-end. Contractual extension is possible.
- Work Reference (Arbeitszeugnis), unconditional right at any time (Art. 330a OR). Must be complete, truthful, and positive in tone. Beware the coded language of Swiss references.
- Overtime, hours beyond contracted time. Compensation: 25% pay supplement or time off in lieu. Statutory maximum under LTr: 45 h (office/industry) or 50 h/week.
- Short-Time Work (KAE), ALV instrument for temporary work reduction. ALV covers 80% of lost wages for up to 12 months within 2 years.
- Home Office Rules, no statutory right to remote work; governed by employment contract or company policy. Employer must reimburse necessary costs. Special rules for cross-border workers (tax, social security).
Permits and Residency
- Residence Permit, Permit B (5 years / 1 year), L (short stay), G (cross-border commuter), C (permanent residence after 5/10 years). Each carries different tax treatment.
- Work Permit, EU/EFTA citizens: free movement via AFMP. Third-country nationals: subject to federal quotas and must pass the labour market priority test.
Frequently Asked Questions About Swiss Employment Law
What is the difference between AHV and BVG in Switzerland?
AHV (first pillar) is the state mandatory insurance system: 10.6% of gross salary, equally split between employer and employee, managed federally. BVG (second pillar, pension fund) is occupational pension provision: contributions managed in the employer's pension fund, with rates that vary by employee age. Both systems are cumulative — every Swiss employee contributes to both simultaneously.
What is a GAV and does it automatically apply to me?
A Gesamtarbeitsvertrag (GAV) or Convention collective de travail (CCT) is a collective agreement between employer associations and trade unions. It applies if your employer belongs to the relevant employer association, or if the GAV has been declared generally binding (AVE). Check your employment contract for a GAV reference, or ask your HR department. SECO maintains a public database of all binding GAVs.
Who is subject to withholding tax in Switzerland?
All foreign employees without a Permit C (permanent residence) — Permit B, L, and G holders. The employer deducts the tax monthly from salary. Since 2021, withholding-taxed employees with Swiss domicile can apply for a subsequent ordinary assessment (NOV) to claim deductions not reflected in automatic withholding.
How long is continued wage payment during illness in Switzerland?
Under the statutory Berne scale: 3 weeks in year 1, then 1–3 months depending on years of service (at 100% salary). Most employers also carry a collective sickness allowance insurance (KTG) providing 80% of salary for up to 720 days. Statutory dismissal protection (Sperrfrist) applies during illness.