Hiring employees in Switzerland in 2026: EOR structure, costs, and compliance

Switzerland is the European market where the structure of an EOR arrangement is decided before any commercial question is reached, because federal law prohibits the arrangement most global providers default to. Staff leasing from abroad into Switzerland is not permitted, licensing is mandatory for anyone leasing staff commercially inside it, and an employment contract written by an unlicensed leasing employer is invalid rather than merely irregular.

While many global employers use Employer of Record arrangements to engage local talent, EOR is not a cleanly recognised statutory model in Switzerland. Swiss law routes employ-and-assign arrangements through a licensed personnel-leasing regime that a foreign-domiciled company cannot enter from outside the country.

Companies can instead use a workforce management platform such as Boundless, a Payoneer company, to engage and pay talent in Switzerland compliantly. Boundless supports employment in Switzerland through local employment arrangements and assists with onboarding, payroll, benefits administration, and compliance support, so companies can engage team members without setting up their own entity.

This section carries the most important compliance risk in the guide. The consequences of getting it wrong fall on the client, not only the provider.

The governing statute is the Federal Act on Employment Services and the Hiring of Services, the Arbeitsvermittlungsgesetz or AVG, at SR 823.11, with its implementing ordinance the AVV at SR 823.111. Article 12(2) AVG states the position in one line: Personalverleih vom Ausland in die Schweiz ist nicht gestattet. Staff leasing from abroad into Switzerland is not permitted.

That is a prohibition on the structure, not a licensing hurdle a foreign provider can clear by applying. An employer domiciled outside Switzerland may not lease personnel into it under the AVG at all, and a licence held in another country does not travel. For a buyer, the practical consequence is that the question “which entity employs the worker” has only two acceptable answers in Switzerland.

The first is a Swiss leasing company that already holds the required cantonal licence, and the federal licence where the activity is cross-border. A foreign provider serves the market by buying services from such a holder rather than by employing directly. The second is a Swiss base of the provider’s own: an AG or GmbH entered in the commercial register, with a qualified resident responsible person, holding the licences itself. Anything else, including a foreign entity contracting directly with a Swiss client to supply workers, sits outside what the AVG permits.

Article 12(1) AVG makes an operating licence, a Betriebsbewilligung, mandatory for any employer that commercially leases employees to third-party user companies. The cantonal labour office of the canton where the leasing company has its seat issues it. Article 12(2) then adds a second requirement for leasing workers out of Switzerland: a federal licence from SECO on top of the cantonal one. SECO is also the federal supervisory authority for private placement and staff leasing.

Article 29 of the implementing ordinance defines when leasing becomes commercial, and it does so through two independent branches. Either is enough on its own. The first is leasing regularly and with the intention of making a profit, where “regularly” is separately defined as concluding more than ten leasing contracts with client companies within twelve months. The second is annual turnover from the leasing activity of at least CHF 100,000, which triggers the licensing duty by itself regardless of how few contracts produced it. A provider that clears CHF 100,000 on a single large placement is caught. Genuinely exceptional leasing below both branches can fall outside the regime, but that reading is applied restrictively and is not a route to plan around.

Article 13 AVG sets the entry conditions: entry in the Swiss commercial register, suitable business premises, and no other business activity that could endanger the interests of job seekers or leased workers. The responsible managers named on the licence must be Swiss nationals or hold a settlement permit, be of good reputation, and be capable of running the operation properly. Where the licence covers cross-border activity, they must also demonstrate adequate knowledge of conditions in the relevant foreign states.

Article 14 AVG then requires a security deposit, the Kaution, lodged specifically to secure wage claims arising from the leasing activity. Placement-only agencies lodge nothing. The deposit attaches to leasing. The amounts are set by schedule rather than by negotiation, under Article 6 of the fee ordinance to the AVG:

A provider leasing out of Switzerland at scale therefore lodges CHF 150,000. The deposit must be in place before the licence issues, stays for its duration, and is released or reduced only when the business shrinks or the licence is surrendered with no unsecured wage claims outstanding.

Switzerland has no federal statutory minimum wage, following the rejection of a national minimum at the 2014 popular vote. For leased workers specifically, that gap is closed by the Gesamtarbeitsvertrag Personalverleih, the collective agreement for staff leasing, which applies across the whole country and covers every enterprise whose main activity is staff leasing and which holds a cantonal or federal licence.

The Federal Council has repeatedly declared this agreement generally binding, and the current declarations extend its binding force to 31 December 2027, with revised wage tables in force from 1 January 2026. Because it is universally binding rather than membership-based, a licensed leasing provider is covered by it whether or not it chose to be, which makes Switzerland the opposite of a market where a buyer has to ask whether an agreement applies.

The 2026 minimum wages for leased workers are set by region and skill level, expressed as annual, monthly and hourly figures on a thirteen-payment basis:

The high-wage region covers Zurich, Basel-Stadt, Basel-Landschaft, the Lake Geneva arc and the Bern agglomeration. Semi-skilled rates are set at 88% of the relevant skilled minimum, so a change to the skilled rate moves them automatically. For Geneva and Neuchâtel, the collective minimum applies where it exceeds the cantonal statutory minimum. Workers earning above the maximum insured earnings under the accident-insurance scheme fall outside the agreement’s personal scope, as do certain short-term agricultural placements.

One point about those hourly figures matters for anyone pricing an hourly placement. They are base rates. The same decision publishes a separate gross hourly rate with public-holiday compensation, holiday pay at 8.33% and the thirteenth month all loaded in, and the gap is wide: for skilled work in the normal region the base rate of CHF 25.86 becomes a gross hourly rate of CHF 31.32. A quote built on the base figure understates an hourly engagement by around a fifth.

One cross-reference matters more than the tables themselves. Where a leased worker is assigned into a sector that has its own universally binding collective agreement listed in Annex 1 of the leasing agreement, Article 20 AVG and Article 48a AVV require the leasing employer to apply that sector agreement’s wage and working-time rules instead, except where the leasing minima are higher. The floor for a given placement is therefore a function of the destination sector, not of the provider.

Five cantons also operate their own statutory minimum wages, which apply where they exceed the applicable collective minimum:

Geneva adds a wrinkle worth knowing: where a thirteenth month is paid, the base hourly rate must be at least CHF 22.70, so that adding the 8.33% supplement brings effective pay to the CHF 24.59 minimum.

• Establish the employing structure first: Confirm how the provider structures the Swiss employment arrangement, including whether the placement is handled through a licensed Swiss entity or local partner.
• Check the licence in the public register: Before contracting rather than after. SECO and the cantons maintain a searchable directory of licensed placement and leasing businesses.
• Identify the destination sector: Determine whether the assignment falls into a sector with its own universally binding agreement listed in Annex 1, because that decides which wage and working-time rules govern.
• Set pay against the higher of the applicable floors: Compare the leasing agreement minimum, any sector agreement minimum, and the cantonal minimum wage where the canton operates one.
• Issue the written leasing contract with the Article 19 content: The statutory list is specific, and omissions are filled by local usual conditions rather than by the parties’ intentions.
• Deliver the Article 330b written information within one month: Names of the parties, start date, function, salary and supplements, and weekly working time, with changes notified within one month of taking effect.
• Confirm permit status before the start date: Under Article 21 AVG, a leasing employer may engage foreign workers only where they are admitted to work and permitted to change employer.
• Register the worker for social insurance and set up withholding: Where the worker is subject to tax at source.

Employer-side charges divide into contributions with fixed statutory rates and contributions that vary by canton, insurer or the employee’s age.

The first-pillar rate and the unemployment rate both held steady into 2026. One point is worth stating clearly because outdated guidance still circulates on it: the 1% solidarity contribution that used to apply to earnings above the unemployment-insurance ceiling was abolished on 1 January 2023. Unemployment contributions now stop at CHF 148,200 and nothing is charged above it.

Accident-insurance rates depend on industry risk class and insurer, and family-allowance rates are set cantonally, with Geneva around 2.40% to 2.45% from 2026 and most cantons falling between 1% and 3%.

Occupational pension is the component that moves most with the individual. The mandatory scheme applies to employees earning at least CHF 22,680 a year, and insures only the portion of salary above the coordination deduction of CHF 26,460, up to a maximum coordinated salary of CHF 64,260.

Retirement credits are age-banded as a percentage of that coordinated salary: 7% from age 25 to 34, 10% from 35 to 44, 15% from 45 to 54, and 18% from 55 to 65. The employer must finance at least half, and many pension funds set combined rates above the statutory minimum. The minimum interest rate stayed at 1.25% for 2026.

Taken together, employer social charges commonly add somewhere in the mid-teens as a percentage of gross salary, though the figure moves materially with the employee’s age, the canton, the industry risk class and the pension plan, and composite percentages quoted in payroll guides are aggregations rather than a rate anyone is assigned. Our cost calculator models the components rather than applying an average.

On the employee side, income tax is levied at federal, cantonal and communal level together. Foreign nationals without a settlement permit, and not married to a Swiss citizen or settlement-permit holder, are generally taxed at source, with the employer deducting monthly and remitting to the canton of residence.

Tariff codes bundle all three levels into a single percentage that varies with income, family status and canton, and the 2026 tariffs took effect on 1 January. Taxation at source ends when the employee obtains a settlement permit, marries a Swiss citizen or settlement-permit holder, or naturalises. Employees taxed at source with Swiss-sourced income above CHF 120,000 must file a return, at which point the withholding is treated as a prepayment against the assessed liability rather than as final.

Two layers apply at once, and the collective agreement is usually the tighter of them.

The Federal Labour Act sets maximum weekly hours at 45 for industrial employees, office staff, technical staff and sales staff in large retail businesses, and 50 for everyone else. Work beyond those maxima is statutory overtime, permitted only exceptionally for urgent work, extraordinary workload, inventories or breakdowns, capped at 170 hours a year where the 45-hour maximum applies and 140 where the 50-hour maximum applies, and compensated at a 25% premium or with equivalent time off.

The staff-leasing agreement sets a standard week of 42 hours for leased workers. Hours 43 to 45 are compensated at par, in pay or in time. Work above 9.5 hours a day or 45 hours a week carries a 25% premium, and Sunday work carries 50%.

Rest rules sit underneath both. Employees are entitled to 11 consecutive hours of daily rest, reducible to 8 hours once a week provided the two-week average holds. Night work runs from 23:00 to 06:00 with a one-hour shift permitted, requires authorisation, and is compensated at a 25% wage supplement when occasional or a 10% time-off credit for regular night workers doing 25 or more nights a year. Sunday work runs from 23:00 Saturday to 23:00 Sunday, is prohibited without authorisation, attracts a 50% supplement when short-term, and must leave a weekly rest period of 35 consecutive hours, with at least 26 Sundays a year falling as rest days.

Statutory annual leave under the Code of Obligations is four weeks, rising to five for employees under 20. The leasing agreement improves on that for its own population: 20 days for workers aged 20 to 49 and 25 days for workers under 20 or aged 50 and over, expressed as percentage uplifts embedded in the hourly wage calculation. Switzerland observes nine federal public holidays treated as Sundays, with cantons adding their own, so the total ranges from roughly nine to thirteen days depending on canton and sector.

Probation runs one month by default and can be extended to a maximum of three by written agreement, a standard employment contract or a collective agreement. During it, either party may terminate at any time on seven days’ notice. After probation, Article 335c of the Code of Obligations sets minimum notice by years of service, all running to the end of a calendar month:

Contracts and collective agreements may lengthen these. Shortening below one month is permitted only through a collective agreement, and only in the first year of service.

The protection periods in Article 336c are where Swiss termination timing surprises foreign employers. Notice given during a protection window is void outright, not merely postponed. The protection windows are:

• Compulsory military or civil-defence service exceeding eleven days, plus four weeks either side of it.
• Illness or accident not caused by the employee: 30 days in the first year of service, 90 days in years two to five, and 180 days from year six.
• Pregnancy and the 16 weeks after childbirth.
• Approved foreign-aid service.

Where notice was validly given before a protection period began, the effect is different: the notice period is suspended for the duration of the impediment and resumes afterwards, then runs on to the next applicable month-end. Both mechanisms routinely push the effective end date past the one the parties had in mind, and they do so in different ways, so which side of the window the notice falls on matters.

Switzerland has no general statutory severance. Article 336 lists the grounds that make a termination abusive, including dismissal for personal characteristics unrelated to the job, for exercising a constitutional right such as union activity, or for asserting a lawful claim such as unpaid overtime. An abusive termination remains effective, but Article 336a entitles the employee to compensation of up to six months’ salary, capped at two months in defined cases, alongside any other damages.

Contribution rates and pension benchmarks were the quiet part of the year. First-pillar and unemployment rates were unchanged at 1 January, and the occupational-pension entry threshold, coordination deduction, maximum coordinated salary and minimum interest rate all carried over from 2025.

The substantive change is the thirteenth old-age pension, approved by popular vote in March 2024 and payable for the first time in December 2026 to everyone entitled to an old-age pension in that month. It equals one twelfth of the year’s actual old-age pensions, is paid on old-age pensions only rather than on survivors’ or disability pensions, and is excluded from the income base used to calculate supplementary benefits. Its financing, whether through VAT, payroll contributions or a mix, remained under parliamentary debate through early 2026 and had not changed contribution rates for the year.

Work-permit quotas were also left unchanged for 2026, following a Federal Council decision of 19 November 2025:

• Third-country workers: 8,500 permits (4,500 residence, 4,000 short-stay)
• Posted service providers from EU and EFTA states: 3,500 permits (500 residence, 3,000 short-stay)
• United Kingdom nationals: 3,500 permits (2,100 residence, 1,400 short-stay)

Citizens of EU and EFTA states employed directly by a Swiss employer benefit from free movement under rules administered by the State Secretariat for Migration (SEM) and are generally admitted without a labour-market test. Third-country nationals are admitted only as qualified specialists, against quota, and on proof that domestic and EU recruitment failed. The employer applies, which is another reason the employing entity has to be Swiss.

The Switzerland-to-EU package known as Bilaterals III was signed on 2 March 2026 and a parliamentary dispatch followed that month. It envisages Switzerland adopting EU rules on the posting of workers and parts of the free-movement directive, with wage-protection and immigration safeguards attached. None of that is in force; the detailed labour-law consequences depend on implementing legislation still to come, and it is worth tracking rather than planning against.

1. Assuming a licence obtained elsewhere carries over: It does not, and the failure is structural rather than procedural. Leasing into Switzerland from a foreign seat is prohibited outright.
2. Treating licensing as the provider’s problem: Where the provider is unlicensed, the worker’s employment contract is invalid and the client’s own leasing agreement is void. The exposure lands on both contracts, not on the provider’s regulatory standing alone.
3. Pricing against the leasing agreement minimum without checking the sector: Where the assignment falls into a sector with its own universally binding agreement, that agreement’s wage and working-time rules govern instead, unless the leasing minima are higher.
4. Budgeting a single pension percentage: The age bands run from 7% to 18% of coordinated salary, so an older hire costs materially more than a younger one on identical gross pay, and the coordination deduction means the insured base is not the salary.
5. Reading the 45-hour maximum as the working week: The statutory ceiling is not the norm. For leased workers, the collective agreement sets 42 hours, and hours beyond that carry defined compensation.
6. Planning a termination date without the protection periods: Illness, accident, pregnancy and military service suspend a running notice period rather than merely delaying the start of one, and the entitlement scales with years of service.

Switzerland has more verification steps than any other European market covered in this series. Work through each item below before signing.

• Confirm the Swiss AVG licence number and check it in the SECO register: 
  • A provider that does not appear, or whose licence has lapsed, makes both contracts void. This takes two minutes and removes the largest single risk in a Swiss hire.
• Which legal entity will sign the employment contract? 
  • How is the Swiss employment arrangement structured? Confirm that the employing party is appropriately established and licensed for the arrangement being used.
• Is the arrangement structured as a leasing arrangement under AVG or direct employment? 
  • The answer determines which collective agreement applies, which pay floors bind the engagement, and which Kaution has been lodged.
• Which sector does the role fall under, and which collective agreement applies? 
  • The NAV covers leased workers by default, but a sector GAV may apply on top with higher floors.

Finally, separate the employment question from the contracting question rather than defaulting to one. Where a role is genuinely independent contracting, a contractor arrangement may be considered following an appropriate classification assessment. Where the role has the characteristics of employment, an employment structure is generally more appropriate.