Switzerland: 2023, Looking ahead
In 2023, Looking ahead, we explore the most important trends and developments related to labour and employment law in Switzerland.
After two turbulent years where many new provisions in connection with Covid 19 were introduced and a variety of new provisions regarding paid leave went into force, 2023 is set to be a quieter year from an employment law perspective.
New Data Protection Law Provisions will enter into Force on 1 September 2023
As we have already informed our clients in the 2022 September Employment Law tracker, new data protection provisions that will also affect employment relationships will enter into force in fall of 2023.
No Impact Rule for Social Security for Cross Boarder Commuters Extended until June 2023
Switzerland will continue a flexible application of the social security rules for remote workers that were introduced during the pandemic until the end of June 2023. The extension of the so called “no-impact policy” allows frontier workers to continue to work from home without becoming subject to social security in their country of residence even if they work from home for more than 25%.
It is very likely that even after the expiry of the special regulation on 30 June 2023, the social security subordination rules will be designed in such a way that more than 25% remote work can be performed in the country of residence without changing the social security jurisdiction. A possible implementation will be discussed in the coming months at the European level and between Switzerland and its neighboring countries. We will keep our clients updated about further developments on this topic.
New Adoption Leave Entered into Force on 1 January 2023
The population’s need for legally anchored, contemporary parental leave models has already become apparent in the past. As of January 1, 2023, the entitlement to a two-week adoption leave comes into force for adoptive parents (new Art. 329j of the Swiss Code of Obligations [“CO”]). For more information on the adoption leave see our 2022 November Employment Law Tracker.
Changes to Swiss Social Security Contributions in 2023
As of 1 January 2023, the solidarity percentage for contributions to the unemployment insurance (ALV) will no longer apply. Furthermore, as pensions of the old age and survivors’ insurance (AHV/AVS; 1st pillar) will be adjusted at the turn of the year (maximum annual AHV/AVS pension: CHF 29,400), the BVG/LPP (2nd pillar) limit amounts for 2023 will change.
Unemployment Insurance (ALV) Contribution Adjustment
The Swiss unemployment insurance (ALV) consists of the statutory unemployment insurance (i.e. ALV I) and the solidarity contribution / unemployment surcharge (i.e. ALV II) and is part of the Pillar I Swiss social security system. These contributions are financed by both employees and employers.
The contributions to ALV I amount to 2.2% (employer and employee contributions together) of the relevant annual salary up to the limit of CHF 148,200. For salaries exceeding this amount, an additional 1% (employer and employee contributions together) of surcharge unemployment insurance is due as a solidarity contribution.
As of 1 January 2023, the solidarity contribution / solidarity percentage to the ALV will be suppressed. This means that contributions will no longer be due on salary components exceeding CHF 148,200 per year. Up to this limit, the contribution will continue to be 2.2% (total contribution of employer and employee). Employers and employees must each pay half of this amount.
The solidarity contribution was introduced in 2011 due to the heavy indebtedness of the ALV.
Adjustment of Limit Amounts of Occupational Pension Funds (BVG/LPP) as of 1 January 2023
Occupational pension funds (BVG/LPP), also called the 2nd pillar, is a mandatory social insurance scheme. It completes the basic 1st pillar system (old age [AHV/AVS], disability [IV/AI], loss of income [EL/APG]). Together, these two insurance systems should ensure that retired people to a large extent maintain their former standard of living. i.e. they should jointly provide approximately 60% of the last salary.
The increase in AHV/AVS pensions as of 1 January 2023 will result in increases in the entry threshold for the BVG/LPP. The threshold newly amounts to CHF 22,050. The coordination deduction will be increased to CHF 25,725, resulting in a maximum coordinated BVG/LPP salary of CHF 62,475.
