international employment law firm alliance L&E Global
Switzerland

Switzerland: 2025, Looking Ahead

1. Mandatory Pension Fund (2nd Pillar): Increase in the Entry Threshold and the Coordination Deduction

A Brief Overview of the Three Pillars of the Swiss Pension System

The Swiss pension system consists of three so-called pillars. Together, the three pillars are intended to ensure that pensioners can cover their basic costs and maintain a reasonable standard of living. The 3 pillars work as follows:

The 1st pillar is a state pension provision, the 2nd pillar is an occupational pension provision and the 3rd pillar is a private pension provision. The contributions to the 1st and 2nd pillars are (generally) compulsory, whereas the contributions to the 3rd pillar are voluntary to increase the retirement pension payout.

The amount of various social security benefits was revised as of 1 January 2025, but this article deals exclusively with contributions to the 2nd pillar, as these are relevant for both employees as well as employers.

 

Higher Entry Threshold and Coordination Deduction for the 2nd Pillar as of January 1st, 2025

A certain annual salary threshold must be reached for the application of the compulsory 2nd pillar. This was previously CHF 22,050.00 (gross). Starting 1 January 2025, this threshold will be CHF 22,680.00.

The applicable coordination deduction (the amount to be deducted from the salary to calculate the 2nd pillar contributions) also increases from previously CHF 25,725.00 to CHF 26,460.00 as of 1 January 2025.

2. Revision of the Code of Civil Procedure: Important Changes for Employment Law Proceedings

The Swiss Code of Civil Procedure (CCP) was introduced in 2011. Prior to this, each Canton had its own Cantonal procedural code, which was not an optimal solution. The newly revised CCP came into force on January 1, 2025. In the following, the authors highlight the changes, which directly affect labour law disputes only:

Right to a Fair Hearing – Art. 53 of the Code of Civil Procedure

What has so far been understood as “Equality of Arms” and supported by national and international court practice will be set out in concrete terms in Art. 53 of the Code of Civil Procedure from 2025 on, namely that the parties may comment on any and all submissions made by the opposing party. The court must grant the parties a period of at least 10 days to do so.

 

Reduction of the Advance on Courts Costs – Art. 98 para. 1 Code of Civil Procedure

According to Art. 114 lit. c CCP, no court costs may be charged in labour law disputes up to a maximum amount in dispute of CHF 30,000.00. However, if the amount in dispute exceeds this threshold, the court required the plaintiff to pay an advance on the estimated court costs, the amount of which was regulated at Cantonal level. It was, therefore, not uncommon for parties not to enforce their claims through the courts because they were unable to pay the advance on court costs. The new Art. 98 para. 1 CCP stipulates that the advance on court costs may not exceed half of the estimated court costs, aiming to facilitate initiating court proceedings for plaintiffs.

Extended Competence of the Conciliation Authority – Art. 210 para. 1 lit. Code of Civil Procedure

As of 1 January 2025, conciliation authorities may offer a settlement proposal to the parties up to a value in dispute of CHF 10,000.00 (Art. 210 para. 1 lit. c CCP). If no party objects to this proposal within 20 days of written notification, it is deemed to have been accepted. Previously, this was only possible up to a value in dispute of CHF 5,000.00.

3. Increase in the Minimum Rates for Family Allowances

The purpose of family allowances is to partially offset the costs incurred by parents for their children. The Federal Family Allowances Act (FamZG) sets a minimum amount of family allowance to be paid out per child and month for all Cantons. The Cantons can, however, increase these amounts, but not reduce them. Previously, the minimum child allowance was CHF 200.00 per child and the minimum education allowance CHF 250.00. These minimum amounts have now been increased as of 1 January 2025.

 

New Minimum Amount for Child as well as Education Allowance per Child and Month as of January 1st, 2025

Both allowances were increased by 7.1% as of 1 January 2025. The minimum allowance per child is now CHF 215.00 per month and the education allowance is no longer CHF 250.00 but CHF 268.00 per child. This means that all employers must check the monthly amounts to be paid to their employees and adjust them if necessary. This applies in particular to the Cantons that previously only paid the minimum rates.

4. Taxation of Cross-Border Commuters

Please refer to our December 2024 newsletter, in which we addressed this specific topic in more detail. Below you will find a brief summary of the new legal situation.

The aim of this law is to prevent, to a certain extent, losses in tax revenue due to cross-border teleworking. The law allows bilateral agreements to be concluded with all direct neighbouring countries, but only two new agreements will be applicable as of January 1, 2025, namely between France and Switzerland as well as Italy and Switzerland. This means that Switzerland can now tax telework up to 25% of Italian and up to 40% of French cross-border commuters working for a Swiss company at their Italian or French place of residence.

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