1. Introduction
Switzerland is a modern market economy with low unemployment, highly skilled labour force, and a per capita GDP among the highest in the world. Switzerland’s economy constitutes a highly developed service sector, led by financial services, and a manufacturing industry that specialises in high-technology and knowledge-based production. Its economic and political stability, transparent legal system, vibrant infrastructure, efficient capital markets, and low corporate tax rates make Switzerland one of the world’s most competitive economies.
Lelex Attorneys at Law is a Swiss boutique law firm based in Zurich with a strong focus on workplace law, providing a full range of employment law services for businesses and individuals both nationally and internationally, including social security, data protection, immigration and employment litigation. The team consists of seasoned lawyers who have accumulated years of experience with business law firms and as in-house counsels of international corporations. A selected network with tax experts, fiduciary and auditing companies and specialised law firms abroad ensures optimal handling of international and cross-border transactions and disputes. We would be delighted to have the opportunity to assist with your organisation’s expansion into Switzerland. We have created a comprehensive package of materials and training modules allowing any organisation to open quickly and in a cost-effective manner, while still ensuring compliance with Swiss regulations and best practices.
2. Labour and Employment Law Requirements
a) Employer Policy Requirements
Swiss law only requires a few mandatory policies. For industrial enterprises it is mandatory to have a written health and safety policy. All enterprises carrying out dangerous or burdensome work need to have an information and risk mitigation policy in place in order to inform and protect women in case of pregnancy. Larger companies (including its Swiss branches and subsidiaries) are expected to have a policy against sexual harassment and bullying / mobbing at the workplace.
Besides those mandatory policies there are a number of policies that we recommend introducing. These policies will help an organisation manage employee relations and mitigate the risk of legal liability in the future:
- use of email and internet policy;
- expense policy;
- company car policy;
- policy on paid leave;
- public holidays policy;
- work time policy.
Many employers in Switzerland decide to combine all of the foregoing policies and procedures within a unified employee handbook that contains all the information every employee would need in the employment relationship.
b) Employee Training Requirements
According to Swiss labour legislation, the employer is obliged to take all necessary and reasonable measures to prevent accidents and occupational diseases at the workplace. The employer must involve employees in the prevention process.
If the employer has entrusted an employee with certain occupational safety tasks, he must provide him or her with appropriate training. There are different specific provisions dealing with such training requirements, depending on the industry.
c) Employment Agreements
Swiss employment agreements do not have to be very extensive. In the absence of an agreement on a specific matter, the provisions of the Code of Obligations, which in Switzerland is generally very employer-friendly, apply. As a very minimum, parties should agree on the salary, the start date and the amount of work (full time / part time).
It is also advisable to include provisions on the probationary period, notice periods, compensation for overtime, intellectual property rights and post-contractual restrictions. Certain agreements must be in writing in order to be valid, in particular agreements that deviate from the Code of Obligations regarding notice periods and compensation for overtime as well as post-contractual non-competition clauses. Under Swiss law, written form means a wet signature or a qualified electronic signature recognised in Switzerland.
Our firm has prepared a wide range of policy templates and employment contracts which can be efficiently modified for your organisation.
3. Corporate Law Requirements
Foreign investors can choose from a variety of Swiss legal entity forms. The limited share company (SA) is the most common capital company structure in Switzerland. Advantages of a limited share company are:
- shareholders’ liability is limited to the share capital;
- company shares (equity) are easily negotiable;
- possibility of contractual and/or statutory trade restrictions;
- the credit rating of a corporation tends to be higher than the credit rating of other company forms;
- shareholders are not made public in the commercial register.
Other common company forms are the limited liability company and the sole proprietorship. The latter is only possible for natural persons and comes along with full personal liability. The limited liability company is a private capital company set up by one or more persons or trading companies. This legal structure is ideal for smaller or family-owned businesses.
Both the limited share company as well as the limited liability company need to be represented by at least one person having its place of residence in Switzerland. Other than this, there are no further requirements regarding residency / nationality.
a) Compliance for Incorporation
In Switzerland, the process of an incorporation usually begins with opening a bank account and depositing the required capital (at least CHF 20’000 for the limited liability company and CHF 100’000 for the limited share company of which at least CHF 50’000 have to be deposited upon incorporation). The bank will issue a receipt for the amount necessary in order to incorporate and register the company.
The company is incorporated once registered in the commercial register. For a registration of a limited share company the following documents are necessary:
- Notarised deed of establishment;
- Articles of association;
- Proof that the members of the board of directors have accepted their election;
- Proof that the statutory auditors have accepted their election (if the company does not conduct a regular or limited audit: Declaration of the Board of Directors regarding the waiver of the audit);
- Minutes of the board of directors on its constitution, on the regulation of the chairmanship and on the granting of signature powers;
- Passport copy of all persons to be registered.
The incorporation process of a limited liability company is in large parts similar to the one of a limited share company.
Certain costs involved include the notary (approx. CHF 1’000 – 4’000) and the fees of the Commercial Registry Office (CHF 500-CHF 700). If the share capital is more than CHF 1 Mio a stamp tax of 1% of the founding share capital applies.
b) Post Incorporation Registrations
Once the incorporation process is completed, the company must register for VAT for taxation purposes. In order to fulfil the duties regarding social security of its employees, the company needs to register with the competent local social security authority and join a pension institution as well as arrange for an accident insurance protection for its employees. An insurance for continued pay in case of sickness is not mandatory, but good practice.
4. Payroll and Benefits Providers
In Switzerland, many employers outsource payroll and benefit responsibilities to third party companies. This greatly reduces the administrative burden coming along with payroll and benefits administration. We are happy to recommend payroll providers to fit your business’s requirements.
