In many growing companies, cash flow is sometimes limited. Entrepreneurs may feel tempted to delay paying salaries to manage their cash flow. However, payroll processing is an important requirement. The laws concerning the remuneration of the employees are strict. If a company does not respect, the legal and financial consequences can be significant, in addition to the stress caused internally.
The federal law on archiving obliges employers to keep pay slips, annual certificates, employment contracts, personal data, social institution and insurance announcement forms etc. for 10 years after the end of the first financial year, in their original form.
Today, providers like Everial or Arcplace offer to archive your important documents in secure digital formats, classify them, list them and manage the various access rights. A very practical solution, which can save time for research thanks to an efficient inventory system. However, using a modern payroll device usually allows you to automatically archive all the information with direct backups.
Since 2011, electronic files have been explicitly admitted as proof, just like a paper document. The Federal Council encourages the digitization and specifies that a title established on a digital support can be regarded as reliable if the process respects certain rules, such as the Olico’s (Ordinance concerning the maintenance and the conservation of the general ledger). Only the operating account and the balance sheet of the company should be kept in paper format.
Keeping this information will allow you to have accurate records in case of complaints or disputes with a current or former employee.
Unless otherwise stated in a standard contract or collective agreement or other terms agreed, the employer has to pay the salary to the workers at the end of each month, no later than the last day of the month. If the employer does not comply with this obligation, they are in default without the employee having to send him a reminder. Therefore, the employee is entitled to ask for late interest at the statutory rate of 5%, suspend or terminate their work.
It is therefore advisable to have a clearly defined process so that your employees are always paid at the same time. Moreover, the enemy of productivity is uncertainty. Paying salary on the 20th, then on the 28th, and the following month on the 5th could create stress for the employees, which can easily be avoided.
According to the Code of Obligations, the employer must submit a payslip to the employees when they pay the salary. It must be clear so that all deductions and supplements come out, and that the employee can check them.
This task which took time before can be largely simplified nowadays by being automatically managed. The payslips can be made available via an online platform or automatically sent by e-mail. This is a process that facilitates the administration on the employer and employee side. On the one hand, the company no longer has to print and distribute the payslips and on the other hand, the employee can archive their document and easily find it if necessary.
Nothing is more important to properly manage salaries than to understand how things work and what obligations to consider. When dealing with payroll, the employer has several responsibilities, particularly concerning social insurance. Omitting to contract social insurance can have significant financial consequences for the employer. Similarly, failure to comply with the general duty to provide insurance information may also, in some cases, lead to heavy compensation. That is why employers need to be careful with salary processing and inquire about the subscription periods fixed by the general conditions. Social legislation in Switzerland has considerably developed to assign more and more legal obligations to the employer and the employee. The employer is also responsible for retaining the employee's salary share and transferring it to the various institutions.
Social insurance (federal law) are calculated as a percentage of the gross salary paid to the employee and are shared between the company and the employee. They consist of:
The AVS-AI-APG are managed by the compensation funds and have unique benefits, since they are dependent on the State. The total contribution of these three social insurance is 10.25% or 5.125% for each party and represents at least 478.-.
The LPP and the LAA are chosen, to a certain extent, by the employer according to the benefits they wish to offer to the employees and the rate of the pension fund therefore varies according to the regulations of the pension institution. In the same way, contracting other insurance depends on the good will of the company, such as the complementary (LAAC) which covers salaries above 148,200 .-. Or IJM that enables the employer to be compensated in case of illness and whose costs can be shared between the employer and the employee or fully supported by the company. These subtleties are often specified in the employment contract.
Other insurance may also be added depending on cantonal regulations. In Geneva, there is the maternity insurance contribution of 0.041% for the employee and 0.041% for the employer. In the canton of Vaud, LPCFam was created for families in difficulty and corresponds to 0.06% for the company and the employee.
Some other possible payroll deductions:
- Tax at source: cross-border employees are concerned. The employer must withhold, according to the cantonal scale handed over by the tax authorities each year, the amount of the tax.
- Payroll seizure: the prosecution office may submit a seizure of wages if a person has not been able to fully compensate their creditors. The deduction is fixed by the employer responsible for paying this amount to the office concerned.
- Repayment of a loan: If an employee wishes to buy back a few years of contributions into their pension fund or is able to obtain a loan from their organization, the repayment is often made by a deduction on the salary.
On the same issue, discover our article: Retirement: understanding the system of pillars and the shortcomings of pension fund.
At the end of an employment contract, all related claims become payable. If the employee has been working for 20 years or more and is at least 50 years old, compensation due to long professional relationships may be due. If the needs of the company conflict with the vacation balance during the notice period, the employer can compensate this right by an allowance (but they have no obligation).
When an employee exits, various administrative tasks must be carried out, along with the final settlement. For example, it is necessary to inform the exiting employee that they must report their exit to health insurance, so that they can arrange to still be covered. It will also be necessary to take the employee out of free passage and family allowances. Depending on the type of permit, the steps may also vary. If the employee is a foreigner and a B-permit holder, there will be nothing to do. Whereas in the case of a G permit, the company will have to announce the exit to OCP (Cantonal Office of Population and Migration).
When the end of a work contract happens, it is important for the employer to assert all the claims he is aware of before the final settlement, otherwise, according to the case law, no communication can be understood by the employee as a renunciation expressed by conclusive act.
Effective payroll management is often related to good relationships with employees and often prevent from potential conflicts. It is important to constantly follow the evolution of federal and cantonal regulations to adapt. Facilitating salary processing may involve outsourcing this part to professionals like Synergix in order to focus on value-added tasks. Our firm takes care of the payroll management in addition to accounting, for many companies ranging from 1 to 500 employees.
If you need assistance, please contact us