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The complexity of payroll in Switzerland

The complexity of payroll in Switzerland

Payroll administration in Switzerland is a fairly complex process. Companies are increasingly tending to outsource it to dedicated companies.

Based on the latest study "Global Payroll Complexity Index 2019 Summary" from NGA Human Resources, let’s review the specifics of the Swiss payroll.


Data protection

Accurate payroll is impossible without reliable and correct employee data. Depending on the legislation of each country, the number of information required may vary, but there are at least: first and last name, address, age, situation, nationality, salary, type of contract and bank details. This data is “personally identifiable information” (PII) and is protected with regulations such as GDPR in Europe or LPD in Switzerland.

What is the responsibility of the company with regard to employee data? What data can be stored? For how long? Should employees be informed? The study shows that everywhere in Europe and Switzerland these regulations have had significant consequences on the management of personal data and are nowadays at the heart of HR issues.

To find out more about the legislation in Switzerland, you can consult the Guide on the processing of personal data in the labor sector implemented by the Federal Council.


Payroll calculation

The complexity of the salary calculation process in Switzerland is influenced by multiple factors, notably its tax structure at three levels (federal, cantonal and local). Payroll managers can work with up to 26 tax authorities (26 cantons) and more than 100 different public social security organizations, each with their own specifications and reporting requirements. Add to that the four official languages, the various permits and statutes, the different ways of collecting tax, the specificities of certain professions governed by their own regulations, the management of benefits such as bonuses, or even federal or cantonal regulations, and one quickly understands the degree of complication of managing the Swiss payroll.

If you are a payroll manager in Switzerland, you can therefore have 6 employees and 6 different situations to deal with. For example, as we mentioned in our articles "HR questions", a foreign consultant may not be recognized as such by the Swiss system, they will have to be incorporated in the company's payroll. Another example, if a cross-border resident worker carries out more than 25% of their activity in France, they will be subject to the social charges of their country.

All these elements can, without specific expertise, result in potential breaches of the law for an organization.

We only detail the situation regarding Switzerland, but it is obvious that each State has its own specificities; for a company with an international presence, the complexity is therefore multiplied.


General evolution of working methods

Artificial intelligence and technology have changed the way we work. The digital opening of the workplace makes it much easier to recruit across the globe and working remotely is a local and global possibility.

Investments abroad are increasing. Businesses and governments are reviewing their regulations and the legislative challenges are international.

In Switzerland, the recent implementation of the equal pay law, the change in social contribution rates following the RFFA law, the fact that paper systems, by default, violate the main regulations of the GDPR, the future modification of source tax and the aging of the active population which creates different multigenerational expectations, are all aspects that complicate payroll management, increase the related necessary expertise and encourage the development of ever more efficient tools.


The reasons more and more companies make the decision to outsource are:

  • regulatory security
  • data security
  • financial security


Do you want to outsource your company's payroll management? Contact us to learn more about the HR and payroll services of our new generation firm.