Switzerland Employment Legislation Changes 2024
Businesses in Switzerland will need to be ready to implement these new regulations for their employees in 2024
In this article, we will delve into the Switzerland Employment Legislation changes 2024. Let’s understand the key updates and amendments in labour laws that are expected to impact employers across various sectors. We provide insights to help employers understand and prepare for the changes ahead.
Join us as we explore what employers need to know to stay compliant and adapt to the evolving regulatory environment in Switzerland.
Leaves Updates
Paternity Leave Is Now Called Parental Leave
Effective January 1, 2024, “paternity leave” has been rebranded as “leave for the other partner” in Switzerland, a change made to ensure that not only fathers, but also lesbian couples, can access the 2 weeks of paid leave.
Homosexual couples with two fathers must still adhere to legal adoption leave, both of which are now covered by mandatory loss of earnings insurance rather than the employer.
Since the approval of same-sex marriage by the Swiss electorate in 2022, Switzerland has had to modify its parental leave system to accommodate regulations for same-sex parents who are not the biological mother or father of the child.
This adjustment, in effect as of January 1, 2024, primarily involved the renaming of “paternity leave” to “leave of the other parent” and “paternity compensation” to “compensation of the other parent.”
Consequently, female employees who are the legal spouse of a newborn’s mother can now benefit from the same parental leave entitlements previously reserved for male employees who become fathers.
Sudden Death of Parent Leave
Moreover, as of January 1, 2024, Switzerland’s paid parental leave provisions also address the scenario of the sudden death of one of the newborn’s parents. If the other parent of a newborn dies while still entitled to their “leave of the other parent,” the remaining leave entitlement of the deceased parent is transferred to the mother of the newborn child.
This entitlement must be taken within the first six months of the newborn’s life, following which it would be forfeited. However, this does not impact the mother’s existing entitlement to paid maternity leave.
Conversely, if a mother dies while she is still entitled to maternity leave, the rest of her leave entitlement is transferred to the surviving parent of the newborn child. The surviving parent is subject to the same restrictions and must use the transferred leave entitlement immediately after the death of the deceased mother.
Additionally, the remainder of the transferred leave entitlement is lost if the surviving parent begins working before their leave period concludes.
While the surviving parent uses the transferred leave entitlement from the deceased mother, they are afforded temporary protection under Swiss law in terms of employment termination.
Planned Extension of Youth Leave for Charitable Work
Under Article 329e of the Swiss Code of Obligations (CO), employees under 30 are currently entitled to one week of unpaid leave each year for extracurricular youth work. However, a motion introduced on June 15, 2023, proposed doubling this to two weeks annually.
The proposal has gained approval from both the National Council and the Council of States, with the Federal Council also backing the motion. A legal amendment is anticipated to follow.
Employer rights in case of Internal Investigation & Job-Related Incapacity to work
Dismissal Possible in Case of Job-Related Incapacity to Work
In Judgement 1C_595/2023 dated 26 March 2024, the Federal Supreme Court ruled that the protection provisions regarding dismissal do not apply in cases of job-related incapacity to work limited to the current workplace.
Dismissal during specific blocking periods due to illness is deemed inopportune, as per Article 336c of the Swiss Code of Obligations. However, the recent judgement clarified that in instances of job-related incapacity to work, these blocking periods do not apply.
This exception has been implemented in German-speaking Cantonal courts but is controversial in the French-speaking region.
No Application of Criminal Procedural Rules in Case of an Internal Investigation by an Employer
A recent decision by the Swiss Federal Supreme Court addressed the procedural rights of employees during internal investigations by employers. Earlier, it had been a long-standing debate between two schools of thought regarding the application of procedural rules and rights.resembling those of a criminal investigation to their employees during internal investigations.
In particular:
- the right not to incriminate oneself;
- the right to refuse testimony;
- the right to have an attorney or another person of their choice present during interviews;
- the right to confront the accuser.
On 19 January, 2024, the Swiss Federal Supreme Court settled the matter. In a case involving termination due to accusations of sexual harassment, wherein the employer had terminated an employee’s contract after an internal investigation, The accused had challenged the termination of his employment as wrongful, claiming that his employer had not:
- provided him with sufficient information and time to prepare for his interview;
- had not given him sufficiently concrete information about the accusation to defend himself; and
- had not informed him that he had the right to have a person of his choice present during the interview.
The court ruled that employers do not have to provide rights resembling those of a criminal investigation to their employees during internal investigations. The court affirmed that the employer’s actions in conducting internal investigations differ fundamentally from criminal investigations, and crucial procedural differences exist. The court emphasized that suspicions in internal investigations can lead to termination, whereas criminal convictions require a higher standard of proof.
Retirement Age, Pension & Insurance Updates
Gradual Increase in the Retirement Age for Women
Starting from 1 January 2024, the reform to stabilize old-age and survivors’ insurance (AHV 21) took effect. This reform includes the implementation of a gradual increase in the retirement age, now termed the “reference age,” for women by three months incrementally. The process will commence on 1 January 2025 for individuals born in 1961.
Various aspects of insurance, including occupational pensions, will be impacted by this change. Employers are advised to assess any necessary actions, such as revising employee regulations or handbooks, and making technical adjustments to the salary processing system.
Continuing to Work After Reaching the Reference Age
Individuals who opt to continue working beyond the reference age of 65 have the option to forego the pensioner’s allowance, currently set at CHF 16,800 beginning in 2024. This choice is aimed at addressing potential contribution gaps and enhancing AHV pension benefits, possibly up to the maximum pension amount.
Employees are required to inform their employers of their decision to waive the allowance no later than when they receive their initial salary following the reference age milestone.
Additional Monthly State Pension Payment
The Swiss electorate voted on 3 March 2024 to amend the state pension system by introducing an additional monthly payment to the existing 12 monthly payments per year. This measure aims to alleviate the financial burden on pensioners due to the increasing cost of living in Switzerland over the past few years
Following the approval of the national initiative, the additional monthly state pension payment will be distributed to pensioners from 2026 onwards. It is yet unclear whether pensioners will receive a 13th payment in December or if the 12 existing payments will be proportionally increased.
As the initiative did not specify the financing of this increase, the Swiss government must propose a solution. Anticipated options include an increase in social security contributions on (self-)employment-related income, an increase in Swiss value-added tax, or a combination of these measures. However, due to the unpopularity of these options, there is a risk that the Swiss people may vote against their implementation, potentially impacting the financial stability of the Swiss state pension system.
Pension Revision
The initial phase of the pension revision has been enacted. Individuals are now allowed to make partial early withdrawals or defer their pensions partially, enabling a gradual reduction in gainful employment. Those working beyond the standard retirement age can decide whether to contribute pension payments on their total income or opt for exemptions up to the specified threshold.
Mandatory occupational benefits insurance (BVG)
The minimum interest rate for occupational benefits insurance was increased by 0.25% to 1.25% as of 1 January 2024. This was decided by the Federal Council at its meeting on 1 November 2023.
International Agreements & Ukrainian Special Refugee Status
New Social Security Agreement between Switzerland and Argentina
In May 2024, Switzerland and Argentina finalized a bilateral social security agreement, adding to Switzerland’s existing agreements with countries such as the USA, Canada, Australia, Brazil, and Japan.
The agreement particularly covers old-age, survivors, and disability insurance and aims to facilitate coordination between the two countries’ social security systems. It ensures equal treatment of insured persons, easier access to benefits, and regulates the payment of state pensions abroad. Additionally, the agreement streamlines social security aspects related to worker postings between the two countries and establishes a legal basis to combat social security abuse.
Before the agreement can enter into force in 2025, it must be approved by the respective parliaments of both countries.
Special Migration Law Status for Ukraine Refugees
The Swiss Federal Council has granted refugees from Ukraine “protection status S” since March 2022, with extensions of this measure made several times. The most recent extension was decided in November 2023, prolonging the status until March 2025.
Criticism of protection status S has been increasing, prompting discussions on potential restructuring of the status. The Swiss government believes in offering refuge to individuals from war-torn Ukraine but is considering adjustments to the existing status.
Concerns have been raised about the low employment rate among Ukrainian refugees in Switzerland (currently at 23% as of April 2024, compared to 50% in the Netherlands and Norway). To address this issue, the Swiss Federal Council engaged with Swiss employer associations for feedback.
One identified problem is the lack of clarity regarding the return of individuals under protection status S to their home country once the conflict subsides, hindering long-term planning for Swiss employers. Many employers have been hesitant to invest in training individuals under this status due to uncertainties about their future in Switzerland.
In response, the Swiss Federal Council is contemplating facilitating the transition of individuals from protection status S to regular Swiss residence permits under specific conditions. However, it remains unclear whether these permits would count towards the yearly quota of residence permits allotted by Swiss cantons to non-EU or non-EFTA nationals.
Concerns have also been raised by Swiss employer associations about potential competition for residence permit quotas if Ukrainian refugees are allowed to switch from protection status S to residence status.
As a result of these challenges, it is anticipated that there will be no immediate changes in the migratory situation of individuals under protection status S in Switzerland.
Digital Signatures in Switzerland: Use Caution to Avoid Legal Issues
In Switzerland, most employment contracts can be signed verbally, through implied conduct, or using digital signatures like DocuSign. There are no formal requirements except for apprentice or employer record agreements (Art. 320 CO). However, employers must provide written confirmation of key details like job title, salary, and hours within one month of employment (Art. 330b CO).
Cases When Writing is Legally Required:
While verbal or digital agreements are generally valid, certain contract terms must be in writing under Swiss law, including:
- Overtime compensation (Art. 321c CO)
- Commission details (Art. 322b, 323, 339 CO)
- Wages during unavoidable absences (Art. 324a CO)
- Expense allowances (Art. 327a CO)
- Trial period and notice period (Art. 335b, 335c CO)
- Severance payments (Art. 339c CO)
- Post-contract non-compete clauses (Art. 340 CO)
If these clauses aren’t written, they are void and default rules apply.
So what does “In Writing” mean here? In such cases as mentioned above, a legally required signature must be handwritten (“wet signature”) as per Art. 13 and Art. 14 CO. Digital signatures are valid only if they are Qualified Electronic Signatures (QES), which meet the standards of the Swiss Federal Electronic Signature Act.
If a contract or clause needs a written signature and doesn’t meet this requirement, it’s considered void. The rest of the contract remains valid, but specific provisions requiring a written signature will not hold.
Using Digital Signatures Correctly:
Only Qualified Electronic Signatures (QES) are legally recognized in Switzerland for situations where a written signature is required. A list of approved QES providers and a tool to validate signatures are available online.
Swiss employment contracts can often be signed verbally or with digital signatures, but when the law or contract requires a written signature, only a recognized QES will suffice. Failing to use the right type of signature can nullify important contract clauses.
Teleworking & Cross-Border Commuter Agreements:
Home Office Days:
In Switzerland, there is still no requirement to declare home office days on the salary certificate. However, for employees with international work arrangements, such as cross-border or weekly commuters, it is advisable to track travel patterns through a travel calendar.
This documentation may be necessary for submission to tax authorities in specific circumstances as detailed below in Supplementary Telework Agreement to the Double Taxation Agreement (DTA) with France.
Employers are also responsible for ensuring the correct social security regime for their employees. Such data is crucial for preventing double taxation and correctly handling exemptions for foreign work days related to withholding tax. Our team is available to offer personalized assistance on these matters.
Supplementary Teleworking Agreement to the Double Taxation Agreement (DTA) with France:
From January 1, 2023, French cross-border commuters can work from home in France for up to 40% of their total working time under telework arrangements without impacting their Swiss withholding tax or cross-border commuter status.
These mutual agreements will continue until December 31, 2024, or until the new supplementary agreement to the DTA with France takes effect. The Swiss Federal Council approved the dispatch for the supplementary agreement on November 22, 2023, which maintains the 40% home office threshold per calendar year.
One key update in the new agreement is the mandatory disclosure of home office days or the percentage of work done remotely. Employers will need to provide this information to tax authorities, enabling them to share it with foreign tax offices. Consequently, maintaining a detailed travel calendar will be essential for affected employees.
New Cross-Border Commuter Tax Agreement with Italy:
The new tax agreement for cross-border commuters between Switzerland and Italy, effective from July 17, 2023, will apply as of January 1, 2024. This agreement introduces changes for employers in Ticino, Graubünden, and Valais, notably distinguishing between “existing” and “new” cross-border commuters.
- Existing cross-border commuters: Employees who worked in the aforementioned cantons between December 31, 2018, and July 17, 2023, will continue to be fully taxed in Switzerland under the regular withholding tax rates.
- New cross-border commuters: Employees who began working in Switzerland after July 17, 2023, and live within 20 kilometers of the Italian border will be subject to different tax treatment. Only 80% of their Swiss income will be taxed in Switzerland, with the rest taxed in Italy. New tariff codes (R, S, T, U, V) will apply, ensuring the avoidance of double taxation.
It remains uncertain whether specific forms for non-return days (up to 45 days annually) will be introduced, as seen in the France agreement. Employers are advised to document travel days for these employees. Under the 2020 cross-border commuter agreement, telework is allowed for up to 25% of total working time without affecting cross-border commuter status.
Renewal of the "Framework Agreement"
The “Framework Agreement,” developed at the European level and adopted by Switzerland, succeeded the temporary flexible application of subordination rules that expired on June 30, 2023. This agreement allows cross-border commuters to work from home between 25% and 49.9% of the time without altering their social security status, provided the following conditions are met:
- Both the employer’s and the employee’s countries must have signed the Framework Agreement.
- Cross-border commuters must fall under the Agreement on the Free Movement of Persons or the EFTA Convention.
- Telework must involve tasks that can be performed remotely using information technology.
- Employees may only have one employer, or if multiple, they must all be located in the same member state.
If these conditions are not satisfied, the standard EU or EFTA regulations apply. Where applicable, an A1 certificate must be obtained by the employer to ensure compliance with these regulations.
Other Corporate Updates
Eligibility to own a .swiss domain
Individuals residing in Switzerland or holding Swiss citizenship now have the opportunity to register domain names ending in .swiss. Additionally, sole proprietorships without commercial register entries, such as architects or craftsmen, are eligible to acquire a .swiss domain name.
Corporate Taxes
In Switzerland, large internationally active companies will face a minimum tax rate of 15% starting from the 2024 tax year. This tax policy aligns with the minimum tax rate agreed upon by the Organisation for Economic Co-operation and Development (OECD) and the Group of Twenty (G20) nations for specific corporations
The minimum tax will impact corporations with an annual global turnover exceeding €750 million (CHF707 million), roughly constituting 1% of companies operating in Switzerland.
Climate Related Laws
Large companies in Switzerland are now required to publish mandatory climate reports. This obligation applies to public companies, banks, and insurance companies with a workforce of at least 500 employees and a balance sheet exceeding CHF20 million or a turnover exceeding CHF40 million.
These climate reports must remain publicly accessible for a minimum of ten years. Companies are mandated to evaluate the financial risks associated with their climate-related activities, disclose the impact of their operations on the climate, establish reduction targets for direct and indirect greenhouse gas emissions, and outline implementation plans.
How Beyond Borders HR Can Help You
These 2024 employment legislation changes for Switzerland can be challenging for employers to process independently. Beyond Borders HR, a global HR consulting firm, stands ready to assist businesses in understanding and implementing these changes effectively. With our extensive expertise in global HR practices, we ensure that your organization stays compliant with the evolving regulatory landscape. Reach out to Beyond Borders HR for tailored solutions, expert guidance, and seamless integration of these legislative updates into your HR policies and practices. Our team is dedicated to empowering your business with the knowledge and support needed to thrive in this dynamic regulatory environment.
