It’s not uncommon for payroll accounting to throw up some tricky tasks. How do you deal with company cars, long-term absences or withholding tax, for example? Here are six common payroll pitfalls and our tips and tricks for handling them competently.
1. Recording company cars without requiring offsetting
If your employees are often on the road as part of their job, for example fitters, service technicians or salespeople in the field, it can make sense to provide company cars. This financial benefit has to be included in payroll accounting and declared on the salary statement. Certify the percentage share for which the car is used in section 15. This way you help your employees avoid offsets for commuting.
2. Recording time correctly
For many years it has been a requirement in Switzerland to record working time. Legislative changes came into force in 2016, which simplified the recording of working time for employees that have flexibility regarding their hours or enabled them to not record their time at all, subject to the conditions of the Employment Act Ordinance. In this instance you need to find a pragmatic, but still legally compliant, solution for your SME.
3. Settling withholding tax
In Switzerland, there are as many guidelines on withholding tax as there are cantons. And the differences can be far from minor. This complexity is compounded by the fact that the field of taxation is continually evolving. As an employer, you need to be fully versed in the provisions in all the cantons in which you pay salaries and to anticipate any significant changes.
4. Assigning the salary type to the correct salary statement section
The salary statement is an important document in any business. As an employer, you will generate a lot of them every year. Your employees and the tax authorities trust the fact that salary statements are correct. To this end, you need to assign the salary type to the correct salary statement section in your software. The instructions for filling out salary and pension statements (Wegleitung zum Ausfüllen des Lohnausweises bzw. der Rentenbescheinigung) and the Swiss Tax Conference’s questions and answers about salary statements (Fragen und Antworten zum Lohnausweis (LA)) provide practical help.
5. Terminating the contract of an employee who is unwell
Terminating an employee’s contract in a transparent, fair and legally compliant way is not always easy in practice. If an employee is absent due to illness, you cannot terminate their contract until after the end of the waiting period defined by the Swiss Code of Obligations. If, on the other hand, an employee becomes ill during the notice period, the notice period is paused until the employee is able to work again – or until the waiting period defined by the Swiss Code of Obligations has ended. You not only need to respect the legal requirements, but you also need to communicate about it properly.
6. Death of an employee
The death of an employee is always tragic and difficult emotionally. The first priority is sending condolences and flowers for the funeral or posting an obituary. It can also present some HR challenges, as you need to make sure the death is handled correctly in payroll accounting. First, you need clarity regarding who will receive the posthumous salary payment. You should provide the employee’s survivors with a pension statement for the posthumous salary payment (which is in many cases not subject to social security contributions), unless the information is noted in section 15 of the salary statement.