The Swiss social security system is unique. However, as an employer, you have many obligations to fulfill. We show you how to meet the requirements with diligence.
The three-pillar concept
The Swiss social security system for the risks of old age, death and disability is based on three so-called pillars.
An unemployed person has an accident – who will pay for treatment: the unemployment insurance or the accident insurance? Later on in hospital, the same person also falls ill – who is to pay now?
The General Part of the Law Governing Social Insurance (ATSG) effective 1 January 2003 was introduced in order to coordinate the individual parts of the law on social insurance and with answers to as many questions as possible.
The General Part defines principles and terminology, lays down procedures and administration of justice and determines the institutes under social insurance law. Moreover, it determines which branch of social insurance is obliged to pay in advance in the case of ambiguity, which benefits can be reduced and to what extent in the case of accumulating claims, and to what extent recourse can be taken against third parties.
The individual branches of social insurance – except for the occupational benefit plan – are in principle based on the provisions in the ATSG. However, individual provisions may contain exceptions which have to be expressly included in the relevant section of the law. The addition of “in deviation to Art. Xyz, ATSG” will be familiar to the frequent user.
The OASI is the mandatory pension insurance scheme in Switzerland. Together with the Disability Insurance and the Supplementary Benefits, it forms the 1st pillar of the pension scheme under Swiss federal law, and serves to secure adequate livelihood for individuals. It therefore has the characteristics of a mutual assistance enterprise.
Pensions are paid out to women from the age of 64 and to men from the age of 65. OASI pensions can also be received from an earlier age onwards, however only under certain terms and conditions, and at a reduced rate. Receiving OASI pensions can be deferred for up to five years. Depending on the duration of the deferment, a supplement is added to the pension. Widows and widowers will receive a survivor’s pension if they share their home with underage children or children still in education.
The OASI presents a number of challenges to companies, notably in the following areas:
For the guidelines concerning the mandatory OASI/DI insurance issued by the Federal Social Insurance Office, follow this Link.
For further information on the OASI, click here.
The DI is a mandatory federal social insurance scheme and part of the 1st pillar. With measures to either reintegrate individuals into the labour market or support them with benefit payments, it aims to secure livelihood for people who have become disabled as a result of illness or an accident. The legal basis for this is laid down in the Federal Law on Disability Insurance (IVG), which in turn is based on art. 111 and 112 of the federal constitution.
As employer, you will have to deal with disability insurance in the following instances:
For detailed information on the DI, follow this link (n/a in English).
The EO compensates for loss of earnings of people serving in the military, civil defence or civil service. This insurance was introduced during the Second World War, and was then called «Wehrmannsschutz» (“soldier’s protection”). The amounts paid out are based on an individual’s income. Since 1 January 2015, EO payments are only made until an individual has reached pension age. Since 1 July 2005, the EO has been expanded to include maternity benefits (MSE) for women in employment.
In the context of EO and MSE, your obligations as an employer are as follows:
For further information on the EO, please read here.
Supplementary benefits (EL) are an additional facility to the OASI and the DI and help fill gaps if pension and income can’t cover the minimum cost of living. As needs-related benefits, EL have a legal basis and do not constitute care or social welfare. Together with the OASI and the DI, they are part of the social groundwork of the Swiss pension system.
Read more about the EL here.
The occupational benefit plan is the 2nd pillar of the Swiss pension system. It aims to allow individuals to continue an adequate livelihood upon retirement. Under the LOB (Law on Occupational Benefits), retired employees receive a guideline value of approximately 60 % of their most recent salary from the 1st and 2nd pillars, up to an income of approx. CHF 85'000 p/a. The LOB also insures against death and disability.
Your key tasks as an employer in this respect are:
In terms of the LOB (Law on Occupational Benefits), these explanations issued by the Federal Social Insurance Office will be of help.
Companies’ pension fund solutions are often higher than what is stipulated by the LOB, which means the companies are responsible for implementing their individual schemes correctly.
If a person becomes partially or fully unemployed, they are entitled to a daily jobseeker’s allowance. UI covers both insured employees and persons entering the labour market for the first time. They need to have completed the mandatory years of education and may neither have reached the OASI pension age nor receive an OASI pension.
Self-employed and non-working persons are not insured under the UI. Likewise, employed persons who are associates or shareholders of a public liability company or a limited liability company and thus in a position to influence the decisions of that company, are also not entitled to UI benefits.
As employer, you may expect the following tasks in the context of the UI:
Providing correct information with regard to the amount of unemployment benefits paid to employees who have become fully unemployed and live abroad.
For more information on the UI, consult the OASI Information Office or the RAV job centre.
Since 2009, the federal law on family allowances (FamZG) sets the (national) framework for cantonal legislation. Family allowances are intended to at least partially cover the costs of raising children. They include child and education allowances, as well as birth and adoption allowances of certain cantons. Families in agricultural businesses continue to benefit from the special law on family allowances in agriculture (FLG).
As employer, the FamZG will be relevant in the following measures:
Click here to consult the guidelines for the federal law on family allowances.
All employed persons in Switzerland are compulsorily insured against accidents and occupational illnesses. The law on accident insurance and occupational illnesses protects individuals from the consequences of occupational accidents, occupational illnesses and accidents outside of work; it covers payments for medical treatment and provides for financial support. The cover for accidents outside of work, such as leisure activities and commuting, applies to persons who work for the same employer for at least 8 hours per week. The insurance premiums for occupational accidents and illnesses (BU) are borne by the employer. For all non-work-related accidents (NBU), the law stipulates that this is borne by the employee. However, in practice in certain industries, it is often also borne by the employer. Employers owe the entire premium under AI law, and will therefore deduct the employee’s contribution from their salary. The premiums are based on the income of the insured individual and on the type of company they work for.
For questions concerning the AI law, these explanations by the Federal Office of Public Health will be of help.
Social health insurance gives everyone living in Switzerland access to adequate health care and covers the financial cost of illness, accident and maternity. Insured persons can also take out a health insurance policy covering additional treatments. Employed persons can exclude the part covering accidents in their health insurance policy as this is already covered by their insurance with the employer.
Under the Social Health Insurance Law, employees and their families sent on secondments abroad remain insured for up to six years. However, an additional obligation to be insured can arise in the host country if such country does not consider the coverage to be adequate.
As employer, you are concerned with social health insurance aspects as follows:
More information on compulsory health insurance can be found here.
Suva has been appointed to fulfil the role of implementing and supervising occupational safety (prevention measures) in individual companies as an independent organisation under public law. At the beginning, Suva’s incorporation was strongly opposed by private insurance companies. Today, it is clearly laid down in the law who needs to be insured by Suva (Art. 66 AI law), such as all companies in the construction industry, in machinery and in transport.
Companies which do not come under this article are free to choose their insurance company. There is a very broad selection of insurance companies, which is why we recommend using a holistic approach when considering the range of services available. Only this way you will be able to offer your employees adequate insurance cover.
Your tasks under the accident insurance law are as follows:
Find helpful information here:
The daily sickness allowance insurance is optional. It ensures that employees continues to receive their salary if they have fallen ill and cannot work for a longer period of time, until they have recovered or receive a disability pension. A sickness allowance insurance relieves the employer from having to pay the full salary until the legal (statutory) period has lapsed. However, this only applies if the insured benefits are at least equivalent to the normal salary. The premiums vary, depending on the waiting period in the contract. Some collective labour agreements have very short waiting periods.
As employer, you are faced with the following challenges in the context of sickness allowances:
Please find more information in this context by clicking here.
Military insurance has been managed by Suva since 1 July 2005. Its financing is via the public sector, which means premiums are not dependent on the individual’s salary. Military insurance is for persons serving in the army, civil defence or civil service.
The 3rd pillar of the three-pillar principle consists of an individual’s own savings measures. Pillar 3a (linked savings plan) offers an additional possibility to put a certain amount aside free of tax, besides the compulsory amounts of the OASI and pension fund. Free of tax in this context means the savings contribution can be deducted from the taxable income, and neither the assets themselves nor any yields resulting from them have to be disclosed in the tax return. The criteria for withdrawing cash from that savings amount are similar to those for the pension fund.
Pillar 3b offers a more flexible savings potential in the context of optional pension plans, as this money can be accessed at any time (subject to the contractual terms and conditions with the relevant financial institute).
Employees who work for their company from abroad on a temporary basis are covered by the Swiss social insurance laws during that period. For this to apply, certain conditions must be met.
As employer, you should verify the following aspects when sending employees abroad:
We would be pleased to support you with our expertise, in particular in the case of international work relationships. The complexity of settlement obligations and insurance coverage should never be underestimated.
The following information and tools will support you when striving to manage international postings and secondments correctly: