Hiring in Switzerland: What UK Businesses Need to Know

A lot of growing UK companies are keen on expanding your workforce by tapping into Switzerland’s skilled talent pool. Perhaps your ideal candidate resides in Zurich or Zug. While the talent opportunity is clear, navigating the intricate rules around employment, taxation, and social insurance between the two countries can seem daunting.

Understanding how to effectively and legally employ Swiss-based individuals ensures smooth operations, prevents regulatory pitfalls, and optimizes financial efficiency.

Common Challenges for UK Employers

Social Security Coordination

When employing someone residing in Switzerland, UK employers must grapple with social security considerations. Switzerland has strict rules ensuring workers receive adequate social insurance coverage. Fortunately, the UK and Switzerland have a bilateral social security agreement. However, complexities arise around eligibility, ensuring contributions to the correct social security system, and the associated administrative responsibilities.

It is critical for both parties to determine quickly which country’s system the employee must be affiliated with—either upon relocation to Switzerland or at the start of the employment if the person already lives there. A common misconception is that liabilities begin only after a contract is signed or once payroll switches to the other country. In reality, affiliation obligations can trigger earlier, often with the actual relocation date of the employee, and failing to act in time may lead to incorrect contributions. Reclaiming such payments later from the wrong system (UK or Swiss) can be a time-consuming and bureaucratic process that is best avoided through proactive clarification.

The bilateral social security treaty between the UK and Switzerland provides a clear legal basis for determining which country’s system applies. Two provisions are especially relevant in most cases:

• Art. 13 Abs. 3 lit. a: “Personen, die in einem Staat eine Beschäftigung oder selbstständige Erwerbstätigkeit ausüben, unterliegen den Rechtsvorschriften dieses Staates.” In essence, this means that individuals working in one state are subject to that state’s social security laws.

• Art. 15 Abs. 1: “Eine Person die gewöhnlich eine Beschäftigung in beiden Staaten ausübt, unterliegt den Rechtsvorschriften des Wohnstaates, wenn sie dort einen wesentlichen Teil ihrer Tätigkeit ausübt.” This applies to multi-state employment scenarios, stating that if a person works in both countries and performs a substantial part of their work in their country of residence, then that country’s system applies.

Employers should analyze the working pattern and residence situation of the employee early on to determine the applicable legislation, using these articles as the legal compass. Two basic examples help clarify this:

• If an employee works 95% of their time in Switzerland, they must be affiliated with the Swiss social security system.

• If an employee works 95% of their time in the UK, even if they reside in Switzerland (e.g. returning to family in CH on weekends), they remain subject to the UK system.

Cases falling between these extremes must be assessed with precision. Established practice helps interpret what qualifies as “a substantial part” of work, particularly under Art. 15.

Assuming the usual case of such international employment, where the employee of the UK employer works for the most part in Switzerland, the treaty affiliates the company with the Swiss social security administration in principle. This means that both the employee and the employer are jointly responsible for administering contributions to the Swiss system.

This is grounded in Art. 18 para. 1 of the agreement:

“Hat ein Arbeitgeber seinen eingetragenen Sitz oder seine Niederlassung ausserhalb des zuständigen Staates, so hat er allen Pflichten nachzukommen, die die auf seine Arbeitnehmer anzuwendenden Rechtsvorschriften vorsehen, namentlich der Pflicht zur Zahlung der nach diesen Rechtsvorschriften vorgeschriebenen Beiträge, als hätte der Arbeitgeber seinen eingetragenen Sitz oder seine Niederlassung in dem zuständigen Staat.”

Translated: An employer without a registered seat or permanent establishment in the competent state is still obligated to fulfill all duties under the applicable social security laws for its employees, as if it were established there. That includes payment of all required contributions.

Once this obligation is established, the parties must decide who handles the administrative execution:

• Either the employer sets up a local representative in Switzerland who takes over the payroll and reporting duties.

• Or the employee may assume these obligations on behalf of the employer.

This second option is allowed under Art. 18 para. 2, which reads:

“Ein Arbeitgeber, der keinen eingetragenen Sitz oder eine Niederlassung in dem Staat hat, dessen Rechtsvorschriften anwendbar sind, und der Arbeitnehmer können vereinbaren, dass Letzterer die Pflichten des Arbeitgebers zur Zahlung der Beiträge wahrnimmt, ohne dass die daneben fortbestehenden Pflichten des Arbeitgebers berührt würden. Der Arbeitgeber übermittelt eine solche Vereinbarung dem zuständigen Träger dieses Staates.”

In English: An employer without a registered seat or branch in the country whose laws apply can agree with the employee that the employee will take over the employer’s duties related to the payment of contributions—without this relieving the employer of its formal obligations. Such an agreement must be submitted to the Swiss social security authority.

This second route is the more pragmatic and cost-efficient option in many lower-risk cases, although it hinges on the employee correctly and consistently managing their obligations.

Another part of the access to the Swiss system is compliance with mandatory insurances. The treaty ensures that employees working in Switzerland receive the same level of protection as local employees. This includes several key components:

• Mandatory accident insurance (UVG): UVG stands for “Unfallversicherungsgesetz” (Swiss Accident Insurance Law), which requires coverage for occupational and non-occupational accidents. It is important to note that accident insurance offered through private health insurance policies, such as those based on KTG (Krankentaggeldversicherung or daily sickness allowance insurance), is not compliant with UVG standards. Employers must ensure that proper UVG-based accident insurance is in place.

• Occupational pension plan (BVG): BVG refers to the “Berufliche Vorsorgegesetz” (Occupational Pensions Act), mandating contributions to a second-pillar pension scheme. This ensures that employees in Switzerland build up retirement benefits comparable to domestic peers.

• Family allowances and unemployment insurance: Employees must also be integrated into the Swiss system for cantonal family allowances and be insured for unemployment benefits, enabling them to receive support in case of job loss.

Let’s take a closer look at two common pitfalls that UK employers face when engaging Swiss-based employees:

1. Continuing UK Payroll After Relocation to Switzerland
   One of the most frequent missteps is failing to adapt the employment structure after the employee relocates to Switzerland. In many cases, UK employers continue paying salaries via UK payroll without notifying Swiss authorities or switching the insurance setup—despite the employee now physically working in Switzerland.

This often stems from false assumptions about grace periods or thresholds (e.g., minimum duration of presence in Switzerland) before a change becomes necessary. In practice, these thresholds often do not apply. For social security purposes, the Swiss compensation office typically references the date of official registration (Anmeldung) in Switzerland and will expect contributions from that month onward. Even if contributions were made in the UK during that period, Switzerland may assert its right to collect, potentially leading to a situation where the employer must retroactively claim a refund from UK institutions. The same logic applies on the tax side if workdays occurred in Switzerland.

2. Unclear Presence and Delayed Action
   Some employment situations involve more fluid transitions, such as partial relocation, remote work arrangements, or undefined plans to move. This ambiguity often leads to procrastination: neither party formally adjusts the employment model or notifies authorities.

However, ambiguity does not eliminate liability. In such dynamic cases—where it’s unclear whether the employee has “moved” in the legal sense or where work is performed across jurisdictions—it’s crucial to conduct a proper legal analysis. While consulting professionals can provide a helpful assessment, the safest route is often to also obtain a formal ruling or clarification from the relevant Swiss authority (e.g., SVA or the cantonal tax office). This not only mitigates future risks but provides legal certainty for both employer and employee.

Possible Solutions for Hiring in Switzerland

Please note that the options described above refer specifically to direct employment relationships, where the UK-based company hires a Swiss resident directly under a cross-border setup. These arrangements are subject to the bilateral UK-Swiss social security treaty and the relevant tax treaty rules, as outlined.

However, direct employment is not the only route available. If direct employment is either inapplicable or presents practical hurdles—such as administrative complexity, social security obligations, or tax uncertainty—other models may be more suitable. The following section introduces alternative approaches, including the ANobAG model, Employer of Record (EOR) solutions, and setting up a Swiss entity.

Each has its own advantages and trade-offs, depending on the company’s long-term strategy, the employee’s nationality, and the operational structure.

Direct UK Employment

• Eligibility: Suitable when the employer is domiciled in the UK and the employee is a national of the UK, Switzerland, or an EU country. This setup assumes a direct legal relationship between the UK employer and the Swiss-resident employee.

• Advantages: Clear rules under the UK-Swiss social security agreement allow straightforward application. This model replicates local employment standards without introducing a third party. It’s often preferred where a long-term or senior relationship is intended, such as for key staff.

• Considerations: Employers must coordinate the payment of Swiss social security contributions correctly, which usually requires appointing a Swiss representative to deal with Swiss authorities or mandating the employee to do so. Withholding tax does not apply, but income taxation still needs to be assessed on a workday basis.

ANobAG (Employee Without Swiss-Accessed Employer)

• Eligibility: Typically applies where the employee is a third-country national (neither UK, CH, nor EU) and direct application of the bilateral social security treaty is not possible. Just the employee is accessed to the system, not the employer.

• Advantages: In this model, the employee takes on the formal obligations of a Swiss employer, managing their own social security registration and payments. This reduces the administrative load on the UK employer and avoids the need for Swiss payroll setup.

• Considerations: The ANobAG setup is less advantageous in terms of benefit coverage and integration with local schemes, such as occupational pension plans. It also varies in execution across cantons, sometimes complicating implementation.

Employer of Record (EOR) Services

• Eligibility: Suitable for all nationalities and company sizes, especially when direct setup is not feasible or time is a constraint.

• Advantages: The EOR model legally employs the individual in Switzerland on behalf of the UK business, ensuring full local compliance with social security, tax, and labor law obligations. It offers a plug-and-play solution for hiring in Switzerland with minimal internal resources.

• Considerations: The EOR is a third party in the employment chain. While practical, this can sometimes cause perception issues—especially if the employee holds a senior or client-facing role. Furthermore, long-term retention through EOR may become costly or complex.

Establishing a Swiss Subsidiary or Branch

• Eligibility: Best suited for companies with multiple employees in Switzerland or with plans to develop local operations.

• Advantages: A full Swiss legal presence allows direct employment under Swiss law, with full control over HR, payroll, and compliance. It also enables local invoicing and contracting, which can be strategically beneficial.

• Considerations: Incorporating a Swiss entity entails upfront legal, notarial, and capital costs, along with ongoing accounting, payroll, and regulatory obligations. It is a long-term investment rather than a quick solution.

Comparison Table: Employment Methods

Method	Administrative Effort	Cost	Employer Responsibility	Suitable Scenario
Direct UK Employment	Moderate	Moderate	Coordinate Swiss social security & taxes	Long-term roles for UK, CH, or EU nationals
ANobAG	Low (for employer)	Low	Limited to salary payments & contracts	Non-UK/CH/EU nationals, short-mid term roles
Employer of Record (EOR)	Minimal	Higher	Delegated to EOR provider	Quick setup, any nationality, limited HR capacity
Swiss Subsidiary/Branch	High	Initially highest	Full local compliance & HR infrastructure	Multi-employee operations or strategic presence

Conclusion

Hiring in Switzerland as a UK-based company is a highly rewarding yet complex undertaking. While Switzerland offers access to a well-educated, multilingual workforce, it also requires strict compliance with social insurance laws, tax regulations, and employment protections. Each decision—from how the employment is structured to how contributions are handled—can significantly impact both the employer’s risk exposure and the employee’s benefits.

Direct employment under the bilateral social security treaty is often ideal for eligible nationals, but it requires careful setup and early coordination with Swiss authorities. Where this route is not viable—due to employee nationality, internal resources, or administrative constraints—models such as ANobAG or Employer of Record offer useful alternatives. For companies planning a long-term presence or scaling their operations in Switzerland, establishing a local entity may be the most sustainable path.

Taxation, meanwhile, follows its own set of rules. Employers and employees must understand that withholding tax may not apply in international setups, and that income may be taxed in both the UK and Switzerland depending on where the work is performed. This makes accurate workday tracking and professional guidance essential.

Above all, the key to success lies in early planning, clear documentation, and proactive coordination with local institutions. Each employment scenario must be assessed on its own facts—there is no one-size-fits-all model.

If you’re considering hiring in Switzerland, we invite you to schedule a non-binding call with our team. In this initial conversation, we’ll help you assess which employment model is the best fit for your specific situation—whether it’s direct employment, ANobAG, EOR, or establishing a local entity. Our goal is to give you clarity, highlight risks, and offer a compliant path forward without any commitment required.