Hire Contractors In Switzerland

Top Swiss technology companies hire freelancers and independent contractors to stay lean and operationally efficient. The biggest names in the industry include Airbnb and Doodle. 

You can save on high HR & payroll compliance costs usually associated with full-time employees by working with independent contractors. 

However, if you are expanding or want to hire contractors in Switzerland, you must avoid falling into a pseudo-independence scenario (More on this in the challenges section). It can lead to fines and penalties retroactively. 

Thankfully, there are specialized solutions like Agent of Record (AOR) that can help you hire contractors in Switzerland while complying with local laws. 

The following sections will discuss various compliance factors and how Skuad AOR can help you deal with them.

How to Hire Independent Contractors in Switzerland

Switzerland's labor laws are distinct from those of the rest of Europe. 

Here’s how you can hire contractors in Switzerland by following these simple two steps:

1. Define the contractual relationship:

• It should clearly outline the nature of work, payment terms, IP rights, and confidentiality clauses. 
• You may also outline the conditions under which either party can terminate the contract and specify the preferred method for resolving disagreements, such as mediation or arbitration.
• You can follow this freelance contract template in Switzerland. 

2. Set up a payroll system:

• Contractors registered for VAT in Switzerland will typically include it in their invoices. You may verify their VAT registration details and process payments through a bank transfer or international payment wallets. 
• You may be required to withhold taxes from the contractor's payments. Consult a professional to understand the specific requirements for contractor payroll in Switzerland. 

How to hire overseas contractors

You can hire overseas contractors in Switzerland easily via EOR solutions. 

Further, you must ask for IRS Form W-8BEN (for individuals) or IRS Form W-8BEN-E (for entities) to avoid withholding compliance. 

How to pay contractors in Switzerland

One of the cheapest ways to pay contractors from the USA to Europe is to use an EOR. However, you may explore other options too.

You can consider the following options to pay contractors in Switzerland:

1. Set up a local payroll system if you have a significant presence in Switzerland. 
2. To make timely payments, you can use digital wallets. 
3. Global or non-EU companies may look for payment platforms with favorable exchange rates to convert payments to Swiss francs.
4. You can offer a variety of payment terms like:
   • Pay upfront before work begins.
   • Pay after the work or product is delivered.
   • Create a credit limit and release funds as needed.
   • Use (Net 10, Net 30, Net 60) payment terms.
   • Make payments at the end of the month.

Additionally, managing payroll becomes complex when employing multiple contractors, which results in more record-keeping compliance. 

Alternatively, you can consider an Agent of Record in Switzerland (AOR) to help with legal and administrative compliance. 

Hiring contractors through Skuad AOR

AOR Solutions is a subset of EOR, specifically focusing on handling contractors. Today, Skuad AOR is the preferred way to hire in Switzerland as it can save compliance and management costs. 

AOR platform can handle all the complexities of hiring and paying contractors in Switzerland, including contractor management, payroll, taxes, and compliance. 

You can even convert your loyal contractors to full-time employees, all without setting up a local entity in Switzerland.

Hiring Contractors Directly vs Hiring Contractors via Skuad

Here’s a comprehensive summary of hiring contractors in Switzerland directly vs AOR solutions like Skuad:

Further, you can review this checklist to avoid misclassifying employees as independent contractors.

How Much Does it Cost to Hire a Contractor in Switzerland?

The minimum wage in Switzerland for employees varies across cantons: 

• Geneva: CHF 24.32 per hour, or about CHF 4,368 per month
• Zurich: CHF 23.90 per hour
• Basel-City, Neuchâtel, Jura, and Ticino: CHF 21.70 to CHF 19.00 per hour 

Consider this a benchmark for setting contractor fees. Fees may vary depending on the contractor's experience, skill set, industry, and project complexity. 

You must also factor in miscellaneous hiring costs, including contract negotiation, drafting, and communication and collaboration tools. 

How to Convert a Contractor into an Employee in Switzerland

You can convert a contractor into an employee in Switzerland using two common ways: 

1. Set up a legal entity in Switzerland

• Choose a suitable legal structure and complete the necessary registration process.
• If the contractor in Switzerland is a foreign national, you must sponsor their employee visa to obtain a suitable work permit followed by a residence permit.
• You must draft a new comprehensive employment contract outlining terms and conditions, work hours, applicable employee benefits, and termination procedures. 
• While there are no national minimum wage regulations, you must comply with social security and tax withholding requirements when converting from a contractor to an employee salary system.

2. Use an Employer of Record in Switzerland

• You may outsource to third-party HR solutions, like EOR, which specializes in Swiss employment laws, to handle the conversion of contractor-to-employee status. 
• The EOR will handle the onboarding process, including contracts, payroll, and benefits in Switzerland. 

Challenges of Hiring Contractors in Switzerland

There is a higher risk of attrition with contractors than full-time employees. In the following, we will discuss more specific hiring challenges related to contractors in Switzerland:

1) Pseudo independence 

Hiring contractors and freelancers are trending among Swiss employers. However, you must avoid crossing the line into "pseudo-independence." 

It's a situation where a worker is labeled as independent but is under the control and authority of a company, much like an employee. For instance, a consultant who works exclusively for one company follows its rules and is physically present at its office.

Such misclassification in Switzerland often results in legal repercussions, including fines and back payments.

You can avoid it with modern HR solutions like Employer of Record in Switzerland (EOR). Skuad is among the leading EOR providers, and it can help manage contractor onboarding and payroll and ensure compliance.

2) Absence of digital nomad visa

About one in every three Swiss employers face difficulties in hiring local talents. Additionally, the absence of a digital nomad visa impacts hiring international workers in Switzerland who prefer remote work arrangements. Here’s why: 

• Without a dedicated visa, remote workers rely on restrictive work permits, discouraging global talent.
• Other countries offering digital nomad visas attract location-independent professionals, leaving Switzerland behind in the remote work trend.
• In the remote work era, you may miss out on global talents who wish to work in Switzerland but remotely. 

3) Swiss labor law compliance

It can be challenging to hire contractors in Switzerland due to several compliance factors:

• Swiss law requires clear terms in contractor agreements regarding intellectual property (IP) and data protection. Contractors may retain ownership of their deliverables without explicit clauses, leading to potential disputes.
• Administrative processes in Switzerland often require documentation in one of its four official languages—German, French, Italian, or Romansh. Language barriers can create misunderstandings, delaying hiring and onboarding.
• Switzerland’s decentralized tax system varies by canton, making determining the correct tax obligations difficult. If you manage multiple contractors, automated payments contractor software like Skuad can simplify compliance.

Hire Contractors in Switzerland with Skuad

Skuad AOR can help you not only hire contractors in Switzerland but anyone, anywhere. 

We take care of localized onboarding, cross-border payroll, compliance, and everything in between— making it seamless for you to build globally distributed teams in 160+ countries.

Use our trusted EOR solution to convert loyal contractors into full-time employees following due compliance. 

‍Book a demo today to get started!

FAQs

1. How to hire someone in Switzerland?

You have to be a registered employer to hire someone in Switzerland. The registration could be setting up a local entity or otherwise. Swiss labor laws oblige you to draft contracts outlining the nature and scope of your employment relationship for record-keeping and compliance. 

2. Can I hire an independent contractor from another country?

Yes, you can hire an independent contractor for another country while operating from Switzerland. There is no specific provision in the Swiss employment regulations enforcing a restriction on the nature of foreign contractors in the nation. 

3. Can contractors work internationally?

Yes, contractors can work internationally in Switzerland. They must work through an SECO-licensed payroll company or do freelancing in Switzerland. This company becomes the contractor's employer for the duration of their assignment. 

4. How do I pay a foreign contractor?

You can pay foreign contractors through a bank transfer or international payment wallets like Payoneer. However, if you manage multiple contractors, you need an automated payroll system like Skuad to help you track, manage, and process contractor invoices per Swiss taxation laws.