Do I Need a Local Entity to Hire in Switzerland?

In Switzerland, a "local entity" refers to a legally recognized presence, such as a subsidiary or branch office, that can act as an employer. This setup is essential for managing payroll and fulfilling employment obligations under Swiss law. Without a local entity, your company cannot directly employ individuals, register for taxes, or comply with local labor laws.

For companies looking to hire in Switzerland without the complexities of establishing a local entity, using an Employer of Record (EOR) is a viable alternative. An EOR can manage payroll, compliance, and employment contracts, allowing you to focus on your core business activities.

What is Required to Employ Someone in Switzerland?

• Local employing entity required to directly employ? Yes (unless using an EOR)
• Payroll registration required? Yes (mandatory for all employers with employees in Switzerland)
• Withholding/tax remittance required? Yes (employers must withhold income tax and social contributions)
• Social contributions required? Yes (employers are required to contribute to social security)
• Local employment agreement required? Yes (written contracts are mandatory under Swiss law)
• Mandatory benefits to budget? Yes (includes statutory leave, health insurance, and pension contributions)
• Works council/collective agreements considerations? Usually (many sectors have collective agreements that may apply)

Best Options If You're Hiring in Switzerland

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but be cautious about misclassification risks. Hiring contractors can be a flexible option, but Swiss law is strict about worker classification.

While you can engage contractors without a local entity, it’s essential to ensure they operate independently. Misclassification can lead to significant liabilities. Here are key considerations:

• Ensure the contractor has multiple clients and isn’t dependent on your business for income.
• Maintain minimal control over how they perform their work.
• Clearly outline the scope of work and avoid treating them like employees.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Switzerland, depending on the type of entity and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated CHF 1,000–2,500 per month ($1,100–$2,750)
• Payroll provider: Estimated CHF 100–300 per employee per month ($110–$330)
• Employer registrations and recurring compliance: CHF 500–1,500 per year ($550–$1,650)
• Corporate tax filings and annual reporting: Estimated CHF 2,000–5,000 per year ($2,200–$5,500)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions, which can be around 12-15% of gross salary)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Switzerland

Hiring in Switzerland can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Switzerland quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.