Swiss Payroll for Contractors – The 6 most important questions to ask

These 6 questions are vital for freelance contractors when selecting an “Umbrella” contract management service for employment and payroll needs in Switzerland.

Congratulations, you have an opportunity to live and work in Switzerland on a fixed-term contract. Switzerland is one of the most attractive countries in the world to live in, not only financially but also for the quality of life. However before you move to Switzerland there are a number of important steps to consider including the legalities around payroll and salary.

To work in Switzerland, you need a Swiss Employer of Record to employ you and process your salary. There are numerous offerings in this area from a wide variety of providers, ranging from opportunistic recruitment agencies and fast internet startups to established professional service providers. To the inexperienced, it is tempting to view such a payroll service as a simple back office calculation and seek a correspondingly cheap and cheerful solution based purely on headline price. For this reason Payroll Services has always been a competitive ​sector in Switzerland, with cheap no frills offerings and associated business failures. However the perception is far from accurate: you are trusting a payroll provider with your income and salary, but they are also there to act as your employer. Under the umbrella working principle they should make sure you comply with Swiss tax and insurance laws, possess a legitimate work permit, and correctly report and pay your salary and expenses in a legitimate manner. A good provider will also make sure you receive a tax efficient payroll, help you get the most out of your contract, insure you correctly and protect you from the nightmare of non payment. The back office payroll calculation is just one small part of this legal service. To make sure you make the right decision, here are the 6 most important things you need to know when selecting a payroll management service.

1. Does the provider actually perform as claimed?

Some payroller websites make lots of claims and promises: do they have any data to back these up?  Bear in mind you are not buying a standard product from a webshop. A good ability in online marketing does not necessarily reflect stability or ability to provide the payroll service you need. Look for serious, well-established companies – they are in business after many years because they have a strong, compliant and viable offering.

2. What is my real financial return with this provider? 

You must consider the overall financial return, and not just the headline service charge:

• Swiss payroll charges are not standard across the nation: there are 26 cantons in Switzerland all with different financial costs and rules.
• Unlike other countries such as the UK, Swiss payroll requires an employer to contract private insurance companies for pension, sickness and accident cover. The premiums vary significantly by provider and the length of time each company has established a claims record.
• Consider lower than average headline commission quotes with suspicion and ask yourself – is the company clawing back money elsewhere, for example in hidden provisions?

 The only way to be really certain is to insist on a full breakdown of the payroll costs, where you can clearly see all charges and the overall retention rate. (i.e. how much you actually get in relation to what the client is billed). When you compare these quotations be very careful you compare like with like: are the monthly hours actually billed in the quotations the same, and is holiday included? If there is a difference you cannot understand, ask until you do.

3. What is not included?

Be especially aware of any parts of the service not included in the quotation. Some payroll companies charge extra for paying the payroll promptly after the month end. This is a legal requirement, so you should not pay extra for this. Others charge items such as a “Permit fee” – which again is a standard legal requirement.

4. Is the provider focused around personal service or just a web shop? 

You might see claims by operations offering a “100% digital solution”. Sounds good, but a contract payroll service in Switzerland is not a commodity and always requires prompt personal service to deal with individual personal requirements. This requires an approachable and responsive service from helpful staff, supported but not replaced by the convenience of a digital portal. Some providers in Switzerland even charge extra for answering emails. So be sure to establish if the service is right for you to avoid serious problems, unpleasant surprises or additional hidden costs.

5. Is the financial picture believable, compared to other providers?

Does it sound too good to be true? Have you been promised special allowances and/or tax breaks? Paying part of your income offshore or deferring payment until after you leave Switzerland (under some kind of loan scheme, for example) is strictly forbidden. The Swiss tax office are fully aware and on the lookout for such schemes, which are dealt with by retrospective charges and fines even if you are no longer resident in Switzerland by that time. The “Expatriate Allowance” has been discontinued for many years so be wary if this is promised to you. You can however claim expenses for working away from your primary Swiss workplace, for example on a business or training trip. Take a look at our FAQs for more details.

6. Is this provider really compliant?

Last but not least, make sure you are using a compliant provider. Employment rules for leasing companies in Switzerland are complex and you don’t want to find your Payroll company has been closed down leaving you in the lurch. Check how long your payroller has been providing payroll services in Switzerland (not just how old the company is, but how long they have held a SECO licence). Ask around but above all ask questions of your payroller before you sign up to see if they are willing to answer your questions and provide the means for you to check the information provided is correct.

Stephen Clothier, Head of IT and Business Services at Accurity says:

“Accurity was established over 20 years ago by contractors searching for a personalised and trustworthy payroll service provider. Since that time the Swiss market has witnessed several waves by various companies looking to gain market share quickly using disruptive tactics only for these to fail. Today not that many Swiss payroll service companies still exist that entered the market even 10 years ago. This strengthens the case for a personalised and trustworthy service  – making these criteria even more important to my work in Accurity”

Accurity – we make Switzerland easy for you!