Payslips in Switzerland: What do I need to know about my payslip?
The payslip is an important topic for Swiss employees. It helps them understand how gross wages are calculated into net wages and what is actually paid out. The calculations influence the financial and the insurance situation. In the following sections, we will look at some key points in more detail.
Legal regulations relating to the payslip in Switzerland
The legislation in Switzerland on wage payments, income components, as well as their deductions includes various regulations and laws. These ensure that all components of the income are correctly recorded and deducted. From old-age and survivors’ insurance to withholding tax – this applies to the respective wage deductions in Switzerland.
Wage payment: This applies in Switzerland
Pursuant to Art. 323 of the Swiss Code of Obligations (CO), the salary must be paid out at the end of each month at the latest, unless otherwise agreed. The employer is required to issue a detailed payslip that transparently shows all deductions and surcharges and to provide it to the employee.
Wage components: This applies in Switzerland
The type and scope of the salary components are recorded in a contract. The forms of contract that exist, for instance, are individual employment contracts, collective employment contracts and standard employment contracts. The salary components such as monthly wages, bonuses, fringe benefits, shift allowances, employee participations, etc. are based on the contractually defined compensation regulations. Likewise, the cantonal regulations on minimum wage requirements must be observed as well.
Wage deductions: This applies in Switzerland
Wage deductions are a central aspect of the payslip. Many employees are interested in knowing what is deducted from their gross wages and how these deductions influence the salary that is paid out to them. The most important deductions include:
- AHV (old-age and survivors’ insurance)/IV (disability insurance)/EO (in-come replacement scheme)
- ALV (unemployment insurance)
- Pension fund/company pension scheme
- Accident insurance
- Daily sick-pay insurance
- Income tax (withholding tax)
Understanding the deductions listed above is critical to understanding one’s own personal payslip correctly. These deductions are not just burdensome income reductions; they are contributions that guarantee the social security of employees. Deductions for social insurance thus also mean protection in the case of lost income from an inability to work due to illness or accident and from unemployment. They also provide retirement income.
A detailed list of the statutory deductions can be found in the Social Security Factsheet. Here is an overview of the most important social insurance contributions in Switzerland and the way that they are deducted in the payslip:
Wage deductions for AHV/IV/EO (1st column)
The old-age and survivors’ insurance (AHV), disability insurance (IV) and the income replacement scheme (EO) are mandatory social insurance. Employers and employees cover the contributions for this in equal parts (50%/50%). These insurance policies offer protection against the risks of disability and death as well as loss of earnings in maternity/paternity leave and military service. In particular, the AHV plays an important role in pension planning, since it forms the pension from the 1st column (state pension scheme).
Wage deductions for unemployment insurance (ALV)
Unemployment-insurance contributions are also mandatory. This insurance covers the risk of unemployment. The law defines an upper limit for contributions that are mandatory for ALV deductions. Currently (2025), the upper limit is CHF 148,200 per year (per employer). This is simultaneously the upper limit for the disbursement of unemployment benefits, i.e., 80% of them.
Wage deductions for pension funds (2nd column)
Each employer is required to connect to a pension scheme (pension fund). The insurance includes savings contributions for old age as well as additional contributions for the risks of disability and death. It supplements state pension schemes (AHV/IV) and generally aims to maintain the standard of living to which one is accustomed in old age, for disability, or in the case of death. The contributions are paid by both the employer and the employee.
The statutory minimum requirements pursuant to the BVG (Bundesgesetz über die berufliche Alters-, Hinterlassenen- und Invalidenvorsorge [Swiss Act on Professional Old-age, Survivors and Disabled Persons Pensions]) must strictly be complied with. Furthermore, the employer has considerable opportunities to configure benefits in a way that improves the minimum benefits stipulated by law in favour of the employees and their retirement pension. The amount of the contribution is very individualised and depends on the insured annual wage, age and pension plan of the pension fund.
Wage deductions for accident insurance
Accident insurance covers occupational accidents (BU) and non-occupational accidents (NBU). The employer is required to take out the relevant insurance policies. The law stipulates that wage contributions to the BU are to be covered exclusively by the employer. The contributions to the NBU can be fully deducted from the employee by law. However, 50/50 solutions are often agreed, or the employer also fully takes over the NBU deductions.
Wage deductions for daily sick-pay insurance
This insurance covers the loss of wages in the case of illness and it replaces the obligation to continue to pay wages under CO 324a and is not a mandatory insurance. If a policy is taken out by the employer, it must at least be equivalent to the statutory regulation on the obligation to continue to pay wages. Deductions for the daily sick-pay insurance must also at least be divided 50%/50% between the employer and the employee.
Income tax deductions or withholding taxes
Income tax is deducted directly from the gross wages only from employees who are subject to withholding tax. These are individuals whose place of residence is Switzerland, but who do not yet have a residence permit. Deductions are based on the legislation of the canton of residence. Swiss citizens and residents submit a tax return annually, according to which the income tax is collected.
Recommendation: check your payslip regularly
The employee is entitled to a payslip that is prepared correctly. If questions arise about salary components and deductions, the employer must be able to always explain these transparently and comprehensibly.
Check your payslip periodically, especially at the beginning of the year and if wage adjustments have been agreed. If you change your job, it is also recommended that you clarify how the insurance benefits of the new employer are designed and what deductions the employee must cover. Hopefully this article will help you with that.
Wage-related questions: we are here for you
Wage deductions can become complex – especially if variable wage components are added or the wage changes regularly. This applies to both employers and employees. If you need support with salary issues, payroll or anything relating to your taxes, we are here for you.
