Introduction

Whether you’re expanding into Europe or hiring remotely from the US, understanding the difference between labour laws in Switzerland and the United States is critical. The two systems couldn’t be more different in structure, philosophy, and risk exposure. 

One offers high levels of worker protection and social partnership. The other is known for its flexibility and decentralised approach.

For businesses operating across both countries, the challenge lies in staying compliant without duplicating processes or creating conflict between legal frameworks. Missteps can be costly - both financially and reputationally. So let’s look at the key differences and what your business needs to consider to manage people effectively in both jurisdictions.

Quick Tips

• Switzerland has strong employee protections - especially around terminations, notice periods, and social insurance.

• The US allows for 'at-will' employment in most states, meaning termination without cause is generally permitted.

• Swiss employers must contribute to mandatory social security, pension, and accident insurance schemes.

• In the US, employer contributions vary widely by state and benefit structure - there’s no universal healthcare or pension.

• Employment contracts are highly recommended in both countries but function differently under the law.

Termination Rights: Stability vs Flexibility

Switzerland’s approach to dismissal is structured and cautious. Although employers can dismiss employees with notice, there are protections against abusive termination and safeguards during periods like illness or maternity leave. Notice periods are typically one to three months, depending on seniority and collective agreements.

In contrast, most US employment is ‘at-will’. This allows either party to terminate the relationship at any time, for almost any reason, with no notice - unless otherwise agreed in a contract. While this creates flexibility, it also introduces risk if local protections (like anti-discrimination laws) are ignored. According to the US Equal Employment Opportunity Commission (EEOC), over 67,000 workplace discrimination charges were filed in 2023 alone.

Businesses hiring in Switzerland need structured offboarding and clear documentation. In the US, they must balance flexibility with consistency to avoid claims.

Social Contributions and Benefits: Who Pays What?

Switzerland’s social insurance system is based on shared contributions between employers and employees. This includes:

• Old-age and survivors insurance (AHV)

• Invalidity insurance (IV)

• Unemployment insurance

• Accident insurance

• Pension funds (second pillar)

These are mandatory and monitored through regular audits. Employers should budget around 12–15% of gross salary for mandatory contributions, depending on canton and sector.

In the US, while Social Security and Medicare contributions are federal, health insurance and pensions (401(k)) are typically employer-managed and discretionary. The Kaiser Family Foundation reports that in 2023, the average employer contribution to health insurance premiums for family coverage was $16,357 annually.

Swiss systems offer predictability. US systems allow choice - but demand robust benefit communication to avoid confusion or employee dissatisfaction.

Working Time and Leave: Plan Ahead in Switzerland

Swiss labour law sets a maximum weekly working time (45 hours for office workers and 50 for others) and mandates four weeks of paid leave, with additional leave often negotiated in contracts or collective agreements.

In the US, there is no federal requirement for paid holiday. Leave policies are employer-driven, and practices vary. Some employers offer generous packages; others offer none. For global HR teams, this raises concerns about equity, morale, and perception.

A practical solution is to align benefits where possible but communicate clearly. In my work with a UK company expanding into both countries, we standardised a minimum time-off policy globally while allowing top-ups in Switzerland to reflect local law. The key was transparency.

Real Example: Missteps in Classification and Leave

One client I worked with was hiring remotely in the US while setting up a Swiss subsidiary. They classified US hires as contractors but provided equipment, set hours, and supervised their work - a classic misclassification risk. In Switzerland, they underestimated the mandatory leave entitlements, leading to back pay and compliance flags in audit.

We restructured their contracts, registered them properly in both countries, and provided internal training on local norms. The result? Smoother operations and significantly reduced legal risk.

Final Thoughts

Swiss employment law is rooted in balance and stability. US employment law values flexibility and individual agreements. Both have their strengths - but mixing the two without proper knowledge can expose your business to unnecessary risk.

Investing in expert guidance now means fewer surprises later. Align your policies to reflect each system, not just your HQ culture.

What’s next for your global people strategy?

Book a free compliance check-in or HR audit with ThinkGlobal HR. Whether you’re hiring remotely, expanding your entity, or just want peace of mind, we’ll help you stay ahead of global risks with clear, reliable advice.