Employees and pensions

Hiring employees – what you should bear in mind

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Is your business going well and your company growing? Then perhaps it's time to hire your first employee. Find out here what you should bear in mind and what practical steps you need to take.

Hiring your first employee is an exciting milestone for your company. The fact that you're thinking about taking on staff means that your company is doing well. You have now become well established and the number of orders or sales is growing - you can no longer do everything on your own and you're looking for support. Or perhaps you'd like to tap into new areas and are now looking for the right technical expertise.  

To help you successfully deal with your first appointment and have your new employee stay with you for as long as possible, we've spoken to HR experts and collated the key information for you.

Hiring staff for the first time - it's all about the right timing

Finding the right time to hire staff is not that easy. First you need the necessary financial resources, but you also need a certain time buffer (in case you don't find anyone straight away, i.e. lack of qualified staff) (currently not available in english). You should also factor in enough time to train the person in question. 

It can help talking to other business owners who have already had the courage to take this step. They can share their experiences with you and help make it easier for you to take the decision.

Do you recognize yourself in some of the following statements? Then it's possibly time to get some help on board:

  • You're stressed and you'd like a better work-life balance.
  • You feel as if or you actually are only in meetings and calls and hardly have any time for customers.
  • You have enough to do with productive work and are no longer interested in doing all the admin work yourself.
  • You're expanding/intensifying your business activities for which you need an extra pair or hands and/or special expertise.
  • You're looking for new inspiration and a fresh look at your company.

If the "when" is clarified, then the next step is "how"? Our step-by-step guide can help you with this.

And of course our start-up offer – so that you can concentrate fully on your company's next step.

Hiring employees - the most important steps from employment contract to reference

If you're hiring employees for the first time, you're going outside your comfort zone and slipping into a new role - that of HR manager but above all that of boss. From the recruitment process to the work reference, you're responsible for completely new tasks.

Step 1: Recruitment

1. Defining the job profile

  • What work do you want to hand over to the new employee?
  • What type of position makes sense and would it be part-time or full-time?
  • What requirements should candidates meet (education, professional experience, special expertise)?

2. Starting the recruitment process

  • Place job advertisements (use various channels)
  • Ask around in your network for suitable candidates
  • Consider working with external staff recruiters

3. Processing the application procedure

  • Prepare for interview: guides (currently not available in english) help you with this. The aim is to gain as full a picture as possible of the applicant's hard and soft skills and determine how they work.
  • Carry out application interview or agree a trial working day.
  • Background check for shortlisted candidates: ask for extract from the criminal register and get references from previous employers.

In the recruitment process, it's particularly important that the new employee fits into any existing team and aligns with the values and conduct for the corporate culture (cultural fit). The new colleague should enhance the team both from a personal and technical perspective. "Lack of technical knowledge can be remedied on the job through upskilling", says Ute Schläfli, Product Owner Recruitment at AXA.

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    Pension funds for SMEs and start-ups

    Only you can make the choice of the right employee - questions and answers about insurance and pensions.


Step 2: Employment contract

An employment contract can be concluded in writing or verbally (and theoretically also implicitly), but it's generally in writing. In certain cases this is also compulsory, e.g. for apprenticeship contracts.

What should be included in an employment contract? 

  • Details about the company and employer
  • Personal details on the employee
  • Beginning of employment relationship
  • Place of work
  • Type of work (job description)
  • Scope of work 
  • Level of employment (including weekly working hours)
  • Holiday leave and regulations
  • Level of salary (plus any supplements) 
  • Notice periods and any probationary period

Permanent contract: state on what grounds and after what period the contract can be terminated. You can also reduce the statutory probationary period of one month, eliminate it altogether or extend it to three months.

Temporary contract: there is no statutory requirement for a probationary period, but this can be agreed if required. Enter the end date of the employment relationship (unless this is determined by the conclusion of a project stated in the contract). 

You should also think about the following aspects:

  • Details on applicable regulations
  • Conditions on social security contributions to OASI and DI
  • Pension fund regulations (if required)
  • Salary entitlement/rights and obligations in the event of sickness, maternity leave and accident and any other loss of earnings
  • Any daily sickness benefits insurance and any other voluntary benefits

Fringe benefits

Benefits that are not obligatory, such as daily benefits insurance or additional contributions to Pillar 2, as well as the choice of an attractive pension fund solution are all fringe benefits. These are becoming more and more crucial when skilled workers in particular choose an employer.

Please note: if your business is subject to a collective employment contract (CEA), you must comply with the latter's regulations and reflect these in the employment contract. You can obtain information from the trade unions, your employer organization, cantonal employment office or the State Secretariat for Economic Affairs (SECO).

You can find tips on "Drawing up an employment contract" and a template for an individual employment contract at myright.ch. But the formulation of an employment contract is obviously a very individual matter. "When issuing your first employment contract, you should also consult your legal advisor to make sure that everything is legally ironclad", explains Irene Roth, Head of Employee Administration. "This way, you won't just be on the safe side, but you'll also have a sample individual contract for any other employees."

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    As a small business, take advantage of five free hours of legal advice under our legal protection insurance. The ideal framework for checking your first employment contract.

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Step 3: Preparation

It sounds trivial, but a functioning workstation and suitable work are initially required so that work can be carried out. Before your new employee starts their first day of work, define what is on the agenda on day X and during the induction period. As well as physically setting up the workstation, you should also not forget any user accounts and approvals. If you're well prepared, your new employee can show their potential from day 1.

Step 4: Cantonal compensation office, possibly family allowances

Employers are obliged to register their employees with the cantonal compensation office and where applicable, apply for family allowances. "The requirement to contribute to social insurance schemes (OASI, DI, LEC and UI) begins from January 1 after a person turns 17", says Barbara Jacobi, Head of Payroll at AXA. "New employees who do not yet have a social security number must be registered immediately by the employer with the cantonal compensation office. If new employees have a social security number, they can be registered straightaway or at the latest with the salary declaration at year-end." Your point of contact is the cantonal compensation office. If you already have a number and imagine that you'll be waiting a long time to be served, don't worry as everything can now be done easily online.

If your company is already registered with the compensation office, new employees do not need to be registered separately - simply declare them at year-end on the official salary declaration (to do so, you need the personal details, OASI number and date of birth of the person in question).

OASI number

If the new employee doesn't have an OASI number yet, for example because they have come directly from another country, a new number will have to be applied for with the responsible compensation office.

If your new employee has children, there is an entitlement to family allowances depending on the family structure. It's your job to apply for these from the family compensation office. The best approach is to contact your OASI compensation office, as the family compensation office is usually located there.

For this process, you'll need the following documents and information from your employee:

  • Social security ID (OASI/DI/LEC) or health insurance card of the children
  • Date on which the partner last started work
  • Employee's gross income

Hiring foreign employees

If you wish to hire foreign employees who don't have a type C residence permit, there are another couple of points you should bear in mind.

1. Submitting registration or application for permit

  • Employees from EU/EFTA countries who work up to 90 days per year in Switzerland must normally be registered. This can be done on the website of the State Secretariat for Migration (SSM).
  • Employees from EU/EFTA countries who work more than 90 days per year in Switzerland need a permit. You are responsible for submitting an application for a permit if one hasn't been issued yet. To do this, you should contact the applicable cantonal employment authority.

2. Registering for withholding tax

Employees subject to withholding tax (foreign employees without a permanent residence permit) must register with the responsible tax authority within eight days of joining.

Step 5: OPA, AIA, possibly DSB 

You must register employees with a pension fund if their salary is at least CHF 22,050 p.a. (as at 2023) and the employment period will be for more than three months or on a permanent basis. Note: insurance is compulsory from day 1, even if the person is initially in their probationary period.

You'll need the following details for registration purposes:

  • Name and address
  • OASI number
  • Date of joining
  • Level of employment
  • Annual salary

Suitable candidates who have several potential employers to choose from increasingly look at factors other than salary, such as the pension fund solution. How well is the pension fund set up? Will retirement assets also be invested and if so, where and how? Does the employer contribute towards supplementary savings contributions for extra-mandatory benefits? The answers to such questions can ultimately make a small but subtle difference.

Furthermore, you have to protect your employees against the consequences of accident and occupational diseases, which means that you have to take out accident insurance. As soon as you hire the first person subject to insurance coverage, this must be registered with the accident insurer of your choice. Having said that, "of your choice" is not entirely correct, as employees in certain sectors are obliged to be insured with the Swiss National Accident Insurance Fund (Suva). Find out beforehand whether this applies to your company. (currently not available in english)

Daily sickness benefits insurance is not mandatory, but it makes sense. This covers the cost of continuing salary payments for employees who are absent due to sickness or are on maternity leave. 

Another advantage is that your employees benefit beyond the statutory minimum under DSB insurance for continued salary payments. This in turn makes you more attractive as an employer.

"For administrative purposes, it's definitely advantageous to take out accident and daily sickness benefits insurance from the same place." - Barbara Jacobi

Our insurance solutions for your employees

Pension fund

For small businesses in particular, it is often too complicated for them to set up and run their own pension fund. AXA can help, in that it offers various semi-autonomous pension solutions that are specifically tailored to the needs of start-ups and SMEs.

Discover our pension solutions

Accident insurance

Accident insurance protects you and your employees against the financial consequences of an accident. If there's a problem, it covers continued salary payments, the cost of care and pensions.

Daily sickness benefits insurance

If employees are absent through sickness or because they are on maternity leave, daily sickness benefits insurance takes over the cost of continued salary payments from you. And your employees also benefit, in that they have more time to recover in peace.

Discover our daily sickness benefits insurance

How much do employees cost?

To determine whether employees are financially viable for you, you should take a realistic view of the applicable costs. There are also a few indirect costs on top of the more obvious direct ones.

Direct costs

The main direct costs that apply are salary costs. These depend heavily on your sector, but also on the type of position and job profile. Salary can also be a good means of locking in particularly qualified candidates.

"An employee's salary should normally be fair, in line with the market and match job requirements", says Ute Schläfli. If you're not sure what that means, it's best to listen to other employers or get advice from industry associations.

Added to salary costs are the costs of social security insurance: OASI, DI, unemployment insurance, family allowances, accident insurance, pension fund and, if applicable, daily sickness benefits insurance. Depending on the structure, these can amount to 11 - 13 percent of the gross salary total.

As a side note, there are government calculation templates that can help you roughly work out the direct costs. (currently not available in english)

Indirect costs

The following costs can easily be forgotten - you must calculate them whenever you hire staff:

  • Recruitment costs (e.g. for job vacancy advertisements, portals, employment agencies)
  • Onboarding/training costs (the work time and any external training for the newly hired person, but also their "absence from work" during this period)
  • Administration costs (e.g. for certificates, registrations, applications etc.)
  • Cost of material and devices (e.g. furniture, computer, additional licenses etc.)

Consider in advance what you would like to achieve: should the new employee help increase turnover, i.e. contribute towards the growth of your business? Or is the idea that you will be relieved of work and have more time available (for business or private purposes) - but possibly with the same level of turnover?

With this in mind, you will be better able to calculate what budget is available for hiring a supporting person and whether this is realistic.

Hiring staff - consult our checklist

Now you have an excellent overview of everything you have to consider if you wish to hire your first employee. But among all the hard criteria, facts and figures, there is one thing that you shouldn't forget - your gut feeling. If you don't feel right about someone, there is usually justification for this. Listen to your intuition and look elsewhere, as this wasn't quite the right person.

And don't despair if everything looks unclear and challenging at the outset. You too will learn and collect experience - in time, you'll become better at dealing with HR matters and better in your role as the boss.

Go for it! Our checklist will guide you through.

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