What to consider when taking on your first team member: legal, financial, and administrative essentials

However, as your company develops step by step, there usually comes a moment when you need additional hands inside the business. Hiring your first employee is an important turning point — and one that introduces new legal, financial, and organisational responsibilities.

In this article, we guide you through what your business needs to prepare before employing someone, what steps follow once you have selected a candidate, and what ongoing payroll and social security responsibilities you should expect as a Swiss employer.

Preparing your company to take on its first team member

Before an individual can legally start working for your company, several elements must already be set up. These are not optional — they form the foundation of lawful employment in Switzerland.

Employer registration with social security authorities

As soon as you decide to expand your team, your business must be registered as an employer with a recognised social security compensation office. This registration allows you to declare salaries and pay mandatory contributions related to old-age pensions, disability coverage, income compensation, unemployment protection , and family allowances.

Without this registration, your business is not authorised to process salaries correctly.

You must complete this step before paying the first wage, even if employment starts on a part-time or temporary basis.

Once registered, your company receives an employer identification number, which will be used for all salary declarations and annual reporting.

Mandatory accident insurance coverage

Swiss law requires every employer to insure employees against accidents. This insurance must be in place from the very first working day.

Two types of coverage apply:

• Insurance for accidents that occur during working hours, which is mandatory for all employees
• Insurance for accidents outside working hours, which becomes compulsory when an employee works at least eight hours per week

Failing to arrange accident insurance on time can expose your business to significant financial risk, as you may be held responsible for medical costs and salary continuation in the event of an accident.

In addition to accident coverage, you might also consider Daily Sickness Benefits Insurance. While this insurance is technically voluntary, it has become standard practice in Switzerland. It provides coverage for employees who are unable to work due to illness, helping businesses avoid unexpected salary costs and financial uncertainty.

Internal staff guidelines and policies

It is strongly recommended for your business to prepare basic internal guidelines before the first day of your employee. These documents help define expectations clearly and prevent misunderstandings later.

Staff guidelines cover topics such as:

• Hours of work
• Remote work or hybrid arrangements
• Use of company equipment
• Absence reporting
• Code of conduct

Please note that, when drafting these guidelines, you must ensure they are fully compliant with Swiss labour law. Internal rules may only support and explain legal requirements — they must not reduce, replace, or take away any rights that employees are entitled to under Swiss law.

What comes next after choosing the candidate

After selecting the right person for your business, the focus shifts to formalising the employment relationship.

Preparation of the employment document

A written signed contract is strongly advised since it protects both you and your employee and ensures that expectations are aligned from the beginning.

Your document should clearly state:

• The role and scope of responsibilities
• The official start date
• Compensation structure (fixed salary, variable elements, or a combination)
• Weekly working hours and employment percentage
• Vacation entitlement
• Notice periods
• Confidentiality obligations and, if relevant, non-competition clauses

The probationary phase

When hiring a new employee, it’s a common thing to include the probationary phase. This phase typically lasts between one and three months:

• Both parties can terminate the contract with a shorter notice period
• Performance and expectations are reviewed more closely
• Adjustments can be made early if needed

Your obligations after the employment begins

Salary payments and payslips

Salaries must be paid punctually, most commonly on a monthly basis. Delays can damage trust and may have legal consequences.

Each payroll calculation must include:

• The agreed gross salary
• Mandatory social security deductions
• Contributions to occupational pension schemes, where applicable
• Accident insurance premiums
• Withholding tax, if required

Your employee must receive a detailed monthly payslip showing all deductions and contributions transparently.

Withholding tax responsibilities

If your employee is subject to tax deducted directly at source, your business is responsible for calculating, declaring, and transferring these amounts to the relevant tax authorities.

This includes:

• Applying the correct tax rate
• Submitting monthly reports
• Ensuring payments are made on time

Mistakes in this area are common among new employers and can result in penalties or corrective payments.

Social security and unemployment contributions

In addition to calculating payroll, your business must make regular contributions for social security and unemployment coverage for every team member. These payments are submitted to the local compensation office, which oversees retirement benefits, disability coverage, and unemployment support.

To manage this properly, your business should:

• Maintain complete and precise records of all contributions and payments
• Submit the required amounts and reports according to the deadlines provided by the compensation office
• Keep documentation organised and readily accessible in case of inspections or annual reconciliation

Monitoring work hours, overtime, and employee leave

As an employer in Switzerland, you are legally required to keep thorough records of your employees’ working time. This encompasses not only standard hours but also overtime and breaks. Any extra hours worked must be handled fairly, either through additional compensation or time off in lieu, depending on the agreements you have in place with your employee.

Beyond daily work schedules, it is your responsibility to track and manage all types of leave. Key areas include:

• Accurate vacation tracking: Ensure each team member receives the full number of leave days mandated by law.
• Managing public and additional holidays: Keep account of statutory holidays as well as any extra leave your company provides.
• Special leave management: Handle exceptional leave situations, such as maternity or paternity leave, military service, or other legally recognised absences.

Annual declarations and documentation

At the end of each year, your business must submit key reports to the relevant authorities.

You can read more about that here.

Practical tips for a smooth start as an employer

Building your team is not only about compliance; it is about setting the tone for a productive working relationship.

To ensure a successful start:

• Prepare payroll and insurance coverage before the first working day
• Use clear, written contracts and internal policies
• Implement simple systems for time and vacation tracking
• Communicate salary details and pay schedules transparently
• Monitor employment costs regularly

If you don’t want to spend excessive time managing all of this alone, or if you are preparing to take more people on board, you can consider getting professional support.

How LedgerPeek simplifies your employment and payroll tasks

At LedgerPeek, we help you set up employee hiring process and also provide a comprehensive payroll service that takes care of all ongoing obligations once the employment starts.

Our services include:

• Full payroll management, tailored for both fixed and variable salaries
• Preparation of employment-related documents (in collaboration with our AdminTech partner)
• Development and review of internal staff guidelines to ensure clear policies and compliance
• Employee time tracking and vacation management
• Coordination and management of health and accident insurance cases

Book a consultation with our specialist today – and take your first team member without worries about the compliance and paperwork.