Managers who hire employees are required to implement rigorous wage management. Indeed, many rules and particularities have to be considered in order to carry out this administrative obligation. So, how should the employer declare the salaries paid to his employees? What deadlines must it respect? What must a pay slip contain? How do collective agreements intervene in the management of salaries? We take stock of the situation so that you may get a clearer picture!
Understanding a pay slip
Salary slips contain a lot of information that varies according to the country where the work is being carried out: gross salary, social deductions and net salary are then indicated.
In Switzerland, a salary slip has several headings.
Gross monthly salary
On a pay slip, the fixed salary or the variable salary (depending on what has been stipulated on the wage-earner's employment contract) will be specified on the first line.
The amount of family allowances
The amount of child benefit that the employee receives will be stated here. They vary according to the canton in which the employee works. The beneficiary of the family allowance may therefore receive an at least CHF 200.- monthly allowance for children up to the age of 16, and an at least CHF 250.- monthly allowance for children up to the age of 25 who are still in education or training.
It should be noted that some cantons offer family allowances that may be higher than what is provided for by federal law. In addition, some companies may also decide to offer a higher amount than the benefit set by the canton.
AVS/AHV and AI/IV contributions
This is one of the social deductions that are made from the gross salary. On some salary slips, AHV and IV (and sometimes EO) contributions are grouped together under the same heading "AVS/AHV".
The AHV is the Old Age and Survivors' Insurance. The objective?
To partially compensate for a loss of income following a work termination. This insurance, to which it is compulsory to contribute, covers an insured person's vital needs in case of retirement or his family's survival in case of death.
This contribution begins on January 1 on a person's 17th birthday and continues until retirement age.
In this sense, the AVS/AHV will allow you to receive a retirement pension (also known as a pension) and a disability pension if you need it. It also allows you to receive a "survivor" pension: this is a pension that will be paid to the spouse or children in the event of the death of one or both parents.
The rate of contribution to the AVS/AHV is set by the Swiss Confederation. It therefore does not vary according to the cantons and companies where the employee works. The AVS/AHV contribution is deducted from the whole income: gross salary, variable salary and allowances.
Invalidity insurance (AI/IV), on the other hand, finances all the measures that will enable employees who are victims of a disability (due to a congenital problem, an illness or accident) to get back to work. It is also a compulsory insurance, which covers the whole of Switzerland and is applicable to all employees, regardless of the company they work in. Thanks to the AI/IV, the employee will then be able to receive a pension or daily allowances. This insurance also offers rehabilitation measures.
Military insurance for loss of earnings
Military insurance for loss of earnings is set by the Confederation and applies to all workers. It covers accidents and illnesses that occur during the periods when perform their military duties
These are the contributions that finance the Swiss unemployment system. The rate is set by the Confederation and is applied to a reference salary (insured earnings). It is important to remember that this monthly reference salary is subject to a ceiling. If you earn more than this amount, your contribution rate will only apply according to this ceiling value, so if you earn more than this ceiling value and you become unemployed, then the benefit you are entitled to will be calculated on this amount: it will therefore be lower than if the calculation had been made on the basis of your actual salary.
The pension fund
The pension fund is actually the second pillar of the Swiss pension system. It is the professional provident fund, which complements the AVS/AHV: thanks to this system, which covers the reduction in income linked to disability and old age, 60% of your salary is then covered.
Any worker who receives more than CHF 19'890.- per year is required to contribute to this pension fund.
The company can choose to apply the minimum contributions provided for by law, or to propose a more advantageous policy.
From the age of 17 to 25, the employee contributes for disability and death cover: after 25 years, he or she also contributes for retirement.
The employer is required to contribute at least the same amount as its employees.
Non-occupational accident insurance
It is compulsory for every employee who works more than 8 hours a week for a company. Non-occupational accident insurance covers, as its name indicates, accidents that occur outside the professional context. The rate is set by the insurance company the employer has a contract with. It depends directly on the sector of activity in which the company operates.
Tax at source
With withholding tax, the employer deducts the amount of tax from your salary every month: the calculation of the tax depends on many criteria. This monthly deduction only applies to specified foreign workers. Swiss nationals living in Switzerland are not affected by this withholding tax. However, Swiss citizens living outside Switzerland are obliged to pay it.
Once the employer has recovered the withholding tax directly from his employees' wages, it is then up to him to calculate the amount that he will then pay directly to the cantonal tax office each quarter.
The net salary
The last line on the pay slip is the net salary, directly accrued to the employee, with all deductions made.
The Role of Collective Agreements in Wage Management
In order to regulate work regulations and the relationship between employers and employees, collective labor agreements are applied. They are drawn up between employers and workers' associations in order to specify :
- The provisions on the content and termination of the individual employment contract of employees;
- Provisions on the rights and obligations of both parties (employers and employees);
- The provisions on the monitoring of the application of the specified measures.
The provisions concerning minimum wages, the 13th month, allowances, holidays, working hours, protection against dismissal or payments in the event of illness, maternity or military service will then be defined by the collective agreement the employer participates in. In this sense, it represents a proper reference for the employer, who will find all the laws he is obliged to comply with in order to manage his workers' salaries.
Declaration of wages
What are the deadlines for declaring salaries?
Employers are obliged to declare to the compensation fund the wages paid to their employees . Wages and salaries must be settled within 30 days after the end of the settlement period. The employer has until January 30 to submit the completed wage statement to the compensation fund. If the employer does not submit the wage statement on time, interest may be charged.
Which wage totals must be declared?
The declaration of the wages that have been paid by the employer during the year makes it possible to take into account the contributions that have been made by each of the employees. The declared income is then entered in the employees' individual accounts, which will make it possible to determine the levels of future benefits to which they will be entitled.
The payroll that is reported must include all salaries that have been paid during the calendar year, and which are subject to AVS/AHV, AI/IV , APG/EO and AC/ALV.
The employer must also report salaries that were paid or credited during the past year, but which relate to activities from previous periods.
The employer must also declare the payrolls subject to the family allowance fund. All salaries subject to Old Age and Survivors' Insurance, Disability Insurance and Loss of Earnings Insurance are also subject to the CAF. In this sense, the general total of the payrolls that are subject to the CAF must correspond to the general total of the payrolls subject to the AVS/AHV, AI/IV and APG/EO.
Transmission of salary information to the Federal Compensation Fund
When the salary declaration is fully completed, the employer must transmit all data to the Federal Compensation Fund. The employee can then choose to send them in txt, xls format or decide to use the ELM uniform salary declaration procedure (in xml format).
Which solutions for managing salaries?
When you own a company, payroll management can quickly become very complex: it requires a great deal of rigor, a highly specialized organization, consideration of numerous laws, and is therefore very time-consuming.
To manage salaries within the company, several options are available to the employer.
First of all, it is possible to create an accounting position dedicated to payroll management. This is a full-time position, which is essential in large organizations that employ a large number of employees. However, when starting up a business, or for some SMEs, this option can sometimes prove too costly and represent too much of an expense.
The second option is then to turn to software dedicated to payroll management, such as Bexio. This type of software reduces the time spent on administrative tasks: in just a few clicks, it is possible to create complete pay slips in an automated way. The interface with your bank allows you to transfer payments directly, without having to manage everything manually.
Since payroll management requires highly specialized skills, do not hesitate to ask for help on this point: the perfect organization of your company depends on it!