Understand your payslips perfectly

Hello to all you curious people who’ve taken a look at your payslip for the first time, or those who’ve suddenly wondered what it’s all about, that mysterious document that arrives in your inbox at the same time as your pay.

Well, get ready, because we’re going to dive headfirst into the fabulous world of Swiss payslips. What exactly are they used for? What treasure trove of information do they hide? How do you check that everything is correct and in order? And, armed with all this data, what wisdom can we draw from it?

More than simply reflecting the amount of your monthly salary, the payslip is a goldmine of more or less regulated and valuable information. It details not only your gross salary, but also the various deductions – social insurance, withholding tax, professional contributions – and sometimes even bonuses or specific allowances.

The payslip is an important tool for checking that your rights are being respected and that your piggy bank is doing as well as possible.

What is a payslip?

Legally speaking, in Switzerland, the Code of Obligations (article 322, paragraph 1) does not explicitly require employers to provide their employees with a detailed ‘statement of account’. It mainly stipulates the obligation to pay the agreed wages. However, in current practice in Switzerland, most employers issue such statements, enabling any employee, regardless of their contract, to check the income they will be paid for the past month. These statements include the fixed salary, variable salary, bonuses, commission, insurance, etc., and also record all the expenses and contributions paid by the employer on behalf of the employee. In the following paragraphs, we will explore in detail each item that should appear on the payslip. In summary, a payslip should clearly illustrate how your gross salary, negotiated with your employer, is transformed into the net amount paid into your bank account.

And as always at FBKConseils, here is an example of a payslip created specifically for this article:

Clarification between the payslip and the salary certificate

Although we could do further research to identify significant differences from a legal point of view between the payslip and the salary certificate, in practice the uses and information contained in these two documents are quite similar. Here are the main distinctions between them, which are essential to understand:

Issue frequency: monthly vs. annually

Salary certificates are generally issued once a year, typically between January and March of the following year, providing no immediate information on income, contributions or other deductions during the current year. In contrast, payslips are issued monthly, providing an accurate and up-to-date record of your income and deductions. This regularity is particularly beneficial for people moving to Switzerland who need to justify their income for purposes such as renting a flat or taking out a loan.

Detail and accuracy of information

While payslips are less formalised in terms of content than salary certificates, they generally include far more detail. Every type of income paid, every contribution paid, the rates applied, and other benefits are meticulously listed, offering maximum transparency. The salary certificate, on the other hand, serves as an overall summary for the year which, although exhaustive, can often prove complex to decipher when it comes to specific amounts.

Usefulness for tax returns

Salary slips, which are useful for a number of administrative procedures such as renting or applying for a mortgage, are not valid for tax returns. For tax purposes, in particular for the annual tax return, it is the salary certificate that is required. What’s more, most cantons require this document to be attached to your tax return.

The practical value of payslips

By exploring the differences between the salary certificate and the payslip in the previous paragraph, we have begun to understand their potential uses. However, to better understand the scope of this document, here is a more detailed list of the possibilities offered by the payslip:

Obtaining a mortgage

When you find the property of your dreams, financial assistance from a bank or insurance company is, in the vast majority of cases, essential to cover the part of the purchase price that you cannot finance yourself (the mortgage debt). To convince the bank, nothing is more persuasive than presenting your last 3 payslips, ideally highlighting the last increase in bold. While your tax returns from previous years serve mainly to reassure the banks about the state of your personal finances and the state of your equity, your recent payslips highlight your income over the last few months, strengthening your case for a loan.

Renting a flat

Moving to Switzerland often involves finding accommodation to kick-start this new phase in your life. Salary slips, together with your residence permit, are essential for securing your first rental agreement. In Switzerland, most landlords require not only an employment contract and civil liability insurance, but also the last three payslips, which attest to your ability to cover the rent. It’s a vicious circle: to get a job, you need accommodation, and to get accommodation, you need a job. Fortunately, salary slips provide concrete proof of your income from the very first month.

Apply for other forms of credit

There comes a time in life when you may need to use consumer credit, car leasing or other types of loan to speed up certain personal projects. The strongest guarantee you can offer is your most recent payslip, which shows your ability to repay the amount borrowed.

In short, payslips play a crucial role not only in the day-to-day management of your finances, but also in securing your financial and logistical commitments in Switzerland.

What information is included on a payslip?

Although we have already touched on this concept above, it is important to understand that payslips are not strictly regulated in Switzerland. As a result, employers who choose to provide these documents have a certain amount of latitude in terms of the information they include. However, thanks to good practice over time, the structure of salary slips tends to become uniform from one employer to another. Here is a detailed presentation of the elements you are likely to find on a typical payslip. For a better understanding, we recommend that you open our example provided so that you can follow each point explained.

Personal information on the payslip

As with any official document in Switzerland, your payslip will contain essential personal data. Here is the typical information you will find:

Full name and date of birth

This basic information clearly identifies the employee. The presence of this information on the payslip ensures that the document is personal and correctly allocated.

Postal address

Your current address is also given, as further confirmation of your identity and as a point of contact for any communication relating to your employment.

AVS number

If you have recently arrived in Switzerland, the AVS number may seem unusual, but it will quickly become a familiar part of your documentation. This 13-digit national insurance number, which always begins with 756, serves as a unique identifier for almost all aspects of life in Switzerland (health insurance, employment, pensions, etc.).

Salary period concerned

It is crucial that the payslip clearly specifies the period to which it refers. This helps to contextualise the financial information presented, by indicating precisely the working month to which payments and deductions correspond.

Details of the different types of income

At a career start, it’s not common to have multiple sources of income, but in Switzerland, as elsewhere, people’s pay varies. Here are the different types of income you might find on a payslip:

Fixed income

The basic amount of your remuneration, generally the amount specified in your employment contract. This fixed income is supposed to be guaranteed, depending solely on your presence and not on external conditions.

Bonus

Bonuses can vary depending on a number of factors, such as the company’s overall performance, your individual performance, or other exceptional rewards. They are a supplement to your basic salary to recognise specific contributions.

Variable income

This category is often aimed at employees in direct contact with customers or those working on the front line, with part of their remuneration dependent on performance criteria clearly set out in their contract.

Commissions

Typically associated with the brokerage business, commissions mainly concern the real estate, insurance and financial contract sectors, and more broadly, the direct sale of products to consumers. They are calculated on the basis of sales or contracts concluded.

Insurance benefits and allowances

In Switzerland, as elsewhere, it is not uncommon to receive insurance benefits or various allowances, such as family allowances. In some cases, these allowances are paid directly to the employer, who then redistributes them to the employees concerned.

Hourly wage

In some sectors, such as catering or freelance administration, remuneration is not based on a fixed monthly salary but rather on the number of hours worked. This model allows flexibility and adaptation to the actual volume of work.

Overtime

During particularly busy periods, or if your employer requires you to be present late at night, at weekends, or even during public holidays such as Christmas, you could be compensated with a higher hourly rate. This overtime is recognition of your commitment beyond normal working hours.

Paid leave

At FBKConseils, the traditional concept of paid holidays doesn’t exist because everyone takes holidays at their own convenience – how lucky is that? However, in other companies, it’s common to have to take days off, and sometimes it’s not possible to take all the days accumulated. In this case, your employer would have to compensate you financially for this time not taken, which is considered as overtime work.

These different components illustrate how your monthly salary is structured and give you the opportunity to challenge it if necessary.

Types of deductions on your payslip

Before diving into the list of deductions that will unfortunately be deducted from your salary, it is crucial to understand the basis on which these employee contributions are calculated. The majority of deductions are based on your total income. However, certain allowances and similar benefits are not subject to contributions. For example, you won’t pay pension contributions on child benefit. Now, let’s explore this list of common deductions:

AVS/AI/APG contributions

We have often discussed the AVS, its contributions and the repercussions on your future retirement pensions in our articles. But here, to put it simply, this first line on your payslip concerns the basic Swiss pension, which is supposed to guarantee you a minimum standard of living when you retire, or, unfortunately, in the event of accident or illness. For the year 2024, AVS contributions total 10.6%, of which 5.3% (i.e. half) is payable by you.

Unemployment insurance contributions (AC)

As from January 1st 2023, contributions amount to 2.2% of your total salary up to a maximum of CHF 148,200. Above this threshold, you no longer pay unemployment insurance contributions on the excess amount. This is because there is a ceiling on the unemployment benefit you can receive.

Accident insurance contributions (AAP-AANP)

These contributions vary according to the number of hours worked. If you work less than 8 hours a week, your employer is only required to pay insurance for occupational accidents that occur during your working hours. On the other hand, if you work more than 8 hours a week, you are also covered for non-work-related accidents, regardless of the nature of the accident. Contributions for this insurance generally vary between 1% and 2% of your salary, depending on the benefits chosen by the employer.

Contributions for daily sickness benefits (IJM)

In addition to accidents, illness is a risk that needs to be covered. While the medical costs associated with an accident are borne by the employer, those associated with illness are covered by your health insurance (LAMal). However, in the event of illness, your employer is obliged to cover your salary for a certain period and can take out insurance to protect against this risk. The contributions for this insurance, which is designed to cover your salary in the event of prolonged illness, are also between 1% and 2% of your salary.

Withholding tax

At FBKConseils, we’ve written a number of articles on tax, particularly withholding tax. Rather than repeat ourselves, I suggest you take a look at some useful links we’ve shared previously.

• How are withholding taxes calculated in Switzerland?
• Tax at source: The subsequent standard taxation (TOU)
• Withholding tax in Switzerland: does it concern you?

But the key thing to remember about your payslip and your tax is that, depending on your type of residence permit, your potential status as a cross-border commuter and other criteria, it is common for employers to be required to deduct a proportion of your salary to pay tax directly. This system, which is similar to the one used in France, uses a scale that varies according to your family situation (for example, whether you are married, have children, or your canton of residence) to determine the applicable tax rate. Then, at the beginning of the following year, you will have several options for adjusting, improving or simply leaving things as they are (rectification of tax at source, compulsory TOU or an optional TOU).

How can you be sure that the information on your payslip is correct?

I understand that this may seem complex, and even for us experts, it’s a real challenge. However, here are a few simple tips for checking the accuracy of your payslip:

• Salary paid: It’s relatively easy to compare the amount paid into your bank account with the amount shown on your payslip. If there is a discrepancy, you can follow the information provided in this article to identify where the problem might lie.
• Calculated salary: Also check that all your overtime, the terms of any contracts you have signed, and other forms of performance-related income have been correctly included for the month in question.
• Calculating tax at source: This is often where mistakes are made. It’s quite common for employers to apply the wrong scale, forget to make the necessary adjustments, or fail to keep up with your changing circumstances. For you, the process is simple: find the appropriate scale, apply the rate corresponding to your pay, and check that the withholding tax has been calculated correctly.

Here we are, almost at the end of this article. In conclusion, I encourage you to stay informed and continue to explore other topics to better understand the various aspects of your professional and financial life.

Conclusion

What can we learn from all this? You already know most of it. The payslip is an essential document that almost all employers provide to their employees. Its main purpose is to clarify the calculation of the gross salary accrued during the past month and to detail the deductions made to arrive at the net amount you will finally be paid. This document deserves particular attention and must be checked, and even contested if necessary, to ensure that your rights are protected and that you understand exactly what is happening to your income. What’s more, the payslip doesn’t just provide useful information; it can also be an indispensable tool in various contractual situations, such as when signing leases, obtaining certain loans or negotiating a mortgage.

Additional resources to learn more about payslips

As is our new habit, we are adding a final paragraph to help you find reliable sources of information outside our site. In this article, unfortunately not being governed by the law, there are not many external sources, but here is a legal basis that might help you.

• Swiss Code of Obligations
• Understanding AVS/AI/APG contributions

How can FBKConseils help you with your payslips?

At FBKConseils, we are dedicated to providing you with clear answers and practical solutions to your financial questions. When it comes to payslips, here’s how we can help:

• Personalised advice: Contact us with any questions you may have about the Swiss pension system. We’ll be happy to clarify any aspect you find complex.
• Mediation with your employer: If you have specific questions or unresolved problems concerning your payslip, we can act as an intermediary between you and your employer to obtain the necessary answers.
• Tax assistance: We work with you to review the tax deducted from your salary and assess whether there are any tax optimisation strategies that could benefit you.

Our aim is to help you navigate the complexities of pay slips and maximise your financial position through our expertise.