Overtime Calculation in Switzerland: A Complete Guide to Swiss Overtime Law and Payroll

IN BRIEF

• Swiss overtime law is governed by two separate legal frameworks: the Swiss Code of Obligations (OR), which applies to all employment contracts, and the Labor Act (Arbeitsgesetz / ArG), which applies to employees working in covered establishments such as factories, offices, and retail.
• Under the Swiss Code of Obligations (OR Art. 321c), overtime is any hours worked beyond the contractually agreed hours. Employers must compensate overtime with a minimum 25 percent wage supplement unless agreed in writing to be offset with equivalent time off.
• Under the Labor Act (ArG), the statutory maximum working week is 45 hours for industrial workers, office employees, and retail staff, and 50 hours for all other employees. Hours exceeding these limits are overtime subject to a 25 percent supplement.
• Overtime worked beyond four hours per week must be compensated in cash with the 25 percent supplement; it cannot be offset with time off unless the employee and employer agree otherwise in writing.
• Annual overtime caps apply under the Labor Act: a maximum of 170 overtime hours per year for employees under the 45-hour weekly limit, and 140 hours for those under the 50-hour limit.
• Night work (between 11 pm and 6 am) and Sunday work each attract a minimum 25 percent wage supplement, independent of whether they also constitute overtime.
• Senior management employees (cadres superieurs) are generally excluded from the Labor Act’s working time provisions, meaning the statutory overtime rules and weekly limits do not apply to them.

 

What Legal Frameworks Govern Overtime in Switzerland?

 

Switzerland’s overtime rules operate under two parallel legal systems that apply simultaneously to most employment relationships. Understanding which framework applies, and in what order, is the starting point for any overtime analysis.

The Swiss Code of Obligations (Obligationenrecht, OR), codified as SR 220, is the foundational private law that governs all employment contracts. Every employee in Switzerland has an employment contract regulated by the OR, whether or not the Labor Act also applies. The OR establishes the basic overtime entitlement: any hours worked beyond those contractually agreed.

The Federal Labor Act (Arbeitsgesetz, ArG), codified as SR 822.11, is the public law that sets maximum working time limits, rest period requirements, and specific protections for employees in covered establishments. The ArG applies to employees in factories, offices, retail outlets, and other commercial establishments but does not apply to all workers.

“Switzerland has two overlapping overtime regimes operating at the same time. The OR creates overtime when contractual hours are exceeded. The ArG creates an absolute overtime threshold that applies regardless of what the employment contract says. An employer cannot contract out of the ArG limits by simply agreeing to a higher number of working hours in the employment contract.”

The Swiss Code of Obligations (OR) SR 220 is the primary private law source for employment contract obligations in Switzerland. The Federal Labor Act (ArG) SR 822.11 is the public law governing working conditions. Both are available in full at fedlex.admin.ch.

 

What Is the Difference Between OR Overtime and ArG Overtime?

 

The distinction between OR overtime and ArG overtime is one of the most frequently misunderstood aspects of Swiss employment law. They measure different things and trigger different compensation obligations.

 

OR Overtime (Uberstunden)

 

• OR overtime arises when the employee works more hours than agreed in the employment contract.
• If the contract specifies 40 hours per week and the employee works 45 hours, the 5 extra hours are OR overtime (Uberstunden).
• OR overtime must be compensated with time off of equal duration within a reasonable period, or, if this is not possible or not agreed, with the hourly wage plus a 25 percent supplement.
• The obligation to pay the 25 percent supplement on OR overtime can be contractually waived for employees whose salary is above a defined threshold (currently CHF 129,600 per year), and only by explicit written agreement.

 

ArG Overtime (Mehrarbeit)

 

• ArG overtime arises when an employee covered by the Labor Act works beyond the statutory maximum weekly limits: 45 hours (industrial, office, retail) or 50 hours (other sectors).
• ArG overtime cannot be waived even by written agreement. The 25 percent supplement is mandatory regardless of salary level.
• ArG overtime is subject to annual quantitative caps that OR overtime is not.
• The relationship between the two: an employee working 47 hours against a 40-hour contract in a 45-hour ArG sector has 7 hours of OR overtime (hours 41 to 47) and 2 hours of ArG overtime (hours 46 and 47). The ArG overtime hours are a subset of the OR overtime hours in this case.

Key distinction: OR overtime is measured against the contractual baseline. ArG overtime is measured against the statutory maximum. In most cases, OR overtime kicks in first (when contractual hours are exceeded) and ArG overtime applies later (when statutory limits are exceeded). Both attract the same 25 percent minimum supplement, but ArG overtime cannot be waived even for high earners.

 

What Are the Swiss Overtime Calculation Rules and Rates?

 

 

What Is the Minimum 25 Percent Supplement?

 

The 25 percent supplement means that each overtime hour is paid at 125 percent of the employee’s regular hourly rate. For a salaried employee, the hourly rate is calculated by dividing the monthly salary by the number of agreed contractual hours per month.

• Example: Monthly salary CHF 7,000, agreed hours 180 per month. Hourly rate = CHF 7,000 / 180 = CHF 38.89. Overtime rate = CHF 38.89 x 1.25 = CHF 48.61 per overtime hour.
• The supplement applies to the total compensation for the overtime hour, not to a base rate after other deductions. AHV and other social contributions are calculated on the full overtime compensation including the supplement.
• Overtime compensation is subject to the same withholding tax rules as regular salary for employees taxed at source (Quellensteuer).

OR Art. 321c para. 3 provides that overtime must be compensated with a minimum 25 percent supplement unless offset with time off within a reasonable period. ArG Art. 13 para. 1 sets the same 25 percent requirement for ArG overtime. Both are available at fedlex.admin.ch.

 

How Is Overtime Calculated in Practice? Worked Examples

 

Applying the Swiss overtime rules to real payroll scenarios requires working through the contractual hours, the applicable legal framework, and the compensation method. The table below illustrates the most common calculation scenarios.

 

 

How Is Overtime Calculated for Part-Time Employees?

 

• Part-time employees are entitled to overtime compensation whenever they work more than their contractually agreed hours, just as full-time employees are.
• A part-time employee contracted for 20 hours per week who works 25 hours has worked 5 hours of OR overtime, subject to the 25 percent supplement or time-off arrangement.
• Part-time employees do not reach the ArG statutory maximum (45 or 50 hours) in most cases, so ArG overtime is rarely triggered for part-time employees unless they work exceptional hours.
• Collective labor agreements covering part-time workers may set different overtime thresholds; always review the applicable Gesamtarbeitsvertrag (GAV) before applying default rules.

Payroll note: Overtime compensation must be included in the AHV salary base and reported on the annual salary certificate (Lohnausweis) in Field 1 (gross salary). It is not a separate benefit or expense; it is part of taxable employment income. Employers who exclude overtime pay from the AHV declaration are creating a compliance error that can be discovered in a compensation office audit. 

 

Can Swiss Overtime Be Offset with Time Off Instead of Pay?

 

Yes, under certain conditions. Both OR and ArG allow overtime to be compensated with equivalent time off rather than cash payment, but the rules differ between the two frameworks.

 

Time Off in Lieu Under the OR

 

• OR Art. 321c para. 2 allows overtime to be offset with equivalent time off (time-for-time compensation), provided that the employee and employer agree and the offset occurs within a reasonable time period.
• The reasonable time period is not defined in the statute but is generally interpreted by courts as within the same calendar year or within a period agreed in the employment contract.
• The 25 percent supplement does not need to be paid when overtime is offset with time off if this arrangement is agreed in writing in the employment contract or in a written agreement at the time of the overtime.
• If the agreed time-off offset does not occur within the agreed period, the employer must pay the overtime in cash with the 25 percent supplement from that point forward.

 

Time Off in Lieu Under the ArG

 

• ArG overtime (Mehrarbeit) can also be offset with equivalent time off, but with stricter conditions than OR overtime.
• The ArG requires that the time off be granted within a period specified in the implementing ordinance, generally within a reference period of 14 weeks or as defined in an applicable collective agreement.
• Time-off compensation for ArG overtime must include the equivalent of the 25 percent supplement unless an explicit written agreement exists to waive the supplement, which is only permissible for certain categories of employees.

 

What Are the Annual Overtime Caps in Switzerland?

 

The Labor Act imposes annual quantitative limits on ArG overtime. These caps are absolute; no employment contract or written agreement can extend them.

 

What Are the Specific Annual Limits?

 

• For employees subject to the 45-hour maximum week (industrial, office, retail workers): a maximum of 170 overtime hours per calendar year.
• For employees subject to the 50-hour maximum week (other categories): a maximum of 140 overtime hours per calendar year.
• Temporary permitted exceptions: the State Secretariat for Economic Affairs (SECO) can grant individual authorization for additional overtime beyond these limits in cases of operational necessity. Such authorizations are not routine and require documented justification.

 

What Happens When Overtime Caps Are Exceeded?

 

• Exceeding the annual ArG overtime cap is a violation of Swiss public employment law and may result in cantonal labor inspection enforcement action.
• Cantonal labor inspectorates (Arbeitsinspektorate) are responsible for monitoring compliance with the ArG, including overtime cap compliance. They conduct both scheduled and unannounced inspections, particularly in sectors with known overtime compliance issues.
• Employers who exceed overtime caps must document the situation, consult with the cantonal labor authority, and in some cases apply for retroactive SECO authorization.

The ArG overtime annual caps are set in ArG Art. 12 and Art. 13, and further specified in the implementing ordinance ArGV 1. SECO oversees the authorization process for exceptional overtime beyond statutory limits. Source: SECO at seco.admin.ch

 

How Do Night Work and Sunday Work Supplements Work?

 

Night work and Sunday work in Switzerland are regulated under the ArG and attract mandatory wage supplements independent of whether the hours also constitute overtime.

 

Night Work Supplements

 

• Night work is defined as work performed between 11 pm and 6 am under the ArG.
• All employees subject to the ArG who perform night work must receive a wage supplement of at least 25 percent for each hour worked during the night period.
• For employees who regularly perform night work (defined as more than 25 nights per year), the supplement increases to at least 25 percent plus additional compensatory time off as specified in the ArG implementing ordinance.
• The supplement is calculated on the regular hourly rate for the hours actually worked during the night period. If the night work hours also constitute overtime, both supplements apply cumulatively.

 

Sunday Work Supplements

 

• Sunday work is work performed on Sundays or public holidays recognized under the applicable cantonal law.
• A minimum 50 percent wage supplement applies to Sunday work for employees who perform Sunday work regularly (defined as more than six Sundays per year without SECO authorization).
• Occasional Sunday work (up to six Sundays per year) may be compensated with equivalent compensatory time off in lieu of the 50 percent cash supplement.
• Employers who require Sunday work on a regular basis must apply to the cantonal labor authority or SECO for authorization, depending on the sector and the nature of the operations.

Combined supplements: An employee who works overtime hours during a Sunday night shift may accumulate three supplements simultaneously: the 25% overtime supplement, the 25% night work supplement, and the 50% Sunday supplement. Swiss payroll systems must be configured to identify these overlapping situations and calculate the combined supplement correctly. Manual payroll processes are highly susceptible to errors when multiple supplements apply. 

 

Which Employees Are Excluded from Swiss Overtime Rules?

 

Not all employees in Switzerland have the same level of protection under the Labor Act. Certain categories are partially or fully excluded from the ArG’s working time provisions, including its overtime limits.

 

Senior Management (Cadres Superieurs)

 

• Senior management employees whose work cannot be subject to external control and who have significant independent authority over their working time are excluded from the ArG working time provisions under ArG Art. 3.
• For these employees, the ArG’s maximum weekly hours, overtime caps, and mandatory rest period requirements do not apply. Their overtime entitlement is governed exclusively by the employment contract (OR).
• Whether an employee qualifies as a cadre superieur is a factual question that must be assessed individually. The title alone is not sufficient; genuine decision-making authority and scheduling independence are required.

 

Other Excluded Categories

 

• Close family members of the employer employed in the business.
• Agricultural workers (governed by separate agricultural labor law).
• Domestic workers (governed by specific domestic work provisions of the OR).
• Certain categories of home workers.

 

What Are the Payroll Obligations for Overtime in Switzerland?

 

Overtime compensation in Switzerland must be correctly integrated into the monthly payroll run. The following obligations apply to every employer processing overtime.

 

AHV and Social Insurance

 

• Overtime pay including the 25 percent supplement is part of the employee’s AHV-subject salary (massgeblicher Lohn). It must be included in the monthly AHV contribution base and in the annual salary declaration to the cantonal compensation office.
• Overtime pay is also subject to BVG occupational pension contributions if it forms part of the coordinated salary. Consistent overtime that forms part of the regular compensation structure should be assessed for BVG treatment.
• ALV (unemployment insurance) contributions also apply to overtime pay up to the annual insured salary ceiling.

 

Salary Certificate (Lohnausweis)

 

• Overtime compensation must be included in Field 1 (gross salary) of the annual salary certificate issued to each employee by January 31.
• Night and Sunday supplements are included in the same field and are not separately disclosed unless required by the cantonal tax authority.
• Any time-off-in-lieu arrangement that does not result in cash payment need not be disclosed on the salary certificate, as no income is received.

 

Withholding Tax (Quellensteuer)

 

• Overtime pay is subject to withholding tax for employees taxed at source. The overtime supplement is included in gross monthly salary for the purpose of determining the applicable withholding rate.
• In months where significant overtime is paid, the higher gross may push the employee into a higher withholding tariff bracket, which the payroll system should calculate using the correct monthly or annual tariff table.

The Swiss salary certificate (Lohnausweis) form and completion instructions are published by the Federal Tax Administration (ESTV). Overtime pay must be included in Field 1 (gross salary). Instructions available at estv.admin.ch/estv/en/home/direkte-bundessteuer/lohnausweis.html.

 

 

External References and Citation Links

 

All statutory references, overtime rules, and compliance obligations cited in this article are sourced from the following authoritative Swiss federal references:

 

Swiss Federal Employment Law

 

• Swiss Code of Obligations (OR) SR 220: Art. 319 to 362 (employment contract): https://www.fedlex.admin.ch/eli/cc/27/317_321_377/en
• Federal Labor Act (Arbeitsgesetz / ArG) SR 822.11: https://www.fedlex.admin.ch/eli/cc/1966/57_57_57/en

 

Swiss Federal Authorities

 

• ESTV: salary certificate (Lohnausweis) guidance: https://www.estv.admin.ch/estv/en/home/direkte-bundessteuer/lohnausweis.html
• AHV/IV official information portal: https://www.ahv-iv.ch/en/

 

International Comparative Resources

 

• International Labour Organization: working time standards and overtime: https://www.ilo.org/global/topics/working-time/lang–en/index.htm
• OECD: working hours data by country: https://stats.oecd.org/Index.aspx?DataSetCode=ANHRS
• Global Payroll Association: Swiss payroll compliance resources: https://www.globalpayrollassociation.com

 

Key Points

 

• Swiss overtime law operates under two parallel frameworks: the Code of Obligations (OR), which governs all contracts, and the Labor Act (ArG), which sets statutory maximum hours for covered employees.
• OR overtime (Uberstunden) is any hour worked beyond the contractual hours. ArG overtime (Mehrarbeit) is any hour worked beyond the statutory maximum (45 or 50 hours per week).
• Both types of overtime attract a minimum 25 percent wage supplement unless compensated with equivalent time off within an agreed period.
• The 25 percent supplement under the OR can be contractually waived for high earners (above CHF 129,600 annual salary) by explicit written agreement. The ArG supplement cannot be waived regardless of salary level.
• Annual ArG overtime caps are 170 hours for employees under the 45-hour week and 140 hours for employees under the 50-hour week. Exceeding these limits requires SECO authorization.
• Night work (11 pm to 6 am) attracts a minimum 25 percent supplement. Regular Sunday work attracts a minimum 50 percent supplement. These apply in addition to any overtime supplement.
• Senior management employees (cadres superieurs) are excluded from the ArG, meaning statutory maximum hours and overtime caps do not apply to them. Their overtime terms are governed by the employment contract alone.
• Overtime pay including the 25 percent supplement is part of the AHV-subject salary and must be included in the AHV contribution base, the annual salary declaration, and Field 1 of the salary certificate.
• Time-off-in-lieu arrangements for overtime must be documented in writing in the employment contract or a separate written agreement. Undocumented time-off arrangements create liability for cash overtime payment at termination.
• Combined supplements apply cumulatively: an overtime hour worked at night on a Sunday may attract three separate supplements simultaneously. Payroll systems must be configured to calculate these correctly.