Calculating your hourly wage: formula, social security deductions and an example for Switzerland

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How is the hourly wage calculated?

The hourly wage is determined in three steps: first, establish the gross monthly salary, then calculate the monthly working hours (weekly hours multiplied by 52 divided by 12), and finally divide one value by the other; for a 42-hour week, this results in 182 hours per month.

• Step 1: Determine the gross monthly salary. The gross monthly salary includes the contractually agreed salary, including regular allowances. The basis for wage agreements is the Swiss Code of Obligations (CO); maximum working hours are set by the Labour Act (EmpA).

• Step 2: Calculate monthly hours. The formula is: weekly hours × 52 ÷ 12. For a 42-hour week, this is 182 hours per month. Anyone working 40 hours per week comes to around 173 hours.

• Step 3: Calculate the gross hourly wage. Gross monthly salary ÷ monthly hours = gross hourly wage. All social security deductions relate to the relevant (OASI-liable) gross wage.

Gross hourly wage = Gross monthly salary ÷ Monthly hours

This gross hourly wage is the basis from which all social security deductions are taken. Anyone working irregular hours calculates the monthly average over the entire year and divides by 12.

Which social security deductions are deducted from the hourly wage?

Four statutory social security deductions are deducted from the gross hourly wage, affecting all employees in Switzerland: OASI/DI/IC, ALV, BVG, and, with sufficient weekly working hours, non-occupational accident insurance (NBU).

The following table shows the 2026 rates for employees:

Two thresholds apply to the second pillar, which are often confused. The entry threshold (2026: CHF 22,680 annual salary with one employer) determines whether someone is compulsorily insured at all. The coordination deduction (2026: CHF 26,460) then determines which part of the salary is insured: the coordinated salary is at least CHF 3,780 and at most CHF 64,260. Both values have remained unchanged since 2025; the FSIO publishes them annually. Many pension funds voluntarily reduce the coordination deduction for part-time workloads in their regulations.

Occupational accident insurance under the UVG (with SUVA or a private insurer) is paid by the employer; the NBU premium is generally borne by the employee as soon as they work at least 8 hours per week for the same employer. Working hours with different employers are not combined for this purpose.

The deductions directly affect the net hourly wage. Anyone checking their payslip will find each of these items listed as a separate line. For employees who combine several part-time jobs: each employer calculates the deductions separately on the salary earned with them. This can mean that while the total OASI/DI/IC contribution is correct, BVG coverage remains incomplete if no individual workload exceeds the entry threshold of CHF 22,680. Anyone in this situation can take out voluntary insurance with the BVG Substitute Occupational Benefit Institution or clarify their pension situation with a specialist.

Especially with part-time workloads of less than 50 per cent, it is worth checking the BVG entry threshold annually. If the annual salary from an individual job is lower, there is no statutory mandatory BVG coverage for this job, even if the total income from several jobs is significantly higher. In this case, employers are not obliged to offer a voluntary solution, but they can do so.

Sample calculation: From gross monthly salary to net hourly wage

A specific numerical example shows how a gross monthly salary of CHF 5,500 with 182 monthly hours results in a gross hourly wage of CHF 30.22, and what share each deduction represents of the net hourly wage. All social security deductions are based on the gross wage.

Step 1: Gross monthly salary

• Value: CHF 5,500

• Calculation: Contractually agreed monthly salary without deductions.

• Result: CHF 5,500 gross salary per month.

Step 2: Monthly hours

• Value: 42 hours/week

• Calculation: 42 × 52 ÷ 12 = 182 hours/month.

• Result: 182 hours per month.

Step 3: Gross hourly wage

• Value: CHF 5,500 ÷ 182

• Calculation: Gross monthly salary divided by monthly hours.

• Result: CHF 30.22 per hour (rounded).

Step 4: OASI/DI/IC deduction

• Value: 5.3% of the gross hourly wage

• Calculation: CHF 30.22 × 0.053

• Result: CHF 1.60 per hour.

Step 5: ALV deduction

• Value: 1.1% of the gross hourly wage

• Calculation: CHF 30.22 × 0.011

• Result: CHF 0.33 per hour.

Step 6: BVG deduction

• Value: Age-dependent, on the coordinated salary

• Calculation: Annual salary of CHF 66,000 minus coordination deduction of CHF 26,460 = coordinated salary of CHF 39,540. Retirement credit for 35 to 44-year-olds 10% = CHF 3,954 per year, half of which is borne by the employee: CHF 1,977 per year or CHF 164.75 per month.

• Result: CHF 0.91 per hour (for 25 to 34-year-olds at 7% around CHF 0.63, for 55 to 65-year-olds at 18% around CHF 1.63).

Step 7: NBU deduction

• Value: Company-dependent premium

• Calculation: The NBU rate varies depending on the sector and insurer and is often around 1 to 1.5% of the gross salary in service businesses; it applies from 8 hours per week.

• Result: Around CHF 0.30 to 0.45 per hour.

Step 8: Net hourly wage

• Value: Gross hourly wage minus all statutory contributions

• Calculation: CHF 30.22 − CHF 1.60 (OASI/DI/IC) − CHF 0.33 (ALV) − CHF 0.91 (BVG) − approx. CHF 0.35 (NBU).

• Result: Around CHF 27.00 per hour. Depending on age (BVG bracket) and NBU rate, the net hourly wage is between approximately CHF 26.20 and CHF 27.40. Withholding tax and any daily sickness allowance premiums are added for those affected.

What does an hourly wage cost employers in total?

Anyone who employs staff on an hourly basis not only pays out the agreed gross hourly wage, but also bears their own social security contributions, which noticeably increase the total wage costs.

Specifically, the following employer contributions are added:

• OASI/DI/IC: Employers pay the same rate as employees, i.e. 5.3% of the gross salary (basis: AHVG Art. 13 for OASI, plus IVG and EOG).

• ALV: Likewise 1.1% up to an annual salary of CHF 148,200.

• BVG: At least half of the retirement credits plus risk and administrative costs, depending on age and pension plan.

• Occupational accident insurance (UVG): Paid entirely by the employer; premium depends on the sector.

• FAK contributions: The family compensation fund finances child and education allowances. Contributions vary depending on canton and sector (around 1 to 3.5%) and are borne exclusively by employers.

• Administrative cost contribution to the OASI compensation fund.

In total, depending on the age of the employees, industry, and canton, total wage costs are typically around 15 to 20% above the agreed gross wage. Anyone calculating an hourly rate for budget planning must factor in this surcharge in order to realistically reflect the actual costs of a position.

For payroll accounting, this specifically means: for every CHF 100 of gross salary, employers incur around CHF 15 to CHF 20 in additional statutory contributions. For a position with a gross monthly salary of CHF 5,500, this corresponds to an additional monthly expense of around CHF 825 to CHF 1,100. These amounts must be taken into account in budget planning and in calculating hourly rates for clients. Anyone preparing quotes on an hourly basis usually factors the employer cost factor directly into the billing rate.

For employers who hire staff on call or with highly fluctuating hours, a monthly projection of employer contributions is recommended. The OASI compensation funds invoice contributions monthly for an annual payroll exceeding CHF 200,000, and otherwise quarterly, in each case based on the reported payroll; after the end of the year, a statement based on the actual payroll follows. Forward-looking planning is oriented towards the annualised gross wage and incorporates employer contributions as early as the quotation stage. Employers are also obliged to issue payslips and the annual salary certificate correctly and to pay all contributions on time.

Hourly wage or monthly salary: When does which model make sense?

Whether an hourly wage or a monthly salary is the right model depends on how regular and predictable the working hours are: the hourly wage is suitable for irregular working hours, part-time work under 50 per cent, and temporary assignments, while the monthly salary is the simpler solution for permanent employment with a predictable workload.

An hourly wage makes sense if:

• working hours fluctuate from week to week.

• the workload is below 50%.

• there are temporary assignments or project-based work.

• holiday pay is compensated as a percentage surcharge: 8.33% for four weeks of holiday, 10.64% for five weeks.

A monthly salary makes sense if:

• the employment is permanent and the workload remains predictable.

• overtime under CO Art. 321c is compensated or offset without billing down to the hour.

The Labour Act (EmpA) sets the framework for maximum working hours, which apply regardless of the wage model. For foreign employees without a C permanent residence permit, employers deduct withholding tax directly from the salary, including for hourly wages.

When switching from a monthly salary to an hourly wage or vice versa, several practical points should be noted. According to the Federal Supreme Court, for an hourly wage, the holiday pay supplement must be stated separately both in the employment contract and on each payslip; if this is missing, holiday pay can be claimed retrospectively. Employers switching between models must adjust the employment contract in writing. Those who employ on-call staff should specify in the contract how the minimum working hours are regulated, so that no unintended claims arise.

For employees moving between two jobs and changing their wage model in the process, it is worth looking at the BVG entry threshold. Anyone switching from a monthly salary to an hourly wage with a lower workload may lose their BVG coverage if the new annual salary is below CHF 22,680. The EmpA stipulates that employers must record working hours, regardless of whether pay is calculated on an hourly or monthly basis. This recording obligation also applies to employees working from home and with flexible working time models.

Payroll accounting without calculation errors: How payroll software helps

Anyone who calculates hourly wages manually risks errors when rates change. In nextesy's payroll accounting, the hourly wage is its own wage type: you record the hours worked per settlement period, and nextesy calculates the wage and automatically deducts social security deductions such as OASI/DI/IC, ALV, BVG, and any withholding tax. Salary certificates are generated directly in the system, and entry, exit, and mutation reports are sent directly to OASI, FAK, and BVG. For Swiss SMEs with hourly-based employees, switching to such a solution is particularly worthwhile when new thresholds and contribution rates must be taken into account on a regular basis. Try payroll accounting with nextesy