Calculating hourly wage: Formula, social security deductions and example calculation for Switzerland

How is the hourly wage calculated?

The hourly wage is calculated in three steps: first, determine the gross monthly salary, then calculate the monthly working hours (weekly hours times 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 salary agreements is the Code of Obligations (CO); maximum working hours are set by the Employment 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 gross hourly wage. Gross monthly salary ÷ monthly hours = gross hourly wage. All social security deductions relate to the relevant (OASI-liable) gross salary.

Gross hourly wage = gross monthly salary ÷ monthly hours

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

Which social deductions are deducted from the hourly wage?

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

The following table shows the 2026 rates for employees:

Two limit amounts 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 work in their regulations.

Occupational accident insurance according to UVG (with SUVA or a private insurer) is paid by the employer; the NBU premium is usually paid 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 added together.

The deductions have a direct impact on 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, the following applies: each employer calculates the deductions separately on the salary earned with them. This can lead to the overall OASI/DI/IC contribution being correct, but BVG protection remaining incomplete if no single job exceeds the entry threshold of CHF 22,680. Anyone in this situation can take out voluntary insurance with the Stiftung Auffangeinrichtung BVG or clarify their pension situation with a specialist.

Particularly in the case of part-time jobs under 50 percent, it is worth checking the BVG entry threshold annually. If the annual salary from a single job is below this, there is no statutory BVG protection for this job, even if the total income from several jobs is significantly higher. Employers are not obliged to offer a voluntary solution in this case, but they can do so.

Example calculation: from gross monthly salary to net hourly wage

A concrete 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 proportion of each deduction makes up the net hourly wage. All social security deductions relate to the gross salary.

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 coordinated salary

• Calculation: Annual salary CHF 66,000 minus coordination deduction CHF 26,460 = coordinated salary CHF 39,540. Age credit for 35- to 44-year-olds 10 % = CHF 3,954 per year, half of which is paid 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 with 7% around CHF 0.63, for 55- to 65-year-olds with 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 companies; 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 compulsory 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 tier) and NBU rate, the net hourly wage is between around CHF 26.20 and CHF 27.40. Withholding tax and any daily sickness benefit premiums are also added for those affected.

What does an hourly wage cost employers overall?

Those who employ staff on an hourly basis do not only pay the agreed gross hourly wage, but also pay their own social security contributions, which increase total wage costs noticeably.

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: Art. 13 AHVG for OASI, plus IVG and EOG).

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

• BVG: At least half of the age 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.

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

• Administrative cost contribution to the OASI compensation fund.

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

For payroll accounting, this means specifically: for every CHF 100 of gross salary, employers incur around CHF 15 to CHF 20 in additional compulsory 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 the calculation of hourly rates for customers. Those who prepare offers on an hourly basis usually incorporate the employer cost factor directly into the billing rate.

For employers who employ staff on call or with heavily fluctuating hours, a monthly extrapolation of employer contributions is recommended. The OASI compensation funds invoice the contributions monthly if the annual salary sum exceeds CHF 200,000, otherwise quarterly, based in each case on the reported salary sum; after the end of the year, the billing is based on the actual salary sum. Forward-looking planning is based on the annualised gross salary and includes employer contributions when the offer is made. 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 hourly wage or monthly salary is the right model depends on how regular and predictable the working hours are: hourly wage is suitable for irregular working hours, part-time work under 50 percent and temporary assignments, while monthly salary is the simpler solution for permanent employment with predictable hours.

Hourly wage makes sense if:

• working hours fluctuate from week to week.

• the workload is under 50 %.

• temporary assignments or project-based work are involved.

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

Monthly salary makes sense if:

• employment is permanent and the workload remains predictable.

• overtime is compensated or offset according to CO Art. 321c without hourly accounting.

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

When changing from a monthly salary to an hourly wage or vice versa, there are some practical points to consider. For hourly wages, according to the Federal Supreme Court, the holiday pay surcharge must be shown separately both in the employment contract and on every payslip; if this is missing, holiday pay can be claimed subsequently. Employers changing between models adapt the employment contract in writing. Those who employ staff on call record in the contract how the minimum working hours are regulated so that no unintended claims arise.

For employees who change between two jobs and thereby change their salary model, a look at the BVG entry threshold is worthwhile. Anyone changing from a monthly salary to an hourly wage with a lower workload may lose BVG protection if the new annual salary is below CHF 22,680. The EmpA stipulates that employers record working hours, regardless of whether the salary is calculated on an hourly or monthly basis. This obligation to record hours also applies to employees working from home and for flexible working time models.

Payroll accounting without calculation errors: how payroll software helps

Anyone calculating hourly wages manually risks errors when rates change; integrated payroll software such as the nextesy payroll module calculates OASI/DI/IC, ALV and BVG automatically, updates the deduction rates in the event of legal changes and creates payslips directly. If the FSIO changes a contribution rate or a limit value, nextesy takes over the adjustment without you having to update the tables manually. Salary certificates are generated directly in the system. For Swiss SMEs with hourly employees, switching to such a solution is particularly worthwhile when new limit values and contribution rates have to be tracked every year. Test payroll accounting with nextesy