In Switzerland, the 13th salary is a common feature of pay packages, particularly in the many sectors where it spreads an employee's annual salary over a different basis than a straightforward twelve monthly payments. How it works still raises regular questions for employers. Is the payment mandatory? How do you calculate the amount? When does it have to be paid?
Unlike benefits the law provides for directly, the 13th salary is not automatically owed to every employee. It generally depends on an agreement between employer and employee, set out in the employment contract, a collective agreement, or rules that apply within the company.
To run payroll correctly, employers also have to account for the rules on social security contributions and on withholding tax. Because the 13th salary counts as an element of remuneration, it has to be carried into the declarations and the social security calculations when it is paid.
What is the 13th salary in Switzerland?
The 13th salary is a portion of annual remuneration paid out as an extra monthly installment. The principle is simple: instead of receiving their full annual salary spread over twelve months, the employee receives a thirteenth installment.
This lets the employer structure annual remuneration differently while keeping the same overall figure set out in the employment contract.
The 13th salary is not, however, a general legal obligation in Switzerland. It becomes mandatory only where the parties have agreed on it, or where a specific provision imposes it, for instance in certain collective labor agreements.
An element of remuneration set out in the employment contract
Calculating the 13th salary starts from the annual salary agreed between employer and employee.
Where a 13th salary is provided for, the annual salary can be divided into 13 equal parts. The employee then receives:
- 12 payments corresponding to the usual monthly installments;
- one further payment corresponding to a thirteenth share of the annual salary.
An employee whose gross annual salary is set at CHF 130,000, for example, receives CHF 10,000 in each of the 13 installments, the thirteenth included.
On this basis, the 13th salary is not an exceptional bonus granted freely by the employer. It is an integral part of the agreed remuneration and has to be treated as a full salary element.
The terms have to be clearly defined to avoid misunderstandings. In particular, the employer has to state in the employment contract whether the annual salary includes a 13th salary, and on what conditions it is paid.
This distinction matters, because a payment presented as a 13th salary follows different rules from a gratuity or a variable bonus.
The difference between a 13th salary and a gratuity
The two are often confused, yet they are different mechanisms.
The 13th salary is an element of remuneration fixed in advance. Its amount can usually be worked out from the start of the employment relationship, since it follows from the agreed annual salary.
A gratuity is an additional payment that may depend on the employer's decision, on company results, or on criteria set in advance. It is therefore more variable in character.
The legal consequence is where the difference really bites, and it shows up when someone leaves. Because the 13th salary is a salary element, an employee whose contract ends part-way through the year is entitled to their proportionate share as of right. For a gratuity, art. 322d para. 2 of the Code of Obligations reverses that: the employee is entitled to a proportionate share on early departure only if it was expressly agreed.
There is a catch in the other direction too. Where a gratuity is paid regularly and without reservation over three consecutive years or more, case law treats it as having become a salary element, with the entitlements that go with it. An employer who wants to keep a payment discretionary has to make that reservation clear, and repeat it every year.
All of this has practical consequences for payroll. An employer who provides for a 13th salary has to build it into pay processes as a fixed component of salary. Qualifying each element of remuneration correctly is what determines which social security and tax rules you then apply.
How do you calculate the 13th salary?
The calculation depends chiefly on the annual salary set out in the employment contract and on the payment arrangements the company has chosen.
The principle stays simple, but some elements need attention if payroll is to be handled correctly, particularly where the employee has not worked the full year or where their pay changes during the year.
Calculating from the annual salary
Where a salary is paid over 13 installments in Switzerland, the 13th salary is one thirteenth (1/13) of the gross annual salary, not one twelfth.
In practice, the annual salary is split into 13 equal parts. Each installment therefore represents 1/13 of the annual salary, which means the 13th salary is the same amount as each of the other 12.
It can be paid in a single sum, usually at the end of the year, or split across several payments, depending on what the employment contract or the collective agreement provides.
Formula:
Gross annual salary ÷ 13 = the amount of one installment
Example:
- Gross annual salary: CHF 156,000
- Installment across 13 payments: 156,000 ÷ 13 = CHF 12,000
- The employee therefore receives CHF 12,000 a month over 13 months, for an annual total of CHF 156,000.
They receive 12 ordinary monthly installments of CHF 12,000 plus one further payment of the same amount as the 13th salary.
Where pay changes during the year, the employer applies the rules set out in the contract or the company's practice to determine the amount due. A salary increase part-way through the year, in particular, may call for an adjustment. The same principles have to be adapted for employees paid by the hour. See our guide to calculating the hourly wage in Switzerland for more.
Arrivals and departures deserve particular attention. Where an employee does not work a full year, the 13th salary is calculated in proportion to how long they were employed. This is not a matter of company practice: where the 13th salary is a salary element, the proportionate share is owed as of right when the contract ends part-way through the year.
Paying the 13th salary in one or several installments
The 13th salary does not have to be paid in a single sum at year end.
Depending on the arrangements the company has set, several practices are possible:
- a single payment, usually at the end of the year;
- a payment split in two over the course of the year.
The employer applies whatever the employment contract or the applicable collective provisions set out. A change to the payment method should not be decided unilaterally where it alters the agreed conditions of remuneration.
For companies, the choice often comes down to internal organization and cash management. Either way, the payment has to be recorded correctly in payroll so that social security contributions and any tax withheld are calculated at the right moment.
Which social security contributions apply to the 13th salary?
The 13th salary is a full element of remuneration. It gets no special treatment that would take it outside social security obligations: when it is paid, it goes into the calculation of the applicable contributions.
For the employer, that means anticipating the payment in payroll management. Contributions have to be calculated at the same time as the payment itself, taking into account the specific rules that apply to certain branches of insurance. For more on salary deductions, see our dedicated guide.
The 13th salary is subject to AVS, AI, APG and AC contributions
In Switzerland, the 13th salary forms part of determining salary for social insurance purposes. It is therefore subject to the mandatory contributions for the AVS, the AI, the APG and, where the conditions are met, unemployment insurance (AC).
When the 13th salary is paid, the employer applies the same principles as for ordinary salary:
- contributions calculated on the gross amount paid;
- contributions split between employer and employee under the usual rules;
- the amount declared in the statements sent to the relevant bodies.
Where an employee receives a 13th salary of CHF 10,000 gross, for instance, that amount goes into the payroll subject to social security contributions. To anticipate what the payment does to company costs, employers can use our freelance calculator for Switzerland. Employer and employee shares are then calculated at the rates in force.
The four branches above are not the whole picture. Because the 13th salary is part of determining salary, it also feeds the coordinated salary used for occupational pensions (LPP) and the insured earnings used for accident insurance (LAA). Leaving it out of either base under-declares the employee and produces exactly the kind of correction employers want to avoid.
The rule exists so that all income from professional activity contributes to financing the Swiss social security system. The 13th salary is not remuneration that sits outside payroll: it carries the same administrative obligations as any other salary element.
Getting the treatment wrong leads to later adjustments, so it is worth checking that your payroll software applies contributions correctly in the month the 13th salary is paid.
The specific rule for unemployment insurance
Unemployment insurance is where the 13th salary needs the closest attention.
AC contributions are due at 2.2 percent of determining salary, split equally between employer and employee, up to an annual ceiling of CHF 148,200. Since 1 January 2023, nothing at all is levied for the AC on the portion of salary above that ceiling: the former 1 percent solidarity contribution has been abolished.
The ceiling is annual, so paying an additional amount such as the 13th salary can push an employee over it. The employer therefore has to test the cumulative annual figure against the ceiling in the month the payment falls, rather than treating that month like any other.
The ceiling applies to each employment relationship taken separately. Where the employee has not worked the full year, it is reduced accordingly: divide CHF 148,200 by 360 to get the daily limit, then multiply by the number of days employed, counting 30 days per month and including Saturdays and Sundays. Someone employed from 15 April to 29 December, for example, works out at 255 days, giving a ceiling of CHF 104,975 for the period. AC contributions are then due only on salary up to that figure.
This matters most for employees whose annual remuneration is close to or above the ceiling. In those cases the calculation has to be configured precisely to avoid withholding too much or too little.
For companies running payroll software, the tool has to tell ordinary salary apart from additional payments such as the 13th salary. Configured properly, it applies these rules automatically and keeps administrative corrections down.
How is the 13th salary treated for withholding tax?
Beyond social security contributions, the 13th salary also has to be factored into the withholding tax calculation for the employees concerned.
The extra payment temporarily raises taxable income and therefore has to be included in the information sent to the tax authorities. The applicable rules are harmonized by the Federal Tax Administration (AFC) and the cantonal tax authorities.
For employers, the point is to tell the 13th salary apart from other variable elements of remuneration so that the tax withheld is calculated under the rules in force.
Including the payment is mandatory
The 13th salary has to be taken into account when determining the withholding tax rate.
Even where it is paid only once a year, it forms part of the employee's taxable income. The employer therefore has to include it in the data used to establish the applicable deduction.
This concerns employees subject to withholding tax because of their tax situation in Switzerland. Treatment can vary with the canton and the applicable scale, but the principle is the same everywhere: the 13th salary has to be declared and carried into the calculation.
Getting this wrong creates a gap between what is withheld during the year and the tax actually due, which then has to be corrected for the employer or the employee.
Why the payslip has to show it clearly
A payslip has to make the different elements of an employee's remuneration identifiable. The 13th salary therefore has to appear separately when it is paid.
That transparency makes it easier to:
- let the employee understand their statement;
- check the amounts subject to contributions;
- verify the tax withheld;
- prepare the annual declarations.
For HR and finance managers, paying the 13th salary is a step that calls for coordination between contractual data, the payroll software and the reporting obligations.
Handling it rigorously avoids gaps between the amount agreed with the employee, the contributions calculated and the information sent to the authorities.
What employers should watch when paying the 13th salary
Paying a 13th salary can look straightforward, since it usually rests on a calculation rule known in advance. Managing it in payroll still needs attention if you are to honor the contractual commitments, apply contributions correctly and avoid later adjustments.
The main difficulties tend to sit in the specific situations: a salary change during the year, an employee joining or leaving, or the line between several variable elements of remuneration.
Check what the employment contract provides
The first step is checking the conditions that apply to the 13th salary.
The employment contract should make it possible to identify:
- whether a 13th salary exists;
- the calculation method used;
- the reference period applied;
- the payment arrangements provided for.
A clear distinction is essential, because the 13th salary does not work like a discretionary bonus or an exceptional gratuity. Where it is agreed as an element of remuneration, the employee holds a corresponding right on the conditions set out.
Employers also have to apply the same rules to all the employees concerned, unless specific provisions justify treating someone differently.
Adjust the calculation when circumstances change
The calculation may need adjusting where an employee's situation changes during the year.
That is the case where:
- the employee joins the company part-way through the year;
- the contract ends before the year is out;
- the salary changes during the year;
- the activity rate changes.
In these situations, the employer applies the rules set out in the contract or in internal practice to determine the amount due.
An arrival or a departure during the year gives a calculation proportionate to the time the employee was employed. On departure this is an entitlement, not a courtesy: where the 13th salary is a salary element, the proportionate share is owed. A clause requiring the employee to still be on the payroll at year end does not change that.
Handling these cases well takes good coordination between contractual data and the payroll system. Incorrect information creates a gap between what the employee expects and what they actually receive.
Check how it feeds payroll and the social security declarations
Paying the 13th salary has to fit into the usual payroll processes.
Employers should check that:
- the gross amount paid matches the calculation provided for;
- AVS, AI, APG and AC contributions are applied correctly;
- the payment is also carried into the LPP and LAA bases;
- the annual AC ceiling is taken into account where relevant;
- the tax treatment is correct for employees subject to withholding tax.
These checks matter most for companies with large headcounts or with several administrative systems running side by side.
An error when paying the 13th salary has consequences on several fronts: corrected payslips, adjusted social security declarations, or a tax correction.
A structured process therefore secures this annual step and keeps remuneration in line with the commitments made to employees.
Hand your Swiss payroll to a specialist partner
Calculating the 13th salary is not simply a matter of dividing annual remuneration by 13. Employers also have to make sure the payment is carried correctly into payroll, subject to the right contributions, and reflected in the applicable tax obligations.
At Numeriq Payroll, we support Swiss companies, foreign companies employing staff in Switzerland and SMEs with their payroll management in Switzerland and their administrative obligations.
With a multilingual team based in Switzerland, over 50 years of combined experience and support available 24/7, Numeriq Payroll helps companies keep their payroll secure day to day.
More than 100 companies and 1,000 contractors rely on us, with a payroll accuracy rate of 99.9 percent. That lets employers handle remuneration with more simplicity, more transparency and full compliance with Swiss requirements.
