Family allowances are one of the things Swiss employers have to build into their day-to-day payroll management. They give financial support to employees with children, but the administrative handling rests largely on the company.
For employees, family allowances are generally paid through the employer. The company has to be affiliated with a family allowance compensation fund (CAF), pass on its employees' claims and pay out the amounts granted at the same time as the salary.
How family allowances work rests on a federal framework set by the Federal Family Allowances Act (LAFam), rounded out by cantonal rules. Amounts, funding and some benefits can therefore vary from one canton to another.
To handle all this compliantly, an employer needs to know which types of allowance exist, the conditions for payment and the steps to take with the competent fund.
How do family allowances work in Switzerland?
In Switzerland, family allowances are meant to offset part of the cost of raising children. They are paid to people in gainful employment who meet the conditions set by law.
The system rests on two main benefits provided at federal level: the child allowance and the education allowance. Cantons can top up these minimum amounts, though, and provide for additional benefits.
For the employer, these allowances are not part of the salary subject to the usual social insurance contributions. They still have to appear clearly on the payslip and be paid to the employee under the applicable rules.
The two main categories of family allowance
Federal law draws a distinction between two main types of family allowance.
The child allowance goes to parents of children up to a certain age. The minimum amount set at federal level is CHF 215 per month.
It is paid:
- from the child's birth;
- until the child turns 16;
- up to the age of 20 at most where the child is unable to work because of a health problem.
The education allowance covers children in post-compulsory education or training: an apprenticeship, upper secondary school, university studies or any comparable course. Its federal minimum is CHF 268 per month.
It is paid:
- from the month the child starts post-compulsory education or training, and at the earliest from the month of their 15th birthday;
- until the end of the course;
- until the child turns 25 at the latest.
It is not due, on the other hand, where the child earns a gross annual income of more than CHF 30,240 from gainful employment.
These amounts are the minimums provided under federal law. Cantons have room to grant higher amounts, so an employer has to apply the rules of the family allowance compensation fund it is affiliated with.
Additional cantonal family allowances
While the LAFam sets a common framework for the whole of Switzerland, cantons can provide for more generous arrangements.
They can in particular:
- raise the minimum amounts of the child or education allowance;
- introduce a birth allowance;
- provide for an adoption allowance.
Cantonal differences therefore concern mainly the amounts paid and certain additional benefits. A company operating in several cantons has to make sure it applies the right rules to each situation.
This cantonal dimension matters particularly for companies employing staff across several Swiss regions. The competent compensation fund determines which rules apply and supports the employer in handling claims.
What are the employer's obligations regarding family allowances?
Family allowances are only one of the many administrative obligations an employer carries. They fit into a wider set of steps tied to payroll management in Switzerland, covering social insurance, mandatory reporting and the handling of remuneration.
The company has to be affiliated with a family allowance compensation fund and act as the link between that fund and its employees.
Mandatory affiliation with a family allowance compensation fund
Every employer paying salaries subject to the AVS has to be affiliated with a family allowance compensation fund (CAF).
Affiliation is generally with the fund of the canton where the company has its registered office or a branch. It is what allows the employer to handle family allowance claims for its staff.
Once affiliated, the company has to:
- report the necessary information to the fund;
- pass on its employees' allowance claims;
- apply the decisions issued by the fund;
- pay the allowances granted together with the salary.
Affiliation with a CAF is therefore an unavoidable administrative obligation for companies employing staff in Switzerland.
The allowance claim submitted by the employer
Family allowances are not paid automatically. The employee has to tell their employer about their family situation and provide the necessary documents concerning their children.
The employer then passes the claim on to its family allowance compensation fund. The fund examines the information provided and determines whether the conditions for entitlement are met.
Once entitlement is recognized, the employer pays the family allowance every month together with the salary. It usually appears separately on the payslip, to set this family benefit apart from the other elements of remuneration.
In practice, the company therefore has to keep up regular administrative follow-up to take account of the changes that can affect entitlement, for example:
- the birth of a child;
- the start or end of a course of training;
- a change in family circumstances;
- a change of canton or of employer.
The employer has to make sure the data it passes on about the employee's situation and the children concerned is correct, and inform the fund of any change likely to affect entitlement to the allowances.
Family allowances have one particular feature in payroll management: they are not subject to the usual social insurance contributions. For a fuller picture of the mandatory deductions applied to salaries in Switzerland, see our guide to AVS, AI, APG and AC contributions. They still have to be built correctly into the company's administrative processes for the handling to be compliant.
For companies, tracking family allowances therefore calls for precise organization. The information employees provide has to be checked, claims have to go to the right fund, and changes in circumstances have to be followed over time.
How are family allowances funded in Switzerland?
Funding for family allowances rests mainly on employers. Unlike other Swiss social insurance schemes funded by contributions shared between employers and employees, family allowances are generally borne by the company.
How this works still varies from canton to canton, particularly on contribution rates and any employee participation.
A contribution generally borne by the employer
In most cantons, employers fund family allowances in full through contributions paid to their compensation fund.
These contributions are calculated on the payroll subject to the AVS. The rate varies according to the canton and the compensation fund concerned.
The employer therefore has to build this charge into the overall cost of its staff. Unlike the allowances themselves, which are paid to employees, CAF contributions are an employer charge tied to employing personnel.
This funding gives compensation funds the resources they need to pay family benefits to those entitled to them. A company is therefore not directly funding the allowance paid to one particular employee: it contributes to the collective scheme set up at cantonal level.
To get this right, the employer has to declare the payroll concerned to its compensation fund every year. That declaration is what allows the contributions due for family allowances to be calculated.
The exception of the canton of Valais
Funding for family allowances works differently in the canton of Valais.
Unlike most other cantons, employees there also contribute to funding family allowances through a deduction from their salary. Part of the contribution can therefore be taken directly from the employee's pay.
That particularity calls for attention when payslips are drawn up for the employees concerned. The employer has to apply the rules of the applicable cantonal scheme and build the deduction correctly into its payroll system.
For companies present in several cantons, this difference underlines how much payroll management has to be able to handle cantonal particularities. The obligations tied to family allowances are not always identical, depending on where the company is affiliated or where its employees work.
What happens when several parents have competing entitlements?
One child cannot give rise to more than one full family allowance. Where several people could claim an allowance for the same child, it therefore has to be decided which of them has priority.
This comes up in particular in families where both parents are in gainful employment, or where the parents work in different cantons.
The order of priority for determining the beneficiary
The Federal Family Allowances Act (art. 7 para. 1 LAFam) sets a precise order of priority for determining who is entitled to the allowance where entitlements compete:
- the person in gainful employment;
- the person who holds parental authority, or who held it until the child came of age;
- the person with whom the child mainly lives;
- the person in gainful employment in the canton where the child is domiciled;
- the person with the highest AVS-liable income from employed activity; failing that, the person with the highest income from self-employment.
These criteria apply in sequence: you only move on to the next one where the previous one does not settle which claimant has priority.
For the employer, this sometimes means gathering additional information before passing a claim on to the compensation fund. It is not always enough to note that an employee has a dependent child: you also have to check whether someone else has a prior entitlement.
How the differential allowance works
In some situations, the person who does not have priority can still be entitled to a top-up.
That is notably the case where the two parents work in different cantons and the canton of the person without priority provides for a higher family allowance.
In that situation, the person concerned can claim a differential allowance corresponding to the difference between the two applicable amounts. This top-up is only due, however, where that person is themselves in gainful employment; failing that, no differential allowance is paid.
The claim has to be made to the compensation fund competent for the person concerned, generally through their employer.
The differential allowance is what makes it possible to take account of the differences between cantonal schemes while respecting the principle that a child gives rise to only one full allowance.
For companies, handling these situations calls for good administrative coordination. Information about the other parent, the canton of activity and the benefits already paid has to be taken into account properly, to avoid calculation errors or later adjustments.
Are family allowances paid when the child lives abroad?
Swiss family allowances can, in some situations, be paid where the child lives outside Switzerland. The applicable rules depend in particular on the child's country of residence, the parent's employment situation and the international agreements in force.
For employers, these situations call for particular attention, because the conditions for exporting allowances are not the same for every country. The family allowance compensation fund remains the competent contact for determining whether an entitlement exists and on what terms the benefits have to be paid.
The rules that apply in the European Union and EFTA
Where the child lives in a member State of the European Union or of the European Free Trade Association (EFTA), the rules coordinating social security systems make it possible, in certain cases, to keep Swiss family allowances running.
These provisions concern in particular workers in gainful employment in Switzerland whose children live in another member country. The aim is to keep someone from losing their entitlement to family benefits purely because of a cross-border situation.
Entitlement still depends on several elements, in particular:
- the child's country of residence;
- the parents' employment status;
- the country in which each parent is in gainful employment;
- whether there is an entitlement to family benefits in another State.
In some situations, another country has priority for paying family benefits. Switzerland can then step in only to pay any difference, where the Swiss amount is higher than the one provided under the other applicable scheme.
For the employer, the administrative handling stays the same: the claim has to go to the competent compensation fund, which checks the conditions and determines the amount the employee can claim.
Situations outside the EU/EFTA
Outside the EU and EFTA, there is in principle no export of family allowances for a child domiciled abroad. Art. 7 para. 1 OAFam provides that allowances are only paid for a child domiciled outside Switzerland where an international agreement expressly provides for it. And according to the FSIO directives (DAFam, no. 304), only the Agreement on the Free Movement of Persons and the EFTA Convention create such an obligation for allowances falling under the LAFam. The agreements concluded with Bosnia and Herzegovina, North Macedonia, Montenegro, San Marino and Turkey cover only family allowances in agriculture (LFA) and do not apply to LAFam allowances.
There is one exception, though, and it concerns Swiss employers directly. Under art. 7 para. 2 OAFam, employees who remain compulsorily insured with the AVS even though they work abroad for an employer with its registered office in Switzerland (posted workers in particular, or people working for the Confederation, an international organization or an aid organization) keep their entitlement to allowances for their children domiciled abroad, even where there is no international agreement. That entitlement then applies worldwide.
It is also the only case in which the amounts paid are adjusted to the purchasing power of the child's country of domicile, on the bands set out in art. 8 OAFam: 100 percent, two thirds or one third of the statutory minimum, depending on the purchasing power of the country concerned. In every other case where an international agreement requires allowances to be paid, in the EU and EFTA in particular, the FSIO directives (DAFam, no. 305) state the opposite: no purchasing power adjustment is applied, and the full amount remains due.
International situations call for particular attention, especially where a company employs cross-border or posted workers. Payroll and social security rules can then differ depending on the employee's country of residence. See our full guide to payroll for cross-border workers in Switzerland. A check with the compensation fund is needed before confirming entitlement to allowances.
Manage your family allowances with compliant payroll in Switzerland
Handling family allowances calls for a good command of both federal and cantonal rules. Between affiliation with a compensation fund, tracking employee claims, differences between cantons and particular situations such as competing entitlements or children domiciled abroad, the administrative obligations can get complicated quickly.
At Numeriq Payroll, we support Swiss companies, foreign businesses employing staff in Switzerland and SMEs in managing their payroll and social insurance obligations.
What our team helps you with includes:
- handling family allowance formalities with the competent funds;
- building family benefits correctly into your payroll processes;
- taking account of the cantonal particularities that apply to your company;
- keeping a compliant record of your employees' particular situations;
- simplifying the administration tied to Swiss social insurance obligations.
With a multilingual team based in Switzerland, over 50 years of combined experience, support available 24/7 and a track record recognized by more than 100 companies and 1,000 contractors, Numeriq Payroll helps employers keep their payroll management secure.
Our expertise also rests on a constant requirement for reliability, with a payroll accuracy rate of 99.9 percent, so that companies can manage their staff in Switzerland with more simplicity and peace of mind.
.png)
