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Procedures & Social Insurance

Simplified Procedure: What Nobody Tells You About the Downsides

The simplified payroll procedure sounds appealing: less paperwork, flat-rate contributions, everything via your tax return. But what sounds simple has real consequences - for your domestic worker and for you. This article honestly shows where the limits are and when the standard procedure is the better choice.

You have found a cleaner, 4 hours per week, CHF 30/hour. The compensation office offers the 'simplified procedure' - sounds perfect. But years later your cleaner discovers that her AHV pension is barely worth anything. What happened?

Key Takeaways

  • 1The simplified procedure charges only 5% flat social contributions instead of the usual ~12.8% - sounds cheaper, but means significantly less AHV pension for the worker.
  • 2It only applies up to CHF 22,680 annual salary per employer. Above that, the standard procedure is mandatory.
  • 3No BVG (2nd pillar), barely any unemployment insurance, no maternity benefits - your domestic worker is less protected in case of job loss, pregnancy, or in retirement.
  • 4Withholding tax is included in the flat rate - practical for the worker, but the tax burden is not individually optimised.
  • 5For short-term, minor engagements the simplified procedure makes sense. For long-term employment, the standard procedure is worth it.
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What Is the Simplified Payroll Procedure?

The simplified payroll procedure (Art. 37a AHVG) was created to make registering domestic workers easier. Instead of individual social insurance contributions, you as the employer pay a flat rate of 5% of gross salary - directly via your tax return.

The 5% covers AHV, IV, EO and ALV on a flat-rate basis. A withholding tax is also included. The settlement is done annually via the cantonal compensation office. The procedure is voluntary and only applies to salaries up to CHF 22,680 per year and employer.

It was introduced in 2008 to combat undeclared work in households. The idea: better low contributions than none. But 'low' has consequences.

5%
Flat contribution rate
CHF 22,680
Max. annual salary
~12.8%
Standard rate (employer+employee)
CHF 0
BVG contributions in simplified procedure

The Benefits - Fair and Honest

Yes, the simplified procedure has real advantages. We are not hiding them:

Extremely simple: one rate (5%), one settlement per year, via your tax return
Less bureaucracy: no separate registration with AHV, ALV, EO needed
Withholding tax included: the worker does not need to file a tax return
Cheaper for the employer: 5% instead of ~6.4% employer share
Ideal for occasional jobs: perfect for a few hours per week over short periods

So far, so good. But now comes the part most sites leave out.

The Downsides - What You Really Need to Know

This is where we get honest. Most websites stop at the benefits. We do not.

1Significantly lower AHV pension

The 5% flat rate sounds like savings - but it is a reduction in social insurance contributions. In the standard procedure, ~10.6% goes to AHV/IV/EO (employer + employee combined). In the simplified procedure, only 5% covers EVERYTHING including taxes. The result: your domestic worker accumulates significantly less AHV credit. Over 20 years of employment, the pension difference can be several hundred francs per month.

2Salary cap: CHF 22,680 per year

The simplified procedure only applies up to CHF 22,680 annual salary per employer. At CHF 30/hour and 15 hours/week, that is already CHF 23,400 - you exceed the limit. From that point, you MUST switch to the standard procedure. Many employers realise this too late.

3No BVG (2nd pillar)

In the simplified procedure, no BVG contributions (occupational pension) are made. The 2nd pillar is central to retirement planning in Switzerland. Without BVG, your domestic worker only has the AHV in retirement - and that is already lower under the simplified procedure. This particularly affects workers who primarily work in private households.

4Barely any unemployment insurance

The ALV contributions in the simplified procedure are minimal. If your domestic worker is dismissed, she may have no or only limited entitlement to unemployment benefits. In the standard procedure, 2.2% ALV contributions (employer + employee) are correctly accounted for.

5No maternity benefits

The income compensation scheme (EO) covers maternity benefits and service compensation. In the simplified procedure, EO contributions are so low that benefit entitlements are severely limited. If your domestic worker becomes pregnant, she may receive no or only minimal maternity compensation.

6Flat-rate tax

The withholding tax included in the 5% rate is a flat amount. For the worker, this can be an advantage or disadvantage - depending on her personal tax situation. Individual tax optimisation is not possible. With low incomes, the worker may pay more tax than necessary.

The uncomfortable truth

The simplified procedure was created to reduce undeclared work - not to optimally protect the worker. The motto was: 'Better little protection than none.' But if you want to treat your domestic worker fairly long-term, 5% is not enough.

The simplified procedure is simple - but simple is not always fair.

Simplified vs. Standard Procedure

Here is the direct comparison - so you can make an informed decision:

Simplified Procedure

  • •5% flat rate (incl. withholding tax)
  • •Max. CHF 22,680 annual salary
  • •No BVG (2nd pillar)
  • •Minimal ALV and EO contributions
  • •Lower AHV pension for the worker
  • •Annual settlement via tax return

Standard Procedure

  • •~12.8% social contributions (employer + employee, correctly split)
  • •No salary cap
  • •BVG mandatory from CHF 22,680 annual salary
  • •Full ALV and EO protection
  • •Full AHV contributions = fair pension
  • •Monthly/quarterly settlement

Learn more about the standard procedure in our articles Register Your Cleaner and AHV Registration for Your Domestic Worker. For a comparison of settlement options, see Self-Service vs. Power of Attorney.

When You Should Switch to the Standard Procedure

The simplified procedure is not inherently bad. But it does not fit every situation. Here is our honest recommendation:

1

The salary exceeds CHF 22,680/year

Above this amount, the simplified procedure is no longer possible anyway. At CHF 30/hour and more than ~14 hours/week, you are already above it. Switch in time, not when the compensation office comes asking.

2

The employment is long-term (>1 year)

The longer your domestic worker works for you, the bigger the gap in retirement provisions. For employment over several years, proper coverage matters.

3

Your domestic worker mainly works in private households

If your cleaner works for multiple families under the simplified procedure, she accumulates minimal AHV contributions everywhere. None of these positions pay BVG. In old age, this can be existentially threatening.

4

You want to offer your domestic worker fair conditions

The standard procedure costs a bit more - but your domestic worker is properly covered: full AHV, unemployment protection, maternity benefits, and BVG for retirement.

AK finder: your cantonal compensation office

AHV registration runs through the compensation office of your canton of residence. Pick your canton - you get the right office, its online portal and the registration form.

Zürich

SVA Zürich

Online portal: AHVeasyFAK contribution (employer): 1.025%
Open registration formGuide for Zürich
Office website+41 44 448 50 00

Source: official data from the cantonal compensation offices.

Clino handles the standard procedure for you

Monthly payroll, correct social insurance contributions, UVG and BVG - all automatic. As simple as the simplified procedure, but with full protection for your domestic worker. For CHF 19.90/month.

Register now →

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Quiz: Is the simplified procedure right for you?

4 questions - and you'll know if the simplified billing procedure fits your situation.

1. What is your helper's monthly gross salary?

2. How long is the employment expected to last?

3. How important is pension fund (BVG) coverage?

4. Does your helper work for multiple employers?

Frequently Asked Questions

Is the simplified procedure illegal?
No, absolutely not. It is an official procedure created by the legislator (Art. 37a AHVG). It is legal and correct - but it offers less protection than the standard procedure. The question is not whether it is legal, but whether it is optimal for your situation.
How much less AHV pension does my domestic worker receive?
That depends on salary and duration. With a gross salary of CHF 18,000/year, the simplified procedure contributes only about CHF 900 in social contributions (5%), part of which goes to tax. In the standard procedure, AHV/IV/EO alone would be around CHF 1,900. Over 10 years, this adds up to thousands of francs in fewer contributions - directly affecting the future pension.
Can I switch from simplified to standard mid-year?
In principle, the switch happens at year-end. Inform your cantonal compensation office early. If you exceed the CHF 22,680 salary threshold, you must switch. Clino supports you with a seamless transition.
Why do compensation offices recommend the simplified procedure?
Compensation offices recommend it because it reduces undeclared work. The logic: better to collect 5% than 0%. That is understandable from the state's perspective - but it does not mean it is the best option for worker or employer.
Does my cleaner have to agree to the simplified procedure?
Yes. Both sides - employer and worker - must agree to the simplified procedure. Your domestic worker has the right to request the standard procedure if she wants better coverage. Talk about it openly.
What happens if I exceed the CHF 22,680 salary limit?
If you exceed the limit, you must retroactively switch to the standard procedure and pay the difference in social insurance contributions. This can be unpleasant and expensive. Keep an eye on the annual salary - or use Clino, which automatically warns you.

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Salvador Jovells

Salvador Jovells, founder of Clino

Verified July 2026