The Family Office Employee: Where Swiss Labour Law Meets Private Wealth Discretion
Family office employment in Switzerland sits at an intersection that standard employment frameworks were not designed for. The family office employee is typically senior, trusted with genuinely sensitive information, and embedded in a working relationship that is more personal and more demanding than conventional corporate employment. Swiss labour law applies to these relationships without modification; the fact that the employer is a private family rather than a listed company changes nothing about the legal obligations on either side.
The specific features of family office employment do, however, raise a set of legal questions that standard corporate employment practice does not always address well. This article covers the principal ones.
The Employment Contract for Family Office Employment
Family office employment should always be documented in a written contract, even where the relationship feels too close or personal for formalities. The contract should define the role precisely; a chief investment officer, a family accountant, a personal assistant, and an estate manager are all family office employees with very different responsibilities and working conditions. Each contract should be specific to the role and the family’s structure.
Key terms to address include: the precise scope of duties and any reporting lines across multiple entities, while clearly identifying the legal employer; working hours and the extent to which on-call availability or flexibility is expected; salary and any variable or discretionary compensation elements; notice periods appropriate to the seniority of the role and compliant with mandatory Swiss employment law requirements; and, where relevant, the terms governing accommodation where the employee resides at, or performs services from, a family property.
Confidentiality in Family Office Employment
Confidentiality is one of the key features distinguishing family office employment from standard corporate roles. Employees may have access to information relating to the family’s assets, structure, relationships and personal circumstances, all of which the family may have a legitimate interest in protecting.
Accordingly, the employment contract should contain robust confidentiality provisions. Such obligations may continue beyond termination of the employment relationship and, in relation to particularly sensitive categories of information, may remain applicable without a fixed time limit, subject to applicable mandatory law and general principles of Swiss law.
Swiss courts generally recognise and enforce appropriately drafted confidentiality undertakings. Clauses that identify protected categories of information with sufficient precision and clearly address the consequences of a breach are generally more likely to be enforceable than broad and undefined restrictions covering all information to which the employee may have had access.
For senior family office roles, a standalone confidentiality agreement entered into at the outset of the relationship may provide additional protection and help make the scope of the confidentiality obligations clear from day one.
Social Insurance and Payroll Obligations
Family office employment in Switzerland carries the same social insurance obligations as any other Swiss employment. The employer must register with the cantonal compensation office and make AHV, IV, EO, and ALV contributions. For senior staff earning above the LPP entry threshold (currently approximately CHF 22,680 per year), occupational pension contributions are also required. Family offices structured as a Swiss SA or Sarl handle these through a standard payroll process.
Family offices that have not formalised their structure, or where family members employ staff directly, must register individually as employers. The registration obligation is personal and applies regardless of the informality of the arrangement. Failure to register results in back-payment liability with interest; in some circumstances it creates personal liability for the principal.
Work Permits for Foreign Staff in Family Office Employment
International families in Switzerland frequently wish to employ staff from abroad; in particular, a family relocating to Switzerland may wish to retain longstanding household or family office personnel.
Nationals of EU and EFTA Member States generally benefit from the free movement of persons regime and may work in Switzerland subject to the applicable registration and permit requirements.
Third-country nationals are subject to Swiss immigration rules and generally require prior work authorisation and an appropriate residence permit (typically an L permit for short-term employment or a B permit for longer-term employment, depending on the circumstances). Admission is generally subject to quotas and, in many cases, labour market requirements, including a demonstration that no suitable candidate could be recruited from Switzerland or the EU/EFTA labour market.
Families wishing to relocate existing staff should therefore assess immigration requirements at an early stage, as the applicable conditions and timelines may vary depending on nationality, canton, role and anticipated duration of employment.
Processing times for work authorisations for third-country nationals in the context of family office employment may vary significantly depending on the canton, the nationality of the employee, the nature of the role and the completeness of the application. In practice, the process may take several weeks to several months and should therefore be anticipated well in advance.
Third-country nationals must obtain the required work authorisation before commencing employment in Switzerland. By contrast, EU/EFTA nationals generally benefit from the free movement of persons regime and may, depending on the duration and circumstances of the employment, be subject to a notification or permit procedure. Commencing employment without the required authorisation or notification may expose both the employer and the employee to sanctions.
For highly qualified or specialised employees ; for example, a security adviser or a trusted personal manager with longstanding knowledge of the family’s affairs ; it may be possible to argue that the role satisfies the applicable admission criteria. However, approval remains subject to the competent authorities’ assessment and should not be assumed.
Non-Compete and Post-Employment Obligations
Post-termination restrictive covenants may be enforceable under Swiss law, subject to statutory conditions and proportionality requirements.
In particular, under Swiss law, post-termination non-compete obligations are generally enforceable only where the employee had access to customers or confidential business information and the use of such knowledge could cause significant harm to the employer. Such restrictions must also be appropriately limited in scope, duration and geographical reach.
In the context of family office employment, the protectable interest may extend beyond traditional trade secrets and may include, depending on the structure and activities of the family office, access to highly confidential information concerning the family’s financial affairs, investment strategy, network, governance arrangements and other commercially sensitive information. However, restrictions should be drafted carefully and tailored to the legitimate interests requiring protection.
Accordingly, a targeted restriction focused on identified activities, categories of clients or relationships developed in the course of employment is generally more likely to be enforceable than a broad prohibition preventing the former employee from working in the wealth management or family office sector more generally.
Non-solicitation provisions ; for example, restrictions on actively soliciting employees, service providers or business relationships introduced through the employment ; are often easier to justify and enforce in practice than broad non-compete obligations. While such provisions cannot eliminate the risk of team departures or migration of relationships, they may provide contractual remedies in the event of a breach.
The Swiss State Secretariat for Economic Affairs (SECO) provides guidance on employment law obligations for employers in Switzerland at seco.admin.ch.
Frequently Asked Questions
Must a family office register as an employer even if it only has one employee?
Yes. Any employer in Switzerland, including a family office with a single employee, must register with the cantonal compensation office and make social insurance contributions. The size of the employer does not reduce the obligation.
Can a family office employee also act as a director of a Swiss company in the family structure?
An employee can hold a director role in parallel; the two relationships are governed separately. The employment contract governs the employment relationship; the director role is governed by Swiss corporate law with its own obligations. The interaction should be addressed explicitly, particularly regarding the scope of authority in each capacity and the treatment of any director’s fees.
Can a family office employee’s identity and remuneration be kept confidential?
Salary is not a public record. The employee’s details are held by the cantonal compensation office but not disclosed publicly. Certain corporate filings for Swiss legal entities may reference directors or authorised signatories. The achievable level of confidentiality depends on the structure and the employee’s formal role within it.
What happens to a foreign employee’s permit if the family leaves Switzerland?
The work permit is tied to the employer and the role in Switzerland. If the family office closes or ceases Swiss activities, the permit lapses. The employer must comply with Swiss notice obligations to the employee and complete all social insurance settlement obligations before the relationship ends.
Are discretionary bonuses legally binding under Swiss family office employment contracts?
A bonus described as discretionary in the contract is generally not an enforceable fixed entitlement. If a bonus has been paid consistently year after year, however, Swiss courts may treat it as an acquired right and require payment or compensation on termination. Bonus provisions in senior family office employment contracts require careful drafting for this reason.
Family office employment in Switzerland rewards the same attention to structure that internationally active families apply to their investment portfolios. A well-drafted employment contract, proper social insurance registration, a clear confidentiality framework, and timely permit management for foreign staff protect both the family and the employee. The cost of getting these arrangements right at the outset is modest compared with the cost of addressing problems after they have developed.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Readers should not act on the basis of this content without first seeking professional advice specific to their circumstances. For guidance tailored to your situation, please contact David Kohler. Learn more about his practice here.