Procedures For Terminating the Agreement
As a general rule there are no specific procedures with respect to terminations. The notice of termination needs to be in writing if the parties have agreed on the written form and the notice periods agreed between the parties or stipulated by law (if the parties have not agreed on notice periods in the employment agreement) have to be respected.
Instant Dismissal
Both employer and employee may terminate the employment relationship with immediate effect at any time for good cause; the party doing so must give the reasons for termination in writing at the other party’s request.
Employee's Resignation
If the employment agreement is not entered into for a fixed-term, the employee can resign respecting the notice period agreed between the parties or stipulated by law if the parties have not agreed on notice periods in the employment agreement.
Termination On Notice
Ordinary termination is subject to the notice periods agreed between the parties or stipulated by law if the parties have not agreed on notice periods in the employment agreement. According to the law, the employment relationship may be terminated at one (1) months’ notice during the first year of service, at two (2) months’ notice in the second to ninth years of service and at three (3) months’ notice thereafter. These notice periods may be changed by written individual or collective employment contract; however, they may be reduced to less than one (1) month only by collective employment contract and only for the first year of service.
The party giving notice of termination must state the reasons for termination in writing if the other party requests so.
Employment agreements (after the trial period) can be terminated as per the end of a month. However, the parties can agree in writing that the notice period may end at any end date.
The notice of termination has its effect once it is received by the other party. Therefore, it is recommended to send the notice of termination with registered mail, or to ask the other party to sign an acknowledgement of receipt.
Termination By Reason Of The Employee's Age
There is no statutory provision that the employment is automatically terminated if the employee reaches the legal retirement age. Termination due to reaching the age of ordinary retirement must be contractually agreed.
Recent development in court practice has shown that the requirements with respect to the duty of care of the employers are higher in case of the termination of older employees who have served many years. Age is considered as an attribute pertaining to the person and therefore terminating an employment agreement due to age can lead to an abusive termination. Prior to terminating long-standing older employees, the employer has to inform the employee about the envisaged termination, hear the employee before deciding and give a last chance to the employee. In addition, there is an obligation of the employer to seek a solution that allows to continue the employment relationship (alternative employment).
Automatic Termination In Cases Of Force Majeure
There is no automatic termination in case of force majeure.
Collective Dismissals
Collective dismissals are notices of termination given by the employer to employees within 30 days for reasons not pertaining personally to the employees and which affect –
- at least 10 employees in a business normally employing more than 20 and fewer than 100 employees;
- at least 10% of the employees of a business normally employing at least 100 and fewer than 300 employees; and
- at least 30 employees in a business normally employing at least 300 employees.
An employer intending to make a collective dismissal must consult the works council or, where there is none, the employees themselves. The employer must give the works council at least an opportunity to formulate proposals on how to avoid such dismissals or limit their number and how to mitigate their consequences. In addition, the employer has to inform the competent cantonal authorities about the collective dismissal.
Termination By Parties’ Agreement
The employment agreement can be terminated at any time by a termination agreement. The parties are not entirely free to agree on the terms and conditions of the termination agreement. The termination agreement has to be considered as a true settlement. Unless in the context of such a true settlement the employee may not waive claims arising from mandatory provisions of law or arising from the mandatory provisions of a CBA.
Directors Or Other Senior Officers
There are no special provisions with respect to the termination of directors or other senior officers. However, termination of employment does not automatically end the directorship and additional steps will be required to terminate the directorship in line with the articles of association of the company.
Special Rules For Categories Of Employee
The termination of the employment relationship of an elected employee representative on the works council is considered as abusive if the employer cannot prove that he/she had a reasonable cause to terminate the employment relationship.
Specific Rules For Companies in Financial Difficulties
In the event of the employer’s insolvency, the employee may terminate the employment relationship with immediate effect unless he is furnished with security for his claims within an appropriate period.
Where insolvency procedures have started, the receiver takes over running the business. There is no automatic termination of employment agreements, but the receiver has to terminate them in line with the contractually agreed terms and conditions.
There is a privilege for certain claims of employees in the bankruptcy proceedings of the employer.
Restricting Future Activities
The parties may agree on a non-competition clause in writing. The non-competition clause is binding only where the employment relationship allowed the employee to get insight into the employer’s client base or manufacturing and trade secrets, and where the use of such knowledge might cause substantial harm to the employer.
The non-competition clause must be appropriately restricted with regard to territorial scope, duration, and subject matter such that it does not unfairly compromise the employee’s future economic activity; it may exceed three (3) years only in special circumstances.
Usually, the parties will agree on a contractual penalty which becomes due when the employee is in breach of the non-competition clause, and the employer can claim additional damages. If agreed in writing, the employer can enforce the non-competition clause by injunctive relief.
Whistleblower Laws
There are no specific whistle-blower laws and therefore it is not entirely clear under what circumstances employees may report grievances or misbehaviour. The employees are bound to the duty of loyalty to the employer and have to keep business secrets. According to court practice the employee has to raise the issue first within the organisation of the employer. Only if the employer does not react, the employee may approach the competent authorities. To inform the media is considered as an ultima ratio measure.
Special Rules For Garden Leave
As a general rule, the employer can put employees on garden leave at his discretion. The salary will still be due. Vacation days can be considered as used up depending on the duration of the garden leave and the amount of outstanding vacation days.
Severance Payments
There are provisions on severance payments in the Code of Obligations. However, these have in general become irrelevant in practice since the contributions of the employer to the mandatory pension fund are considered.
It is not uncommon that there are agreed severance payments in case of collective dismissals. Such severance payments may also be determined based on a social plan.
Special Tax Provisions And Severance Payments
As a general rule, severance payments are subject to income tax. The details of taxation depend on the nature and purpose of the severance payments. In addition, the tax regime depends on the specific tax laws of the involved canton.
Allowances Payable To Employees After Termination
The employment relationship ends with the death of the employee. The employer has to pay the salary for a further month thereafter or, where the employee had completed more than five (5) years of service, for two (2) further months, provided the employee is survived by a spouse, a registered partner, children who are minors or, in the absence of such persons, other persons to whom he had a duty to provide support. Other than that, there are no allowances payable to employees after termination.
Time Limits For Claims Following Termination
The general limit for claims in connection with work performed by employees is five (5) years. This applies in particular to all claims with the character of salary (such as claims with respect to bonus, gratification, pay for extra work, salary in case of incapacity to work, expenses, pay during vacation etc.). The time limit for any other claims in connection with the employment relationship is 10 years (for instance with respect to the letter of reference and payments with respect to abusive termination or unjustified instant dismissal).
The time limit for damages or satisfaction arising from an injury or death in breach of contract is three (3) years from the date on which the person suffering damage became aware of the damage, but in any event 20 years after the date on which the harmful conduct took place or ceased.
In particular, if a party is seeking compensation due to abusive termination, he / she must submit an objection to the notice of termination in writing to the party giving such notice not later than the end of the notice period. The following claim for compensation prescribes if not brought before the courts within 180 days of the end of the employment relationship.