Bratschi Ltd.

Forums For Adjudicating Employment Disputes

The Civil Procedure Code determines that the court at the domicile or registered office of the defendant or at the place where the employee normally carries out his or her work has jurisdiction to decide about claims relating to employment law. If a job applicant or an employee brings an action based on the Recruitment Act of 6 October 1989 (“Arbeitsvermittlungsgesetz, AVG”), the court at the place of the business establishment of the recruitment or hiring agent with whom the contract was concluded also has jurisdiction.


The Main Sources Of Employment Law

The main sources of employment law are the Code of Obligations, the Labour Act and the terms and conditions of the specific employment agreement. In addition, there are mandatory collective bargaining agreements in certain industries or operating regulations (“Betriebsordnungen”). There are additional laws containing regulations that are relevant for employment relationships such as the Act on Gender Equality, the Participation Act and the Secondment Act.


National Law And Employees Working For Foreign Companies

The parties of the employment agreement are free to choose the law of the country in which the employee has ordinary residence. Alternatively, the parties can choose the law of the country in which the employer has an establishment, domicile, or ordinary residence. In the absence of any choice of law the employment relationship is governed by the law of the country in which the employee usually performs his work. If the employee usually performs his work in several countries, the employment contract shall be governed by the law of the country in which the establishment or, in the absence of such establishment, the domicile or habitual residence of the employer is located.


National Law And Employees Of National Companies Working In Another Jurisdiction

The parties of the employment agreement are free to choose the law of the country in which the employee has ordinary residence. Alternatively, the parties can choose the law of the country in which the employer has an establishment, domicile, or ordinary residence. Therefore, Swiss law can be applied to employees of a Swiss employer working in another jurisdiction provided the parties agree on the application of Swiss law.


Data privacy

The employer may handle data concerning the employee only to the extent that such data concerns the employee’s suitability for his/her job or are necessary for the performance of the employment agreement. In all other respects, the provisions of the Act on Data Protection apply.

Legal Requirements As To The Form Of Agreement

As a general rule, no specific form is required for employment agreements. However, if the employment relationship is entered into for an indefinite period or for more than one month the employer must inform the employee in writing at the latest within a month after the start of the employment relationship about the name of the parties, the start date of the employment relationship, the function of the employee, the salary, and any extra pay, as well as the weekly hours of work. In practice it is more important that certain agreements can only be validly made if they are in writing. This applies in particular to changes to the rules prescribed by law with respect to overtime, payments in case of incapacity to work, acquisition of inventions and designs not made in fulfilment of contractual obligations, extension of the trial period for a duration of more than one month, reduction of notice periods and restrictive covenants. In exceptional cases, for instance apprentices, the law requires written form of the employment agreement. In addition, collective bargaining agreements may require written form of employment agreements.


Mandatory Requirements
  • Trial Period
  • The first month of the employment relationship is considered a trial period. However, the parties can agree that there is no trial period at all, or they can extend the trial period by written agreement to a maximum duration of three months. During the trial period the employment relationship can be terminated by either party with a notice period of seven (7) days. Again, the notice period can be reduced by written agreement. During the notice period, there is no protection from termination in case of sickness, accident, maternity, military service, or any other circumstances triggering a so-called blocking period. However, the employee is entitled to get a confirmation about the reasons for termination in writing and courts decided that terminations during trial periods can also be abusive under certain circumstances.

  • Hours Of Work
  • If the employment agreement is subject to the Labour Act, the maximum hours of work per week are limited to 45 hours. This applies in particular for employees in industrial operations, office staff and sales personnel. Besides this, the maximum hours are limited to 50 hours per week. These weekly limits may only be exceeded in exceptional circumstances. Excess hours (“Überzeit”) – i.e. hours exceeding the weekly threshold of 45 or 50 hours, respectively – shall, as a general rule, not exceed two hours per day, 170 hours in total in a calendar year for employees with a weekly maximum of 45 hours, and 140 hours in total in a calendar year for employees with a weekly maximum of 50 hours.

  • Special Rules For Part-time Work
  • As a general rule, there are no special regulations for part-time work prescribed by law (save for no accident insurance coverage for employees only working a few hours and that there must only be a pension plan for employees whose salary exceeds a certain amount per year). Any discrimination of part-time employees due to unobjective reasons may be considered as discriminatory in particular based on the Act on Gender Equality.

  • Earnings
  • Collective Bargaining Agreements may stipulate minimum salaries. If the employment agreement falls within the application of such a Collective Bargaining Agreement, the employer may not pay less than the stipulated minimum.

  • Holidays/Rest Periods
    • Vacation

    • According to the Code of Obligations there is a minimum vacation entitlement of four (4) paid weeks per year of service. For employees up to the age of 20, the minimum vacation entitlement is five (5) paid weeks per year of service. The vacation entitlement for a given year of service is generally granted during that year; at least two (2) weeks of vacation must be taken consecutively. The employer determines the timing of vacation considering the employee’s wishes to the extent these are compatible with the interests of the business. The employer must pay the employee the full salary due for the vacation entitlement. During the employment relationship, the vacation entitlement may not be replaced by monetary payments or other benefits.

    • Rest periods

    • For employment relationships subject to the Labour Act there are minimal breaks between 15 minutes and one (1) hour depending on the hours worked per day. In addition the rest period between the end and beginning of work the next day must be at least 11 hours.

  • Minimum/Maximum Age
  • Except for specific circumstances, the minimum age for employees is 15 years. There are specific ordinances governing the employment of employees up to the age of 18 years.

    The general retirement age for male employees is 65 years. For female employees it is currently 64 years but there is a political debate about increasing the retirement age to 65 years.

  • Illness/Disability
  • If an employee is prevented from working by illness, the employer has the legal obligation to pay the salary for a limited period of time depending on the years of service. By written agreement, the parties can decide that the payments of the employer are replaced by insurance coverage which cannot be less favourable than the obligations of the employer according to the Code of Obligations.

    In the case of sickness, the employer cannot validly terminate the employment agreement during the following blocking periods: 30 days during the first year of service, 90 days from the second to the fifth year of service and 180 days from the sixth year of service. If the illness occurs after the notice of termination has been served to the employee, the notice period is interrupted for the maximum duration of the mentioned blocking periods.

  • Location Of Work/Mobility
  • As a general rule, the permanent change of work location is only possible based on an agreement of the parties or by giving notice of termination and offering a new employment agreement with a changed location of work. The right of the employer to give instructions may include to assign a changed location of work to the employee temporarily.

  • Pension Plans
  • Pension plans are mandatory if a certain annual minimal salary is reached. The actual terms and conditions of the pension plan are not incorporated in the employment relationship but form part of the separate legal relationship between employee and pension plan.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
  • The employer cannot validly terminate the employment agreement during pregnancy and for a period of 16 weeks after giving birth. There is a set of mandatory minimal standards with respect to leave and pay during maternity and paternity. After having given birth, the mother is entitled to a paid maternity leave of at least 14 weeks. There is a daily allowance which amounts to 80% of the average income earned before the start of the entitlement to compensation. The maximum amount of the daily allowance is CHF 196. There is a right to a paid paternity leave of two (2) weeks to be taken within six (6) months after birth. Again the daily allowance during paternity leave amounts to 80% of the average income earned before the start of the entitlement to compensation with a daily maximum of CHF 196. The parties may agree in the employment agreement on more beneficial compensation arrangements for the employees. There are currently no mandatory rules in force with respect to rights of employees in cases of adoption.

  • Compulsory Terms
  • The articles of the Code of Obligations which are compulsory are listed in the law (art. 361 CO) as well as the ones which cannot be changed to the detriment of the employee (art. 362 CO). In addition, the Labour Act – if applicable to the employment relationship – is compulsory. The same applies to the regulations of applicable collective bargaining agreements.

  • Non-Compulsory Terms
  • To the extent there is no compulsory regulation, the parties are free to agree on their own terms and conditions of employment.


Types Of Agreement

There are employment agreements for an indefinite period of time and such for a fixed term. The notice periods for employer and employee must be the same if the employment agreement is concluded for an indefinite period of time. Fixed term employment agreements end without a notice of termination. If a fixed term employment relationship is tacitly extended beyond the agreed duration it is deemed to be an employment relationship for an indefinite period. After 10 years, any employment relationship agreed for a longer duration may be terminated by either party by giving six (6) months’ notice expiring at the end of a month.


Secrecy/Confidentiality

For the duration of the employment relationship, the employee must not exploit or reveal confidential information obtained while in the employer’s service, such as manufacturing or trade secrets. The employee remains bound by such duty of confidentiality in accordance with the Code of Obligations even after the end of the employment relationship to the extent required to safeguard the employer’s legitimate interests. Depending on the specific requirements, employment agreements often contain provisions with respect to secrecy and confidentiality obligations during and after the term of the employment relationship.


Ownership of Inventions/Other Intellectual Property (IP) Rights

Inventions and designs produced by the employee alone or in collaboration with others in the course of his/her work and in performance of his/her contractual obligations belong to the employer, whether or not they may be protected. By written agreement, the employer may reserve the right to acquire inventions and designs produced by the employee in the course of his work for the employer but not in performance of his contractual obligations. An employee who produces an invention or design as stated before must notify the employer thereof in writing; the employer must inform the employee within six (6) months if he wishes to acquire the invention or design or release it to the employee. Where it is not released to the employee, the employer must pay a separate, appropriate remuneration to the employee to be determined with due regard to all pertinent circumstances and in particular the economic value of the invention or design, the degree to which the employer contributed, any reliance on other staff and on the employer’s facilities, the expenses incurred by the employee and his position in the company.


Pre-Employment Considerations

The hiring process must be compliant with data protection obligations of the hiring company. Candidates may not be turned down based on discriminatory reasons according to the Act on Gender Equality.


Hiring Non-Nationals

The Employer must make sure that employees are entitled to work in Switzerland. The requirements depend on the nationality of the employee and on the duration of planned stay. EU/EFTA citizens will be granted a work permit as a general rule. UK nationals coming to Switzerland to work are considered as third-country nationals. Like other third-country nationals, they must apply for a permit from the cantonal immigration and labour market authorities prior to taking up employment.


Hiring Specified Categories Of Individuals

There are special provisions in the Code of Obligations with respect to apprentices and travelling salespersons. In addition, there are other laws containing mandatory provisions with respect to the protection of employees up to the age of 18, as well as during pregnancy and maternity.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

The provision of staffing services (“Personalverleih”) is governed by the Recruitment Act (“Personalverleihgesetz, AVG”). The Recruitment Act contains provisions with respect to the required permit to provide staffing services and defines minimal standards with respect to the content of the agreements between employer and employee, as well as with respect to the agreement between employer and the employing company (“Einsatzbetrieb”).

Changes To The Contract

The employer can give instructions to the employee, but the employment agreement cannot be changed unilaterally. With the agreement of the employee, the employment agreement can be changed at any time. However, it is recommended to implement changes that are to the detriment of the employee only after the (hypothetical) notice period has lapsed because the employee is entitled to unchanged terms and conditions of employment for the duration of the notice period in any way. If there is no agreement between the parties to change the employment agreement the employer can terminate the employment relationship and at the same time offer a changed employment agreement, entering into force after the notice period has lapsed (“Änderungskündigung”). The employment relationship ends if the employee does not agree with the changes of the employment agreement.


Change In Ownership Of The Business

If the employer transfers the business or a part thereof to a third party the employment relationship and all rights and obligations pass to the acquirer as of the day of the transfer unless the employee declines such transfer. Where the transferred employment relationship is governed by a collective bargaining agreement, the acquirer is obliged to abide by it for one year unless it expires or is terminated sooner. In the event that the employee declines the transfer, the employment relationship ends on expiry of the statutory notice period; until then, the acquirer and the employee are obliged to perform the contract.

Where the employer transfers the business or a part thereof, he must inform the works council or, where there is none, the employees themselves before the transfer takes place. In particular the information must include the reason for the transfer and its legal, economic, and social consequences for the employees. Where measures affecting the employees are envisaged as a result of such transfer, the works council or, where there is none, the employees themselves, must be consulted before the relevant decisions are taken.


Social Security Contributions

Statutory social security contributions (including old age and survivors insurance, disability insurance, unemployment insurance, income compensation insurance, accident insurance and pension fund) are mandatory for most employment relationships. With exception of accident insurance, which is fully paid by the employer, the employer and employee, as a general rule, pay half of the social security contributions. The employee’s part of the contributions is deducted from their monthly gross salary.


Accidents At Work

Employers are obliged to make sure that the workplace is safe and protects the employee’s health. In addition, the employer has to provide for accident insurance and pay for the respective premium.


Discipline And Grievance

Should employees breach their obligations based on the employment agreement or not comply with the employer’s instructions the employer can issue a warning towards the employees. In case of repeated violations of duties there might be a legitimate reason for termination of the employment relationship. There are no legal provisions with respect to the warning letter or grievance procedures.


Harassment/Discrimination/Equal pay

Equal treatment of the genders is stipulated in the Act on Gender Equality. Employees must not be discriminated against on the basis of their sex, whether directly or indirectly, including on the basis of their marital status, their family situation or of pregnancy. This prohibition applies in particular to hiring, allocation of duties, setting of working conditions, pay, basic and continuing education and training, promotion, and dismissal. Any harassing behaviour of a sexual nature or other behaviour related to the person’s sex that adversely affects the dignity of women or men in the workplace is discriminatory. Such behaviour includes, in particular, threats, the promise of advantages, the use of coercion and the exertion of pressure in order to obtain favours of a sexual nature.

Anyone who is the victim of discrimination within the meaning of Act on Gender Equality may apply to the court for an order prohibiting or stopping threatened discrimination, requiring discrimination to cease, confirming that discrimination is taking place if it is continuing to have a disruptive effect and for the payment of any salary due.

If the discrimination relates to the refusal of employment or to dismissal under the Code of Obligations, the person concerned is entitled only to a compensatory payment. This payment must be fixed by taking all the circumstances into account and is calculated on the basis of the probable or actual salary.

In case of discrimination through sexual harassment, the court may also award the person concerned compensation, unless the employer proves that it took measures that have been proven in practice to be necessary and adequate to prevent sexual harassment and which it could reasonably have been expected to take. The compensation must be fixed by taking all the circumstances into account and is calculated on the basis of the average Swiss salary.


Compulsory Training Obligations

There are no general training obligations imposed by Swiss law. However, there might be specific requirements for certain professions or in order to comply with safety standards.


Offsetting Earnings

Where the employer holds claims against the employee, he may set them off against the employee’s salary claim only to the extent that such salary claim is subject to attachment. However, claims for compensation of intentional damage may be set off without restriction.


Payments For Maternity And Disability Leave

After having given birth, the mother is entitled to a paid maternity leave of at least 14 weeks. There is a daily allowance which amounts to 80% of the average income earned before the start of the entitlement to compensation. The maximum amount of the daily allowance is CHF 196. The parties may agree in the employment agreement on a more beneficial compensation arrangement for the employee.


Compulsory Insurance

Statutory social security contributions (including old age and survivors insurance, disability insurance, unemployment insurance, income compensation insurance, accident insurance and pension fund) are mandatory for most employment relationships. With exception of accident insurance which is fully paid by the employer, the employer and employee, as a general rule, pay half of the social security contributions. The employee’s part of the contributions is deducted from their monthly gross salary.


Absence For Military Or Public Service Duties

Employees are entitled to take leave for military or public service duties. An employer may not serve notice of termination to an employee during military service and where such service lasts for more than 11 days or during the four (4) weeks preceding/following it.


Works Councils or Trade Unions

Companies with at least 50 employees can appoint a works council on request of at least a fifth of all employees based on the provisions of the Participation Act. The details of the collaboration between employer and works council are usually laid out in agreed regulations. The works council, in particular, must be involved for information or consultation procedures concerning the transfer of a business, collective dismissals as defined by the Code of Obligations and with respect to the protection of health.

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 had a reasonable cause to terminate the employment relationship.

It is a constitutional right to establish, maintain and be a member of a trade union. Collective bargaining agreements can be entered into by a trade union and a single employer or a trade union and an employer’s association.


Employees’ Right To Strike

There is only a right to strike if a social partner (trade union) is aiming to reach a goal that can be regulated by a collective bargaining agreement and at the same time the strike does not violate any obligation to keep peace and the strike is considered as “ultima ratio”.


Employees On Strike

If the employer terminates the employment relationships of employees participating in a lawful strike because of their participation in the strike, the termination will be considered as abusive. There is no salary due during the strike.


Employers’ Responsibility For Actions Of Their Employees

In general, employers are liable for damages caused by their employees according to the Code of Obligations.

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 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 making a decision 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 collective bargaining agreement.


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 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.

Specific Matters Which Are Important Or Unique To This Jurisdiction

Swiss employment law does not recognise any protection of continuance of the employment relationship. An abusive termination or an unjustified instant dismissal also terminates the employment relationship.



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Hansruedi Wyss
Bratschi Ltd.
Switzerland


Disclaimer:

© 2021, Bratschi Ltd.. All rights reserved by Bratschi Ltd. as author and the owner of the copyright in this chapter. Bratschi Ltd. has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021