Termination of Employment Contracts in Switzerland

1. Grounds for Termination

As a principle, both parties to an employment contract may terminate the employment agreement at any time, subject to either the statutory or contractual notice period; without the need to fulfill any statutory grounds for termination. The party issuing the termination must however provide a written explanation of the termination upon the other party’s request.

Employees are, however, protected against abusive dismissal. Such abuse exists, for example, if notice of termination is given because the employee raises a bona fide claim arising out of the employment agreement, because the employee exercises a constitutional right, because notice is only given to prevent the coming into existence of a claim arising out of the contract, or because notice is given for a reason that is inherent to the personality of the other party (gender, race, origin, nationality, age, etc.).

2. Collective Dismissals

The Code of Obligations provides special rules regarding collective dismissals. Article 335d CO defines “collective dismissals” as notices of termination in enterprises issued by the employer within the period of 30 days for reasons unrelated to the person of the employee and that effect:

  1. At least 10 employees in companies usually employing more than 20 and fewer than 100 persons;
  2. at least 10% of all employees in companies usually employing more than 100 and fewer than 300 persons; and
  3. at least 30 employees in companies usually employing more than 300 persons.

Before a collective dismissal, the employer must inform or consult with the works council (if any) or the employees. Employers must also inform the cantonal labor office of every planned collective dismissal. Non-compliance with the procedural rules by the employer constitutes abusive termination of the affected employment, which may lead to the payment of damages and additional remunerations, and in the case of substantial non-compliance, the terminations can be found void and reinstatement ordered.

The employer must hold negotiations with the employees with the aim of preparing a social plan if the employer:

  1. normally employs at least 250 employees; and
  2. intends to make at least 30 employees redundant within 30 days for reasons that have no connection with such persons.

3. Individual Dismissals

Employees have to be given notice of termination of their employment. The length of the notice period is agreed in the employment contract, subject to statutory rules on minimum length and equality of the notice periods for notice to be given by employer, and employee. An employment relationship can be terminated with immediate effect for cause. There are no statutory severance payment obligations. An obligation may, however, be provided by a collective agreement or by a social plan in case of collective redundancy.

4. Separation Agreements

The termination of an employment relationship does not require a separation agreement. A separation agreement may, however, be advisable in order to amicably settle all mutual claims relating to the employment.

5. Remedies

A wrongful termination must be challenged by the employee before expiration of the notice period by written communication to the employer. After the last day of employment, the employee has a 180 day deadline to submit a request for a conciliation hearing with the competent magistrate. If no settlement can be reached before the magistrate, the claiming party has a 3-month period to submit the claim to the court of 1st instance. The employee can claim up to 6 months salary as indemnification in case of a wrongful or discriminatory termination.

For more information on these articles or any other issues involving labour and employment matters in Switzerland, please contact Humbert Heinzen Lerch
This entry was posted in Termination of Employment Contracts on and modified on .