Termination of employment contracts in Switzerland

Practical Guide

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Switzerland

Is “employment at will” the general principle in the respective country or do you usually need grounds for a termination of an employment contract?

As a general rule (see question 2 below for the exceptions), Swiss law allows both parties, employer and employee, to terminate the employment agreement for any reason (far reaching freedom of termination), subject to observance of the contractual or statutory notice period. No need to state the reason for termination in order for the termination to take effect. However, the party giving notice of termination must give reasons for its termination in writing at the request of the other party.

However, a termination without notice period is always subject to the existence of good cause.

If there is a general concept of “dismissal protection”, is it limited to certain requirements (e.g. size of company/workplace, length of service)?

Although there is no general concept of “dismissal protection” and a specific need for grounds, a termination might be considered unlawful under certain conditions:

a) However, in most of these cases the termination is not void. The employment terminates at the end of the termination period, if any; the employee is only entitled to compensation, but not to re-employment.

Examples are terminations

  • on account of an attribute pertaining to the person of the employee (age, religion, race, etc.) 
  • because employee exercises a constitutional right
  • solely in order to prevent claims under the employment relationship from accruing to the employee
  • because the employee asserts claims under the employment relationship in good faith
  • because the employee performs Swiss compulsory military or civil defence service or Swiss alternative civilian service or a non-voluntary legal obligation
  • because the employee is or is not a member of an employees’ organisation or because the employee carries out trade union activities in a lawful manner
  • while the employee is an elected employee representative on the staff council for the business or on a body linked to the business, and the employer cannot cite just cause to terminate his employment; 
  • in the context of mass redundancies, without having consulted the organisation that represents the employees or, where there is none, the employees themselves.

In any event, it is recommendable to have a written history of issues addressed to the employee before termination is expressed, in particular if termination is not given for economic reasons.

b) In addition, there is a temporal protection against termination given under the following circumstances, so termination is void and the employment relationship continues: 

  • whilst performing military or civil defence service or Swiss alternative civilian service
  • illness or accident 
  • pregnancy and childbirth 
  • participation in an overseas aid project ordered by the competent federal authority.

The employer must give further notice after the end of the protection period if he wants to terminate the employment relationship. If the termination is made before the start of a protection period, but the notice period has not yet expired by then, the expiration of the notice period is interrupted and only continues after the end of the protection period. However, the termination as such is effective.

If a termination is deemed to be invalid, is “reinstatement (including backpay)” or “payment of damages and/or a severance payment” the general remedy?

Swiss law in no event considers a reinstatement. Depending on the type of termination, either payment of damages and/or a severance payment is due (see question 4 below).

If “payment of damages” is the general concept, what is the basis of its calculation/the maximum amount the employee may receive?

If the termination is void (see question 2b above), the employment relationship is not terminated and no remedy is owed.

In case of a termination without notice period , the termination is also effective without a good cause. But the employee is entitled to the salary for the duration of the contractual or statutory termination period. The judge may oblige the employer to an additional compensation of up to a maximum of 6 months’ salary.

In case of unlawful dismissal (see question 2a above), a severance payment of up to a maximum of 6 months' salary is due.

May the right to terminate in some cases forfeit, (e.g. right to terminate forthwith) if not executed timely? If so, what is the respective timeframe?

Yes.

The right to terminate without notice period may forfeit if notice is not given within 2-3 working days, in exceptional cases approximately one week.

Has a termination to be delivered in writing or may the delivery of an oral/email/facsimile termination without an original signature be sufficient as well?

Unless otherwise stipulated, the termination does not require any special form. It can therefore be given orally, by e-mail, by SMS or as a message on the combox of the mobile phone, or it can also be expressed by clear implied behaviour. However, if written form has contractually been agreed upon for the termination, it is presumed to be a validity requirement. If the written form has been agreed, a termination by e-mail without a qualified electronic signature is not sufficient. The same applies to a termination by fax.

May a termination be successfully rejected due to the lack of a formal proxy of the managing director or may internal authorisation generally be sufficient?

The termination must originate from the real employer (correct legal entity) or at least be attributable to such entity (i.e. signed by persons having signatory power for the real employer either (a) based on a corresponding entrance in the Commercial Register, (b) based on a specific proxy or (c) based on an internal regulation). A deficiency in the power of representation can be remedied subsequently. However, it must be remedied before the employee notices the deficiency. If the employee has noticed the deficiency, a new notice of termination must be given.

Is there any general formal procedure with regard to the employee (e.g. obligatory meeting with the employee) before a valid termination may be issued?

As a general rule, Swiss law does not require the employer to hear or warn the employee before dismissal (except in the context of a mass dismissal, an action concerning several employees). In any case, termination becomes effective upon receipt by the employee only. It is therefore recommendable to either send the termination by registered mail or to have the employee countersign the termination notice handed over to the employee in a meeting.

Is there any statutory body that needs to be dealt with before a valid termination may be issued? If so, what is the usual timeframe?

Except in case of a mass dismissal, no statutory body needs not to be notified.

Is there -usually- an employee representative body that needs to be dealt with before a termination may be issued? If so, what is the usual timeframe?

Except in case of a mass dismissal and where the employer sets out a specific internal procedure in this respect, an employee representative body needs not to be dealt with before a termination notice may be given.

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