Swiss labor law is quite liberal and doesn’t foresee any specific rules for employment termination. Both parties (employer and employee) may terminate a working relationship in compliance with certain terms without giving a specific cause or explanation.
There can be a lot of reasons for terminating an employment contract in Switzerland as anywhere else. The most simple terminations are: ordinary termination or the expiration of a contract. But, sometimes, extraordinary circumstances impose extraordinary terminations.
Ordinary termination is a unilateral decision to terminate the work contract when this is for an indeterminate time period.
The notice period depends on the employee’s length of service.
So, unless otherwise agreed in writing, a work agreement may be terminated:
- during the trial period, at any time with seven days’ notice;
- during the first year of work with one month’s notice;
- from the second to the ninth year of service, with two months’ notice;
- from the tenth year of service with three months’ notice.
The employment relationship ends at the end of the notice period and usually, no justification for dismissal is required in these cases. However, if one of the parts demands the reasons of contract termination, then the notice has to be justified in writing. Otherwise, the party who infringes the rules could be charged with litigation costs and fees.
There are some specific periods when the employer doesn’t have the right to dismiss employees if these are absent due to:
- compulsory Swiss military service, Red Cross service or other civilian services;
- accidents or illnesses for 30 days in the first year of service, for 90 days from the second year of service until to the fifth year of service, and for 180 days as of the sixth year of service;
- pregnancy and 16 weeks after the employee has given birth.
Abusive dismissal is when an employer gives a notice of termination for subjective reasons. The list of unfair causes includes:
- personal characteristics such as sex, religion, race, and creed;
- claims, (if these are in bona fede) about the rights arising out of the employment contract;
- exercising a constitutional right;
- being employee representative in a company institution or other institution related to it;
- in connection with a collective dismissal without any prior discussion with the employees’ representative.
The employee is entitled to compensation for up to six monthly salaries if the dismissal was abusive. However, if the employee finds a new job, the compensation may be reduced.
Regardless the type of contract, the duration or any statutory notice period, in certain conditions, employers and employees have the right to terminate the working relationship for cause, immediately. A cause is when one of the parties cannot continue the employment. In these cases, the courts decide if there is a just cause or not. If the extraordinary termination is for cause and it is justified, some financial consequences will be determined, taking into consideration all material grounds. The reasons for extraordinary termination are usually related to behaviors from one of the parties: insubordination, sexual misconduct, vulgar speech, intentional discrimination and, very seldom, for the underperformance of employees.
In cases when an employee is dismissed without a cause, the termination is valid but the employee is entitled to compensation equal to the salary received if the employment agreement hadn’t been terminated. If the employee terminates the employment relationship, the termination is valid but the employer is entitled to compensation and further damages.
An employer who plans to do a collective termination, must pay attention and think very well about consequences, in order to not infringe the Swiss labor law regulations.
As a general rule, the cases which are considered collective dismissal under Swiss law are those made within a period of 30 days affecting:
- at least 10 employees in companies employing between 20 and 100 workers;
- at least 10% of all employees in companies employing between 100 and 300 workers;
- at least 30 employees in enterprises employing at least 300 workers.
The first thing to do in these cases is to talk to employees’ representative body or if this figure is missing, with all and every employee, before taking a decision, in order to find a solution advantageous for both parties. For example, if an employer is going to dismiss more than 250 employees, an agreement on the social plan with a union, or a work council is required. Furthermore, the employer is obliged to inform, in writing, the local labor office about the dismissals, the reason and the number of employees to be dismissed.
Under Swiss Law, all employment relationships with private companies are essentially driven by individual contracts, collective employment agreements, and rules contained in the Swiss Code of Obligations (CO). And this flexibility and lack of bureaucracy have transformed Switzerland into a business favorable environment.