Employment termination in Switzerland is primarily governed by the Code of Obligations, which emphasizes the principle of contractual freedom. This means that employment contracts can generally be terminated by either the employer or the employee, provided the correct procedures and notice periods are observed. Unlike some other jurisdictions, termination does not typically require a specific reason, except in cases of summary dismissal for just cause or when challenging a termination as abusive.
Understanding the nuances of Swiss termination law is crucial for employers to ensure compliance, avoid potential disputes, and manage transitions smoothly. Key aspects include adhering to statutory notice periods, understanding the limited circumstances under which severance pay is mandatory, and navigating the procedural requirements to ensure a lawful and effective termination process.
Notice Periods
The required notice period for terminating an employment contract in Switzerland depends on the employee's length of service with the company. These are minimum statutory periods, and individual employment contracts or collective bargaining agreements (CBAs) may stipulate longer periods. Notice must typically be given by the end of a calendar month to be effective at the end of the following month, unless otherwise agreed.
| Length of Service | Minimum Notice Period |
|---|---|
| During probation period | 7 days |
| Up to 1 year | 1 month |
| From 2 to 9 years | 2 months |
| 10 years or more | 3 months |
The probation period is typically the first month of employment, but can be extended up to three months by written agreement. During this period, a shorter notice period applies.
Severance Pay
Mandatory severance pay (Abgangsentschädigung) in Switzerland is not a standard entitlement upon termination. It is only legally required for employees who are terminated after at least 20 years of service and are aged 50 or older at the time of termination.
The calculation of this mandatory severance pay is based on the employee's length of service and age. The minimum amount is equivalent to two months' salary, and the maximum is capped at eight months' salary. The exact amount within this range is determined by the court in case of dispute, taking into account all circumstances. Many companies offer contractual severance packages even when not legally required, often based on company policy, individual negotiation, or CBAs.
Grounds for Termination
Swiss law distinguishes between ordinary termination and summary dismissal.
Ordinary Termination
Ordinary termination does not require a specific, objective reason. Either party can terminate the contract by observing the applicable notice period. While no reason is legally required for the termination itself, if the employee challenges the termination as abusive, the employer may need to provide a reason to demonstrate it was not based on prohibited grounds.
Summary Dismissal (Termination for Just Cause)
Summary dismissal allows for immediate termination without notice. This is only permissible for "just cause," which is defined as a serious breach of contract that makes the continuation of the employment relationship unbearable for the terminating party. Examples include serious misconduct, theft, fraud, persistent refusal to work, or gross insubordination. The reason must be objectively serious, and the termination must occur immediately or very shortly after the employer becomes aware of the grounds.
Procedural Requirements for Lawful Termination
While ordinary termination doesn't require a specific reason, certain procedural steps are crucial for a lawful termination and to avoid challenges:
- Written Notice: Although not strictly required by law for ordinary termination, providing written notice is highly recommended for clarity and proof. For summary dismissal, written notice stating the just cause is essential.
- Timing: Notice periods must be respected, and termination is typically effective at the end of a calendar month.
- Hearing (Optional but Recommended): While not legally mandated for ordinary termination, offering the employee an opportunity to be heard before making a final decision can be beneficial, especially in complex cases or when performance issues are involved. It is often required in public sector employment or under certain CBAs.
- Documentation: Maintain clear records of the termination process, including the notice itself, any communication regarding the termination, and documentation supporting the reasons if a challenge is anticipated (e.g., performance reviews, warnings).
Failure to follow correct procedures, such as not respecting the notice period or terminating during a protected period, can render the termination invalid or lead to compensation claims.
Protection Against Wrongful Dismissal
Swiss law provides protection against abusive termination. A termination is considered abusive if it is based on certain prohibited grounds, even if notice periods are observed. Examples of abusive termination include termination due to:
- An employee's membership or non-membership in a union.
- An employee serving in the military or civil protection service.
- An employee being elected to or fulfilling a legal obligation in a public office.
- The employer establishing or preventing the establishment of an employee representation body.
- The employee asserting claims from the employment relationship in good faith.
- The employee's race, gender, age, religion, political views, or sexual orientation (discriminatory termination).
- Retaliation after reporting misconduct (whistleblowing), provided certain conditions are met.
If a termination is found to be abusive, the employment relationship is generally not reinstated. Instead, the employee is entitled to compensation, typically ranging from one to six months' salary, depending on the circumstances and the court's discretion.
Furthermore, employees are protected against termination during specific "blocking periods" (Sperrfristen), such as during illness or accident (for a duration depending on length of service), during pregnancy and maternity leave, or while serving in mandatory military or civil service. Termination during a blocking period is null and void.
