This article was taken from the recent IR Global – Meet the Members publication
The main source of labour law in Switzerland is the federal legislation which is supplemented by federal ordinances, collective agreements, and standard contracts. The private employment contract, which I will talk about in this article, is governed by Arts. 319- 362 of the Swiss Code of Obligations (CO).
CONCLUSION OF A WORK CONTRACT
An employment contract under Swiss law can be concluded by implication, and does not require any special form. It is even considered to be concluded if the employer takes on work which, according to the circumstances, can only be expected to be paid (Art. 320 CO). If a contract is not held in writing, the minimum requirements of the CO are fully applicable. In any case, the employer is obligated to confirm certain key points of the employment contract to the employee (Art. 330b CO).
I personally deem it judicious to conclude an employment contract in writing. The contract should include the term (fixed or permanent), a precise job description, the date of commencement, the weekly working hours, duration of the probation period and gross monthly salary (or the calculation bases for variable salary). It should also specify whether a salary is payable twelve or thirteen times a year, conditions for bonus payments, the number of vacation days, and data privacy clauses.
Furthermore, depending on the position of the employee, confidentiality and non-compete clauses should be included as well as intellectual property (IP) ownership clauses.
TERMINATION OF A WORK CONTRACT
Employment contracts may be terminated:
• within the agreed notice period or (if agreement is missing) in accordance with Art. 335b or 335c CO) at the initiative of either of the parties;
• for cause without notice at the initiative of either of the parties;
• by agreement.
In most cases, one of the contracting parties terminates the contract in compliance with the period of notice. It is in the nature of things that a termination of the employment contract by the employer leads to problems more often than vice versa. There are certain periods during which the employer may not terminate the employment contract, for example during pregnancy, in the event of illness (for a limited period of time) or during military service. A dismissal issued during such a period is void.
If the employer terminates within the ordinary period of dismissal, the contract is deemed terminated at the end of the notice period. Higher level employees are often offered immediate termination at the same time as they are dismissed. As an alternative, if they do not agree with the immediate termination, they are released from their duties until the contract expires. It is precisely these practices that repeatedly lead to legal headaches:
• Insufficiently thought-out release instructions can lead to employers being confronted with claims for financial compensation of overtime and remaining holidays after termination of the contract, despite the employee not working during the period of notice.
• If a court decides that the employee did not give his consent to a termination agreement voluntarily and without pressure from the employer, it may deem the agreement as an inadmissible circumvention of the mandatory protection against dismissal. Therefore, both termination contracts and negotiations with employees should be well prepared.
The employer must bear in mind that the employee is entitled to a reason for the termination, since the employee may believe that the dismissal is a wrongful dismissal. The termination would be determined as a wrongful dismissal if, for example, it was motivated by personal reasons, or the fact that a worker had exercised his/her constitutional rights. The party liable for the wrongful dismissal in a termination scenario would be required to pay compensation. The compensation is decided by the court and may not exceed an amount of six months’ salary.
The employer (or employee) may terminate a contract without notice for cause. Cause is given under circumstances which, in application of the rules of good faith, make the continuation of the employment relationship appear intolerable. Usually, the employee must be warned in writing before pronouncing the termination without notice.
Under Swiss law, there is no possibility of recourse to a job. A dismissal is valid and can only lead to damage claims, except for dismissals which are issued during lock-up periods (Art. 336c CO).
POTENTIAL PITFALLS TO BE AWARE OF
Even though many of the questions that may arise are regulated by law, there are many traps, especially in labour law, which are problematic. The following is a list of some potential pitfalls:
• Non-domestic employees may require work and residence permits. In particular non-EU persons must meet certain requirements in order to obtain a work and residence permit in Switzerland.
• Subsidiary joint liability of the board members for social security contributions (and tax debts).
•An employers’ obligation to record the daily working hours of their employees (incl. exact break times). Employees who have a high degree of autonomy in the performance of their work, who set their own working hours, and earn more than CHF 120,000 p.a. may waive this right in writing.
•Entitlement of the employee to receive a copy of all personal data included in their personnel file.
•Entitlement of the employee to not only receive a confirmation of work, but a detailed benevolent and truthful reference letter.
• When salaries consist of fixed and variable components, the employee may be entitled (depending on the ratio) to the payment of an average wage in the event of (vacation) absences.