Particularly in economically challenging times, restructurings and job cuts are becoming increasingly important. In this context, it should be noted that the law requires the employer to comply with certain obligations in the case of a so-called mass dismissal. This article provides an overview of the most important rules for mass dismissals and the legal consequences if these rules are not complied with.
When is there a mass dismissal?
If one of the following thresholds is exceeded within 30 days, there is a mass dismissal pursuant to Swiss employment contract law:
- 10 or more employees in a business establishment with 21-99 employees;
- 10% or more of the employees in a business establishment with 100-299 employees; or
- 30 or more employees in a business establishment with 300 or more employees
To determine the above values, terminations within a single business establishment are relevant, i.e. within an organized structure which has the means to achieve its work objectives and a certain autonomy. Even if several business establishments are geographically close (e.g. post offices) the terminations are to be counted separately.
Included are terminations for economic, technical or organizational reasons, but not other forms (termination of contract due to lapse of time, termination
agreements or employee resignations, employer terminations for performance- or behavior-related reasons, amicable amendment of employment contract).
When determining the total number of employees in a business establishment, part-time-employees are also counted, but not temporary support staff. In the case of high fluctuation, the average number of employees in the last calendar year or in the previous season in the case of seasonal operations can be used as a basis.
The provisions on mass dismissal do not apply if employees are dismissed in the context of bankruptcy proceedings or in the case of a composition agreement with assignment of assets, or if the business is discontinued as a result of a court decision.
What are the employer's duties?
If there is a mass dismissal, the employer is subject to the following information and consultation obligations:
- Written information to all employees;
- Consultation of the employees; and
- Information of the cantonal employment office
The information letter addressed to the employees must contain the reasons for the mass dismissal, the number of employees who are to be dismissed, the number of employees usually employed and the period during which the dismissals are to be made.
The purpose of the subsequent consultation procedure is to exchange views with the workforce and to give them the opportunity to make proposals as to how the dismissals can be avoided or their number limited, and how the consequences can be mitigated.
The cantonal employment office is usually notified of the mass dismissal by means of a copy of the employee information letter. The result of the consultation procedure and further information on the intended mass dismissal must also be communicated.
If at least 30 employees are dismissed within 30 days in a company with 250 or more employees, a social plan must be drawn up.
Finally, the Job Placement Act (AVG) imposes a separate notification obligation in the event of dismissals and closures of companies if ten or more employees are affected.
What happens in case of a violation of these obligations?
The violation of the statutory obligations may lead to the qualification of the dismissal as abusive, which in turn can lead to an obligation to pay a compensation to the employee in the amount of up to two months' salary.
In the event of a failure to notify the cantonal employment office, the notice period does not begin to run, with the consequence that the employment relationship in question continues to exist.
Finally, the law provides for a fine of up to CHF 40'000 for a deliberate violation of the reporting obligation contained in the AVG.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.