Terminations present legal challenges for employers: Deadlines, formal requirements, protection rules, and risks such as wrongful termination must be considered. A compact overview of the key points.
The termination of an employment relationship raises various legal issues. In addition to formal requirements, deadlines must be observed, protective provisions respected, and potential risks – such as abusive dismissal – avoided. Below you will find a brief overview of terminations in Switzerland from the employer's perspective.
1. Reason for Termination
As a general rule, Swiss labour law provides for freedom of termination, meaning that an employment relationship may be ended without cause. However, care must be taken to ensure that the termination is not abusive.
A dismissal is deemed abusive if it violates the principle of good faith. This is the case, for example, if an employee is dismissed on grounds of age, gender, religion, nationality or political opinion without any connection to the employment relationship. Termination is also considered abusive if it is issued in retaliation for asserting claims arising from the employment relationship or if its sole purpose is to prevent such claims from arising.
While an abusive dismissal remains legally valid, the employee is entitled to compensation of up to six months' salary. Further information on abusive termination can be found in our magazine article dated 12 February 2020.
2. Notice Period and Effective Date of Termination
Unless otherwise agreed, an indefinite employment relationship may be terminated after the probation period in the first year of service with a notice period of one month, in the second up to and including the ninth year of service with a notice period of two months and thereafter with a notice period of three months, each to the end of a calendar month. During the probation period, the employment may be terminated at any time with seven days' notice.
The effectiveness of the termination depends on when the other party actually receives the notice. Therefore, the notice must reach the recipient no later than the last day of the month, and the terminating party should be able to prove that the notice of termination was delivered on time.
An exception is termination for good cause ("wichtiger Grund"). Good cause exists when circumstances arise that make it unreasonable for the terminating party to continue the employment relationship. In such cases, the employment relationship can be terminated immediately. However, the threshold is high, and it is advisable to seek legal advice beforehand. Also, such termination must always be given immediately after the good cause becomes known - usually within two to three working days.
3. Termination Letter
As a rule, termination does not require any particular form unless a specific form has been agreed upon – for example, in a collective labour agreement, the individual employment contract, or internal regulations.
Where written form has been stipulated, the notice of termination is only effective if it is either signed by hand or with a qualified electronic signature (QES) (see our magazine article of 16 March 2023 on qualified electronic signatures). If the signature is handwritten, it must be ensured that the original letter is received by the employee in due time.
It is not legally required to state the reason for termination in the termination letter for it to be valid. However, the employee is entitled to request a written justification.
4. Time of Termination
Swiss law provides for statutory blocking periods during which ordinary termination by the employer is not allowed. After the probation period, such blocking periods apply, for example, during military service, pregnancy, maternity leave, and incapacity for work due to illness or accident. The duration of the blocking period in the event of prolonged incapacity for work due to illness or accident depends on the years of service: In the first year of service it is 30 days, from the second up to and including the fifth year of service 90 days and from the sixth year of service 180 days. If the incapacity is job-related, there is no protection against dismissal, according to the Federal Supreme Court (see our magazine article of 17 June 2024).
If notice is given during a blocking period, the notice is null and void and the employment relationship remains in place. If the blocking period arises after notice has been given, the notice period is suspended and the employment relationship is extended accordingly.
5. Number of Termination
Special care must be taken when several employees are dismissed simultaneously. If an employer gives notice of termination to a certain number of employees within 30 days, and the terminations are unrelated to the individual employees, this qualifies as a mass dismissal. The thresholds are clearly defined: for companies with more than 20 and less than 100 employees, the threshold is at least 10 dismissals. For companies with at least 100 and fewer than 300 employees, a dismissal of at least 10 per cent of the workforce is considered a mass dismissal. In companies with at least 300 employees, a mass dismissal is deemed to occur if 30 or more employees are affected.
In the case of a mass dismissal, the employer must observe specific consultation and notification duties toward the workforce and the cantonal employment office, both before and after issuing terminations. Failure to comply may entitle employees to compensation, or the notice periods may not commence. Under certain circumstances, the employer is also required to establish a social plan.
Even outside the scope of a formal mass dismissal, employers are obliged to report terminations if at least 10 employees are affected (in some cantons, the reporting obligation starts with 6 terminations).
6. Termination Agreement as an Alternative
A termination agreement offers an alternative or supplement to termination. By mutual consent, the employment relationship may end on a jointly agreed date, with both parties settling all outstanding claims and declaring mutual release of further obligations.
Whether you are considering a termination agreement, ordinary or immediate termination, or are dealing with a mass dismissal, we are happy to advise you on all legal matters relating to the end of an employment relationship.
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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.
