Switzerland
General labour market
Hiring
Vacancies for jobs where the unemployment rate reaches at least 5% are subject to a job registration requirement. Vacancies for such jobs must be reported to the regional employment office and must not be advertised elsewhere for five days. The registration can be done online. The idea is to ensure jobseekers registered with the regional employment office are informed first about vacancies and to better utilise the potential of the domestic workforce. The regional employment office may propose suitable candidates and the employer is required to give feedback.
The list of relevant jobs is updated annually. For 2025, the list is again longer than in the preceding year. While approximately 3% of the workforce worked in jobs that were subject to the job registration requirement in 2024, that quota increased to approximately 6.5% in 2024.1 The unemployment rate remains at a low level. Finding qualified staff to fill vacancies is a major concern among Swiss businesses.
Minimum wages
There is no general national minimum wage in Switzerland. However, minimum wage requirements may result from collective bargaining agreements, standard employment agreements or from cantonal regulations. The authorities may declare a collective bargaining agreement generally applicable and binding in the relevant industry of a certain region. In sectors where there are no generally binding collective employment agreements, the competent authorities can enact fixed-term standard employment contracts with binding minimum wages in the event of repeated and improper undercutting of wages. The number of employment relationships subject to collective bargaining agreements, whether generally binding, is ever increasing. Also, the number of standard employment agreements containing minimum wage requirements tends to increase; their geographical reach, however, is heavily concentrated in the Cantons facing pressure on salaries due to the large number of cross-border commuters and service providers, namely the Canton of Ticino, bordering Italy, and the Canton of Geneva, bordering France
A proposal to introduce a national minimum wage of CHF 22 per hour was rejected by a large majority of voters in a referendum held in 2014. However, the Swiss Confederation, as Switzerland is officially termed, consists of 26 Cantons enjoying large autonomy. Some Cantons have since moved to introduce minimum wages applicable in their territories. The first Canton was Neuchâtel. Upon challenge on constitutional grounds, the Swiss Federal Supreme Court confirmed in 2017 that the Cantons were competent to introduce minimum wage requirements in pursuit of socio-political aims, provided the minimum was set by reference to social security or social welfare minimum standards at relatively low levels (BGE 143 I 403). Other Cantons have followed the example of Neuchâtel and also introduced Cantonal minimum wages, namely the Canton of Jura (2018), the Canton of Geneva (2020) and the Canton of Ticino (2021). The Canton of Basel City, after a referendum held in 2021, was the first Canton in Switzerland's German speaking area to introduce a Cantonal minimum wage, which came into effect on 1 July 2022. As the prospects of finding a political majority in other Cantons are bleak, the promotors of minimum wages have moved to the communal level in left-leaning urban areas to promote statutory minimum wages.
Proposals to introduce minimum wages at communal level have received voters' assent in the City of Zurich and in Winterthur, both communities in the Canton of Zurich, by large majorities of roughly 70% and 65%, respectively. Trade associations challenged the decisions on the grounds that, under the law of the Canton of Zurich, communities lacked legislative competence regarding the matter. After the first instances dismissed the challenges in both cases, the Administrative Court of the Canton of Zurich ruled otherwise and quashed communal legislation on minimum wage requirements (AN.2024.00001 and AN.2024.00002 of 29 November 2024). Appeals are now pending in the Swiss Federal Supreme Court
Labour market and competition law
According to an uncontroversial view, competition law does not prohibit collective bargaining agreements. However, that does not mean the labour market is off limits for competition watchdogs. In 2024, the Swiss Competition Commission published a report on its preliminary investigation into allegedly anti-competitive arrangements among employers.2 The arrangements included, in particular, the sharing of information on salaries, some of which the Commission considered potentially problematic under competition law. As per its own statements, the report is a first attempt to sketch the contours of competition law relating to the labour market in Switzerland. The Competition Commission announced to monitor the market, consult with stakeholders from employer organisations, employee organisations and authorities and establish best practice rules to inform the public what arrangements on the labour market the Competition Commissions considers unproblematic and what arrangements it considers problematic and intends to prosecute under competition law.
Free movement of persons for EU nationals
Some 20 years ago, on 1 June 2002, the EU–Swiss agreement on the free movement of persons entered into force. Since then, several eastern European states have joined the EU and the EU–Swiss agreement was extended accordingly. The most recent joiner of the EU was Croatia. After expiry of a transitory period, Croatian nationals enjoyed the same right of free movement in Switzerland as other EU citizens in 2022. Due to a significant increase in the number of Croatian nationals that immigrated to Switzerland, following a decision by the Swiss government, quotas for Croatian nationals were re-introduced for the years 2023 and 2024 for the year, as permitted by the relevant treaty. Since the restrictions cannot be applied for more than two consecutive years, Croatian nationals again benefit from free movement since 1 January 2025.
Brexit: Citizens' Rights Agreement and Convention on Social Security Coordination
On 31 January 2020, the United Kingdom (UK) left the EU and after a transitory period expiring on 31 December 2020, UK citizens in Switzerland and Swiss citizens in the UK can no longer benefit from the EU– Swiss agreement on the free movement of persons. However, the Swiss–UK Citizens' Rights Agreement protects the rights of UK citizens in Switzerland and Swiss citizens in the UK as acquired by 31 December 2020. UK citizens with no acquired rights who wish to start working in Switzerland after 1 January 2021 require a work permit. The Swiss government has reserved special quotas for UK citizens.
As part of the EU–Swiss agreement on the free movement of persons, the EU rules on the coordination of social security3 apply also between Switzerland and EU Member States. After Brexit, these rules are no longer applicable as between Switzerland and the UK, except as provided for in the Citizens' Rights Agreement. Switzerland and the UK have agreed on similar coordination rules in the Convention on Social Security Coordination. The Convention was provisionally applied from 1 November 2021 and, after completion of the ratification process, formally came into force on 1 October 2023. Among other things, the Convention provides that UK employers that employ employees who are subject to the Swiss social security regime must administer and pay social security contributions like Swiss employers and vice versa, even if they have no establishment in the competent State (Article 18(1) of the Convention on Social Security Coordination). The employer and employee may agree that the employee shall fulfil the employer's obligations on its behalf without prejudice to the employer's underlying obligations.4
Business protection and restrictive covenants
During the employment relationship, the employee must carry out the work assigned to him or her with due care and loyally safeguard the employer's legitimate interests (Article 321a of the Swiss Code of Obligations; CO). The employee must not perform any paid work for third parties in breach of the duty of loyalty, in particular, if such work is in competition with the employer. The employee must not exploit or disclose confidential information obtained while in the employer's service, such as manufacturing or trade secrets. The employee remains bound by the duty of confidentiality even after the end of the employment relationship to the extent required to safeguard the employer's legitimate interests.
Post-termination non-compete undertakings are subject to specific rules. An employee with capacity to act may agree in writing on a post-termination non-compete undertaking. The undertaking is binding only where the employment relationship allows the employee to gain insight into the employer's clientele or business secrets and where the use of such knowledge may cause the employer substantial harm. The undertaking must be appropriately restricted with regard to its geographical reach, duration and scope so that it does not unfairly compromise the employee's future economic activity. The court may, at its discretion, reduce an excessive non-compete undertaking, taking due account of all circumstances. The validity of the undertaking does not depend on any special consideration or the employer's commitment to pay a waiting allowance; however, special consideration will be considered when assessing whether or not the undertaking is excessive. The non-compete undertaking will lapse once the employer demonstrably no longer has a substantial interest in maintaining it. It also lapses if the employer terminates the employment relationship without the employee having given any good cause to do so, or if the employee terminates it for good cause attributable to the employer. By default, the only remedy for violation of a post-termination non-compete undertaking is a claim for damages. Injunctive relief is available only if specifically agreed in writing and if the employer's interest in preventing the competing activity prevails the employee's interests. In balancing the interests, the judge will have to consider, among other things, the potential damage and the employee's conduct. Since damage is hard to prove and the hurdles for injunctive relief difficult to overcome, the deterrent of choice is an agreement on a contractual penalty, which also requires written form. The court has discretion to reduce an excessive penalty and will typically do so if it reduces an excessive non-compete undertaking to an acceptable level.
A recent case dealt with by the Swiss Federal Supreme Court illustrates that the duty of confidentiality cannot place restrictions on the employee that would be prohibited under the rules regarding posttermination non-compete undertakings and that general industry knowledge cannot be protected (4A_364/2022 of 12.05.2023). The dispute emerged between a software engineer and his employer. The employment contract provided that the employer was the exclusive owner of all intellectual property, know-how, business secrets and other characteristics of projects (specifications, plans) and software developments (documentation, source code, etc.) created by the employee alone or together with others and that the employee must not use for his own benefit or for the benefit of any third party, or disclose, any such confidential information during his employment or thereafter. The contract also provided for a post-termination non-compete undertaking. Furthermore, it provided for a contractual penalty in case of violation of the intellectual property clause, the confidentiality undertaking or the non-compete undertaking. The employee resigned because of the employer's default on salary payments. The default constituted good cause for the employee's resignation, was attributable to the employer and, consequently, the post-termination non-compete undertaking lapsed by operation of law. The employer, however, after the employee had taken up a job with a competitor, asserted a contractual penalty against the employee for alleged violation of the confidentiality undertaking. The claim failed. The broad notion of business secrets contented by the employer would have had the effect of preventing the (former) employee from engaging in any activity in the IT industry after termination of the employment relationship. The court confirmed that one must distinguish between genuine business secrets, i.e. technical, organisational or financial information that the employer wants to keep secret on the one hand and knowledge that can be acquired in any firm in the relevant industry on the other hand. The employer was unable to specify what business secrets the employee had violated, there were no indicia the employee had used business secrets of his (former) employer in his new job, and the court found the employer's concern was more about the employee's use of his experience and specialist knowledge of a specific programming language, know-how he could have acquired anywhere in the industry. Absent specific contentions what business secrets the employee allegedly violated, the claim was bound to fail.
The case is a reminder to employers that there are limitations on post-termination restrictions that can be imposed on employees and that employees cannot be prevented from using general industry knowledge elsewhere. As mentioned above, a post-termination non-compete covenant will lapse by operation of law if the employee terminates the employment relationship for good cause attributable to the employer (Article 340c(2) CO). In this context, good cause is any event or circumstance for which the other party is responsible and that, according to reasonable commercial considerations, could trigger the first party to terminate the employment relationship; it is not required that the employment agreement has been violated (BGE 130 III 353 E. 2.2.1). It will not suffice, though, that the other party is responsible for such event or circumstance, but there must be a causal link between the event or circumstance and the termination of the employment relationship. While no immediate reaction is required, waiting too long may be construed as a waiver to rely on the relevant event or circumstance. Also, inconsistent behaviour against good faith may prevent a party from relying on a good cause for termination. A recent judgment illustrates these points (4A_426/2023 of 3 January 2024). According to the facts of the case, the employee had agreed on a post-termination non-compete undertaking for the duration of two years. In consideration for the employee's compliance with the non-compete undertaking, the employer had agreed to pay the employee a waiting allowance equivalent to half the employee's last salary for the duration of the post-termination non-compete undertaking. In November 2020, after more than 10 years in service, the employee gave notice of termination. He contended that he resigned because the employer had failed to pay him a bonus that was owed to him for the year 2019 since spring 2020. He brought an action against his former employer seeking payment of outstanding bonuses and a declaration that the post-termination non-compete undertaking had lapsed. The court held that the employee was indeed entitled to the bonuses. However, the court also found that there was no plausible justification why the employee had waited about half a year after he knew the employer would not pay the bonus for 2019. Consequently, the court denied a causal link between the employer's failure to pay the bonus and the employee's resignation. Moreover, the employee had accepted without reservation the employer's payment of the waiting allowance. By doing so, the employee had implicitly accepted the validity of the post-termination non-compete undertaking. In these circumstances, it was inconsistent and against good faith for the employee to contend the non-compete undertaking was not binding on him. Eventually, the court found that the post-termination non-compete undertaking had not lapsed as a result of the employee's resignation.
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Footnotes
1 Media release of 28 November 2024 from the Federal Department of Economic Affairs, Education and Research: Mehr meldepflichtige Berufsarten für das Jahr 2025.
2 Recht und Politik des Wettbewerbs (RWP), 2024/4 p. 1101 et seq., Lohnabsprachen.
3 In particular, Regulation (EC) No. 883/2004 and Regulation (EC) No. 987/2009 on the coordination of social security systems.
4 Similar to an Employer–Employee Agreement in accordance with Article 21 of Regulation (EC) No. 987/2009.
Originally published by GLi
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