Overtime Compensation - Does it Apply to Senior Managers?
Along with the provisions of the Swiss Code of Obligations relating to overtime (Art. 321c CO), the Swiss Labor Act and the associated Ordinances contain detailed provisions on working and rest times and compensation for extra hours. Implementing the statutory requirements poses a range of questions for startups and SMEs.
Who is responsible for recording working time?
All Swiss employers must record the working times of their employees and allow relevant authorities access to the documents upon request. The daily and weekly working and rest times for all employees are to be recorded, independent of any contractual provisions regarding working time. As well as the start and end of the working day, breaks must also be recorded.
It is possible to delegate the recording of working time to the employee concerned. However, the employer must ensure that the employee has the necessary tools to do this and is ultimately responsible for ensuring that the data recorded is accurate and complete. If legal requirements are not complied with, the company risks official sanctions and retrospective claims by employees to be paid for self-documented extra hours.
What are the exceptions for senior managers?
Employees who hold a senior management position or undertake scientific or independent artistic activities are exempt from the obligation to record working time (Art. 3 lit. d Swiss Labor Act).
What does a “senior management position” mean in practice? In general, the statutory exception is somewhat narrower than generally assumed.
A person holds a senior management position if he or she has authority to make significant decisions and consistently influences the structure and course of business of a company.
This would, for example, include members of the administrative board or managing directors. However, whether an individual holds a senior management position will always depend upon the specific circumstances. Factors such as income level, signatory authority for the company or managing a large team are not on their own sufficient to meet the stipulated criteria.
Employees who are not in a senior management position can only waive or simplify the requirement to record working time under specific conditions:
Employees who receive an annual gross salary of at least CHF 120,000 and who can determine the majority of their working hours themselves can waive the requirement to record working time in the context of a collective labor agreement.
Simplified recording of working time means only recording the total time worked (without start, end and rest times). This can be agreed with employees who are free to determine at least one-quarter of their working time. In companies with less than 50 employees, agreements may be reached individually, however, larger companies require the agreement of employee representatives, or a majority of the employees in the company.
How should additional working hours be compensated?
A distinction must be made between overtime (Überstunden) and extra hours (Überzeit). Overtime hours are those worked above the contractual working hours. Extra hours are those worked above the statutory maximum working time.
Compensation for overtime can be contractually excluded, which occurs regularly for those in senior management positions. However, if the employment contract is silent, then overtime hours must be compensated with a wage supplement of 25%.
Extra hours arise when the statutory maximum working time is exceeded. Depending upon the activity or company, a weekly maximum working time of either 45 or 50 hours will apply. Hours worked in excess of this must be compensated either with time off in lieu or with a wage supplement of 25%. Apart from a few exceptions, it is not possible to contract out of this obligation.
This means that extra hours worked by employees who are not in a senior management position must be compensated or remunerated and employees cannot validly waive their rights to this during the employment relationship.