Terminating a Swiss Employment Contract - What You Need to Know
Employment contracts can be agreed for fixed or open-ended periods of time. Fixed term employment relationships will end automatically when the agreed duration of the contract expires, whilst open-ended contracts usually end by mutual agreement or termination by one of the parties.
Termination agreement
Just like any other contractual relationship, parties to an employment contract can terminate it by agreement at any time.
The termination agreement should always be in writing and contain a “full and final settlement” clause, meaning that once the agreement takes effect, the parties have no further claims against each other.
However, it also needs to take account of statutory protection which prevents employees from waiving their right to bring claims arising from mandatory legal provisions during the employment relationship and for one month following its termination (Art. 341 Swiss Code of Obligations). These include, for example, claims to holiday or overtime payments.
Ordinary termination
Under Swiss law, notice of ordinary termination can normally be given by both parties at any time. If there is no contractual agreement to the contrary, the statutory notice periods (Art. 335b and 335c CO) will apply. However, any notice of termination given during a period protected by law, e.g. during pregnancy or a period of incapacity due to ill-health, will be ineffective.
Even if not expressly required by law, termination should always be in writing, or at least sufficiently and provably documented. Notice of termination is a unilateral declaration of intent by the terminating party, however, to be valid, the other party must receive it. In the event of a dispute, the terminating party must prove receipt.
Provided that notice of termination is given outside of any legally protected periods and is received by the other party, the notice of termination will be effective and lead to the end of the employment relationship. With a few exceptions, a wrongful termination will typically only give rise to claims for compensation and damages and not to a claim for continued employment or reinstatement.
Ordinary notice of termination does not need to include grounds. However, the party in receipt of notice can request written justification for the termination. The grounds must be true and complete. If grounds for termination are given which conceal the true basis, this could be considered an indicator of wrongful termination.
Notice of amendment
Generally, notice of termination of an employment contract cannot be revoked, nor linked to specific conditions. Once issued, it normally leads to the end of the employment relationship.
However, the so-called “notice of amendment” (Änderungskündigung) is an exception to this principle. It is conditional, meaning that an employer offers to continue the working relationship with the employee on amended terms. The amendment could, for example, involve the allocation of additional duties with an adjusted salary. If the employee does not agree to the amended contractual terms, the employment relationship is terminated in accordance with the notice period for ordinary termination.
Termination without notice
As with any contractual relationship, fixed or open-ended employment contracts can be terminated by either party at any time with immediate effect, for good cause. Good cause is any circumstance which renders the continuation of the employment relationship unconscionable for the party giving notice (Art. 337 CO).
Termination without notice is justified, for example, if an employee acts in a criminal manner towards the employer. For less serious breaches of obligations, the party in receipt of notice must first be given a warning.
Whether lawful or not, termination without notice always results in the end of the employment contract. However, an unjustified dismissal without notice may result in a "penalty payment" of up to six months' salary in addition to the obligation to continue to pay salary until the end of the ordinary notice period.