Employment law - Details

Applicable law
 

• Swiss Code of Obligations (CO), Articles 319 to 362, SR 220

• Swiss Federal Act on Employment in Trade and Industry, SR 822.11

• Swiss Federal Act on Old-Age and Survivors' Insurance, SR 831.10

• Swiss Federal Act on Disability Insurance, SR 831.20

• Swiss Federal Act on Occupational Pension Plans, SR 831.40

• Swiss Federal Act on Accident Insurance, SR 832.20

• Swiss Federal Act on Health Insurance, SR 832.10

• Swiss Federal Act on Gender Equality, SR 151.1

• Swiss Federal Act Respecting the Federal Conciliation Board in Collective Industrial Disputes, SR 821.42

• Swiss Federal Act on Employees Sent to Switzerland, SR 823.20

• Agreement on Social Security between the United States and Switzerland, SR 0.831.109.336.1 (similar agreements exist with several other countries)

Related publication: Swiss Contract Law


Frequently asked questions
 

Are there any requirements regarding the form of an employment contract?

A written employment contract is normally not required. It can be concluded in writing, verbally or even tacitly, i.e. an employment agreement is deemed to have been concluded if someone accepts a persons' work for a certain period of time and under the given circumstances, such work would normally only be done for remuneration. Certain special employment contracts, however, e.g., apprenticeship contracts or traveling salesmen's contracts, and some contractual clauses deviating from the statutory provisions must be in writing. The parties, however, are strongly encouraged to conclude an employment contract in writing.
 

What are collective and standard employment contracts?

Collective employment contracts are concluded between employers or employers' associations and labor unions. They determine the relationship between the employers and employees. Collective employment contracts generally establish provisions concerning the conclusion, content and termination of the individual employment contract. The terms of the collective employment contract apply if the employer has signed the agreement or if he belongs to the employers' association that signed it. Upon the request of all contracting parties the Swiss federal government or a canton can make a collective employment contract binding for a certain branch of industry.

Standard employment contracts are contracts that apply to certain types of professions and that have been adopted by the competent authorities. They specifically determine the conclusion and the termination of the employment contract, as well as the terms of employment. It is, however, possible to agree to terms that are different than those used in the standard contract by using a formal employment contract.

Binding collective agreements and standard contracts play relatively little importance in the overall employment market.
 

Is there a statutory minimum wage?

Generally, there is no statutory minimum wage in Switzerland. Some collective or standard employment contracts, however, may stipulate a minimum wage. Further, minimum wages may apply to foreign employees sent to Switzerland for a limited time by their foreign employers.
 

Will taxes be deducted from the salary?

No income taxes are withheld from the salary of Swiss employees and employees holding a settlement permit (C permit). Foreign nationals having a (temporary) residence permit (B permit) or a short-term residence permit (L permit) and who are not married to a Swiss citizen or to a person holding a C permit are in principle taxed at the source, i.e., the employer is obliged to withhold the taxes. In most circumstances they can opt out of source taxation however.
 

Does an employee have the right to a salary in case of accident or illness?

If an employee, by no fault of his own, is prevented from performing his work for reasons inherent in his person, such as illness and accident, the employer shall pay the normal wages (plus a reasonable compensation for any lost payment in kind, if applicable), for a limited period of time provided that the employment relationship has existed or was concluded for a fixed period of more than three months. Subject to an agreement fixing a longer period of time, during the first year of employment, the employer shall pay the wages for three weeks, and after that for an appropriately longer time, which varies from canton to canton. Most employers, however, choose to insure the wages of their employees in case of disability to work. Where the insurance, as is usually the case, offers the employee substantially better protection than foreseen by law, payment of the insurance premium may be split equally between the employer and the employee.
 

How is the social security system set up?

In Switzerland the social security system is made up of various social insurances, welfare assistance and provisions for the future (pension plan). Everyone who is gainfully employed has to contribute to the following social insurances: (i) old age and survivors pension scheme, (ii) invalidity insurance, (iii) insurance against loss of earnings, (iv) occupational pension scheme, (v) unemployment insurance, (vi) accident insurance, and (vii) health insurance. The employees are responsible for their health insurance. All the other insurance contributions are equally split between the employer and the employee, and the employer deducts the employee's contributions from the salary. Such contributions amount to 10-15% of the gross salary for both the employee and the employer. Special rules apply to self-employed persons.
 

Are there any maternity rights?

Pregnant women may stay away from or leave work upon a simple notification. After having given birth, women may not work at all for 8 weeks and only with their consent for another 8 weeks thereafter. There is additional protection for pregnant and breast-feeding women's health and safety with regard to the type and hours of work. A new law on maternity leave has been implemented as of July 1^st, 2005. Under this new law women have the right to receive maternity compensation of 80% of their average income made prior to giving birth for 14 weeks after delivery. Further, there is protection against dismissal during pregnancy.
 

How much vacation is an employee entitled to?

An employee is entitled to at least four weeks of paid leave in each year of service, and at least five weeks in the case of juvenile employees until completion of the 20^th year of age. For an incomplete year of service, vacation shall be granted in proportion to the duration of the employment relationship during such year. The employer shall pay the employee during his vacation the full wages otherwise due. The employer is authorized to determine the point of time of vacation, taking into consideration the wishes of the employee as far as they are compatible with the interests of the employer.
 

Which public holidays are there?

The number and dates of public holidays vary depending on the canton. Besides the Swiss national holiday (August 1^st), all cantons have at least 8 public holidays. The parties can modify the holidays by means of a written agreement, taking national and religious considerations into account.
 

What is the maximum length of a working week?

Depending on the profession and the business, the working week is limited to a maximum of 45 to 50 hours. There are, however, numerous exceptions, and longer working weeks can be permitted by law or by permission of the authorities. These restrictions do not apply to the top management. The ordinary working week of a normal full-time employee is 40-42.5 hours. If the performance of overtime work becomes necessary, the employee is obligated to perform it to the extent he is able and can be expected in good faith to do so. Subject to an agreement to the contrary, overtime work has to be remunerated at a surcharge or compensated by time off.
 

Is night work permitted?

Work performed at the request of the employer between 11 p.m. and 6 a.m. is considered night work and has to be approved by the competent authorities. Permission is only granted if the employer can prove the need for such work.
 

Is work on Sundays permitted?

Working on Sundays at the request of the employer is not generally allowed, dispensations can, however, be granted.
 

Are there any statutory provisions on gender discrimination?

The constitution forbids all forms of unequal treatment that cannot be justified for objective reasons related to the nature of work. In particular, it stipulates equal treatment for men and women, but it also prohibits any form of discrimination due to a person's race, age, language, religion, political opinion or any type of disabilities. Therefore, and based on the Swiss Federal Act on Sexual Equality, employees may neither directly nor indirectly be discriminated against, e.g. due to their gender, their matrimonial status, their family situation or pregnancy. Sexual harassment is prohibited. Furthermore, men and women are entitled to equal pay for a job of equal value. However, so far only little case law has been established in this field.
 

Are after-termination non-competition agreements permitted?

Non-compete clauses that remain in effect after termination of an employment relationship are permitted provided there are safeguards for the employee. The restriction must be limited in time (up to three years), to a certain geographical area and to a specific branch of business. No special remuneration is required.
 

Does a notice period have to be observed when terminating the employment relationship?

Employment contracts may be concluded for a limited or for an unlimited time. Limited employment contracts automatically end upon expiration of the fixed term, without need to give notice of termination. If the parties, however, tacitly continue their employment relationship the provisions of an unlimited employment apply. Unlimited employment contracts may be terminated by either of the contracting parties with a notice period of seven days to three months, depending on the nature and length of service. The parties may alter the notice period by mutual agreement but the notice periods shall, however, not differ for the employer and the employee.
 

Are there any formalities for terminating an employment agreement?

An employment agreement can be terminated in writing, verbally or tacitly. The parties, however, are strongly encouraged to issue a written notice. Upon request by the employee the employer must state the reasons for its giving of notice in writing as to enable the other party to decide whether the notice is abusive. There is, however, no general requirement to justify the termination of an employment relationship.
 

Are there any statutory restrictions to terminating an employment agreement?

An employment relationship may not be terminated by either party for abusive reasons. Abusive reasons are defined in Art. 336 of the Swiss Code of Obligations. An abusive termination is nevertheless valid, however, the party giving abusive notice must pay an indemnity of up to six months pay. The employment agreement may otherwise be terminated by either party at any time with the legal or contractual notice period, except during a limited period if the employee is prevented from performing his work fully or partially by no fault of his own due to illness, accident, compulsory military or civil service or during the participation at a foreign aid service. Any notice given during such period is void. If the notice is given prior to the beginning of such period, the expiration shall be suspended and shall continue only after termination of the forbidden period. Furthermore, there is a special procedure for collective redundancies. All employment contracts may, however, at any time be terminated by mutual agreement. For the rest and subject to the statutory notice periods, in Switzerland there is freedom as to the giving of notice.
 

Is it possible to terminate an employment agreement with immediate effect?

Any party at any time may terminate the employment relationship with immediate effect for valid reasons, i.e., if the terminating party in good faith cannot be expected to continue the employment relationship. The courts assume valid reason with great restraint. In case of unjustified dismissal without notice, the termination is valid but the employee has a claim for compensation of what he would have earned if the employment relationship had been terminated by observing the notice period or until expiration of the fixed agreement period. This amount is offset against what the employee saved because of the termination of the employment or what he earned or intentionally failed to earn from other work. In addition, the judge may obligate the employer to pay an indemnity of up to six months’ pay.
 

Does Swiss law apply in case of Non-Swiss employees or employers?

Subject to applicable international treaties, if an international labor dispute is brought to a Swiss court which has jurisdiction, the judge will apply Swiss law if the employee has his ordinary place of work in Switzerland. In a case where an employee ordinarily works in several countries, the employment agreement is subject to the law of the country of the employer's business establishment or, in the absence of such establishment, the country of his domicile or ordinary residence.
 

What happens with the employees in case of a business transfer?

If the employer transfers the business or a part thereof to a third party, the employment relationship is transferred to the acquiring party including all rights and obligations as of the date of transfer, unless the employee declines the transfer. If a collective employment contract applies the acquirer shall be bound to the contract for at least one year unless it expires earlier or is terminated by notice. With the decline of a transfer by an employee, the employment relationship shall be terminated upon the termination of the legal (and not the contractual) term of notice.
 

Is the employer entitled to relocate an employee or to transfer him to another company?

An employee may only be relocated upon mutual agreement, e.g., in the original employment agreement. The employee is not entitled to transfer the rights from an employment agreement to a third party unless otherwise agreed upon or, under certain circumstances, in the course of a business transfer.
 

Are strikes and collective disputes common in Switzerland?

The right to strike is recognized under certain conditions: Only the labor unions have a right to call a strike, strikes must be related to work conditions (political strikes are illegal), and strikes are a means of last resort. Unlike in some of its neighboring countries, in Switzerland strikes are quite exceptional and usually of very limited impact beyond the target business.

Checklist
 

When drafting an employment contract the following issues should be taken into consideration:
 

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