Any Swiss or foreign company that dismisses an employee employed in Switzerland must comply with the following rules:
Notice of termination is strictly regulated by law.
Abuse of a fixed-term contract may result in its requalification as a permanent contract.
In addition to the duration of the notice, there are questions about the form of notice, how it is received and the grounds for dismissal.
Employees are protected against dismissal in certain cases, such as illness or pregnancy, and for fairly long periods.
Dismissal may be wrongful, even if the legal time limit is respected, and the employer may therefore be held liable.
Human resources professionals who draw up contracts and deal with employee complaints, whether they work in-house for the company or as external consultants, are also affected.
What’s more, private individuals who hire household staff, such as domestic help, nannies or gardeners, also need to be aware of the applicable legal regime and the associated risks.
Main legal rules
In this section, we will look at the main rules to be observed when terminating a permanent contract under Swiss law:
Minimum termination leave does not apply during the probationary period, with shorter leave often stipulated during the probationary period.
Open-ended contracts can be terminated with the minimum leave prescribed by law, but longer leave can be agreed by the parties.
The same leave must apply to two parties. Where the parties stipulate different leave entitlements for the employer and the employee, the longer of two applies for both parties.
Termination leave only takes effect for the end of the month in which the last day of leave falls. For example, a one-month notice of termination served on 15 July will end the contract for 31 August.
The minimum notice of termination set by law depends on the employee’s length of service:
Except for the trial period, this leave is one month.
It is 2 months from the 2nd year of service.
It is 3 months from the 10th year of service.
Leave may be given verbally, unless otherwise stipulated in the contract.
The employer is not obliged to give the reason for dismissal, unless the employee requests it. In this case, the reason must be communicated in writing.
In the event of the employee’s illness or accident occurring during the termination period, the dismissal leave given by the employer is suspended, but not the resignation leave given by the employee.
In certain cases such as illness, accident or pregnancy, the employee is protected against dismissal for a certain minimum period, and thus cannot be dismissed. Thus, if the illness occurred before, a dismissal leave cannot be notified during a protection period, up to:
30 days during the first year of service.
90 days from the 2nd to the 5th year of service.
180 days from the 6th year of service.
In certain other cases, a dismissal may be considered unfair, leading to the employer’s liability, even if the time limit is respected.
The possibility of immediate dismissal in exceptional circumstances is reserved.
Please note: although fixed-term contracts do not require notice of termination to expire at the agreed date, there are exceptions:
If a chain of fixed-term contracts is concluded in such a way as to deprive the employee of his rights, in an abusive manner, a requalification as a permanent contract by the judge is possible.
In addition, a fixed-term contract tacitly renewed by the parties becomes an open-ended contract.
Recommendations
Now that you have familiarised yourself with the main rules governing termination of a permanent contract, here are some recommendations to help protect you as an employer:
If you enter into successive fixed-term contracts with the same employee, make sure you can justify this approach on the basis of objective needs.
Don’t forget to stipulate a trial period for new employees, with a greatly shortened leave period, which you can choose from our sample employment contracts.
Pay close attention to the notice periods, the form of notice agreed in the contract, and ensure that the employee has received it (e.g. by sending the duplicate by email or delivered by hand) and keep any written records for the good order of the file.
If necessary and possible, agree an amicable termination with the employee, even if you respect the leave entitlement. This allows you to settle any other questions about salary, bonus, expenses, holiday and overtime compensation, as well as any monetary claims by either party.
In just 3 minutes and for just CHF 30 per template, you can have your own personalised employment contract, drafted in real time and ready to sign.
The trial period applies to all companies, whether Swiss or foreign, employing staff in Switzerland. This period is subject to major restrictions for all of the following reasons:
Because there are situations in which other means must be used instead of the trial period.
Because the trial period allows not only the employer to assess the employee’s skills, but also the employee to terminate the contract prematurely if he or she is not satisfied, and the time limits are equal for both parties.
The legal rules surrounding the probationary period in Switzerland are crucial for human resources professionals who have to draw up contracts and deal with employee complaints, whether they work in-house at the company or as external consultants.
It’s also worth noting that private individuals who hire household staff (cleaners, nannies, gardeners), especially as the legal regime doesn’t change compared with a large company, so you have the same risks and needs.
Main legal rules
As far as the legal rules governing the trial period in Switzerland are concerned, here are the main ones:
The trial period in an open-ended contract (CDI) is one month, unless otherwise stipulated by the parties, but may never exceed 3 months. Thus, the absence of information on the trial period in the contract results in a trial period of one month by law.
In a fixed-term contract (CDD), the law only sets a maximum of 3 months for the trial period, but it must be provided for contractually. Otherwise, no statutory trial period applies.
The trial period only applies to new employees or, very exceptionally, to those promoted to a position requiring significantly altered responsibilities, again justifying a trial period. On the other hand, it is not possible to apply a trial period to a freelancer who has become an employee for the same tasks, or for an open-ended contract concluded subsequently to an old fixed-term contract.
The trial period is suspended and extended when the employee is absent due to illness, accident or the fulfilment of a legal obligation, but no extension applies due to holidays taken during the trial period.
During the trial period, the contract may be terminated without cause, by either party, with 7 calendar days’ leave. The parties may, however, provide for no leave, shorter leave or longer leave.
It is also possible to dismiss an employee who is pregnant, ill or unable to work during the trial period.
However, and in exceptional circumstances, dismissal during the probationary period may be considered unfair, as the purpose of the probationary period must be taken into account.
Recommendations
To optimise working relationships, we recommend that you follow the recommendations below:
When taking on a new employee, consider agreeing a 3-month trial period or using a fixed-term trainee contract for a longer period, which frees you from the obligation to continue the employment relationship if you are not satisfied.
If you are not at all sure of the candidate’s abilities, particularly if they have no professional experience, give priority to a trial contract to assess their skills without any commitment.
If you are promoting an employee, consider carefully whether a further trial period is justified by exceptional circumstances. If you’re not sure, it’s best to agree with the employee to end their existing contract and enter into a fixed-term contract for a new position.
Also consult the UNIA website to find out whether there is a CLA with specific rules on probationary periods:https://www.service-cct.ch/
Don’t miss the deadline for giving notice of termination during the trial period. After the last day of the trial period, the notice of termination will be at least 1 month for the end of the month in a permanent contract, and the fixed-term contract will have to be respected until its end.
In just 3 minutes and for just CHF 30 per template, you can have your own personalised employment contract, drafted in real time and ready to sign.
Any Swiss or foreign company employing staff in Switzerland must give them holiday entitlement, taking into account all of the following points:
Holidays must be paid for, which can mean a sudden additional cost for untaken holidays over several years.
In addition to equivalent pay, compensation may be payable in the event of non-compliance.
Holiday entitlement is monitored by the competent authorities.
Holidays must be taken in full within a year and up to the last day of work in the event of dismissal, even if the employee refuses to take them in full.
Holiday pay is also subject to contributions and tax, where applicable.
Human resources, both internal and external to the company, play a crucial role in drawing up employment contracts and handling employee complaints.
Among others, private individuals who employ domestic staff (cleaning, nannies, gardeners) are also affected by this issue, as they must grant a minimum amount of paid leave even for part-time, irregular or hourly workers.
Principal rules on vacations
The following is a list of the main legal rules on minimum paid holidays for employees in Switzerland. Here are the main points to bear in mind:
All employees are entitled to a minimum of 4 weeks’ paid holiday per year. This increases to 5 weeks for employees under the age of 20.
Most collective labour agreements provide for 5 weeks’ holiday for staff who have reached the age of 50 or who have worked for the same employer for 20 years.
In the case of part-time work, holiday entitlement is reduced proportionately. For example, a 100% employee working 5 days a week is entitled to 20 working days’ holiday (plus Saturdays and Sundays), while an 80% employee working 4 days a week is entitled to 16 working days’ holiday per year.
Holidays may not be compensated in cash, subject to the holidays remaining on the days of dismissal or resignation. In particular, the employer may refuse to allow the employee to take all of his holiday during the termination leave for just reasons and legitimate business needs.
An illness or accident that does not allow you to rest during your holiday does not count as holiday taken.
National or cantonal public holidays do not count as holidays.
Holidays are agreed between the employer and the employee, but the employee is entitled to at least 2 consecutive weeks’ holiday. In addition, the employer will take into account the employee’s particular needs and will generally grant holidays during school holidays if the employee has children, or the right for spouses working in the same company to take holidays at the same time. On the other hand, employees may be obliged to take holidays during periods when the company is closed.
During holidays, the full salary must be paid. In addition, salary supplements must be paid, including the variable salary to be paid proportionally. This is based on the average salary paid over the last 12 months.
Recommendations
In this final section, we’ll give you some recommendations on how best to manage minimum paid holidays for employees in Switzerland. Here are our tips:
Take into account the employee’s age and family situation.
Also consult the UNIA website to find out if there is a CLA providing for higher holidays than the law:https://www.service-cct.ch/
Carefully record hours worked, sick leave, absences, holidays, public holidays and any other payroll information.
Use our staff regulations template to set out the general holiday plan, the deadline for requesting holidays, their duration and other essential points to protect you.
Or negotiate holiday conditions with full rights and restrictions for each employee separately, taking into account their personal situation and workstation.
This applies to any Swiss or foreign company employing staff in the Cantons with a legal minimum wage or where the minimum wage is provided for in a collective labour contract (CCT) or standard labour contract (CTT) for certain types of employee and economic sectors.
Any Swiss or foreign company employing staff in these cantons is therefore obliged to respect the legal minimum wage. What’s more, even if the employment contract makes no mention of it, employees have the right to claim what they are owed, and the authorities can impose fines on companies that fail to meet this obligation. It is therefore essential to comply with the regulations in force to avoid damaging financial and reputational consequences.
Minimum wage legislation in Switzerland is a matter for the cantons, and there is currently no minimum wage set by federal law. However, five cantons have introduced a statutory minimum wage for all types of employees working on their territory: Geneva, Neuchâtel, Jura, Ticino and Basel-Stadt.
Human resources, both internal and external to the company, play a crucial role in drawing up employment contracts and handling employee complaints. Private individuals who employ household staff are also concerned, provided that these employees can be classified as employees rather than self-employed.
Main legal rules
The minimum wage applicable in Switzerland is governed by the following rules:
The absence of a federal minimum wage: As mentioned above, each canton reserves its own minimum wage legislation.
Exceptions: Certain types of employees, such as minors, apprentices, volunteers and trainees in vocational training, are not covered by the minimum wage obligation.
Elements included in the determining salary : In addition to the normal salary, all economic benefits or benefits in kind received by the employee must be taken into account. These include residence allowances, bonuses, seniority gifts, tips, service charges and many others.
Bonus point: What constitutes a decisive salary?
In addition to the normal salary, the following elements must be taken into account:
Any economic benefit or benefit in kind received by the employee, including residence allowances, gratuities, seniority gifts, tips or service charges, etc.
13th salary.
Holiday pay for hourly-paid staff.
However, amounts paid as salary supplements, such as compensation for night work, Sunday work, overtime or extra pay for overtime, are not taken into account.
Recommendations
If you hire low-paid staff
Consult the website of the Canton in which the employee must work regularly if that Canton has a legal minimum wage.
You can also consult the UNIA website to find out whether there is a CLA providing for a minimum wage by sector:https://www.service-cct.ch/
If possible, opt for a remote employment contract for a cross-border employee or an employee who lives in another canton that does not have a statutory minimum wage.
Under Swiss employment law, any Swiss or foreign company employing staff in Switzerland must draw up an employment contract with the employee, for the following two reasons:
Because the rules of employment law are stricter and provide more protection for an employee against his employer than for a self-employed person against his client.
Because the substance of the contract prevails, and a freelance, subcontract, consultancy or other contract can be requalified as an employment contract, regardless of whether the signed contract states otherwise.
Please note: A frequently inserted clause “this contract shall not be construed as an employment, partnership or corporate relationship…” is of no use in the circumstances of a particular case.
Because not only the employee can intervene to claim his rights, but also the competent authorities responsible for monitoring working conditions, associations or trade unions.
Because it is primarily the employer’s responsibility to collect social security contributions on the employee’s gross salary and pay them to the relevant authorities.
Private individuals who employ household staff are also affected, provided that these employees can be described as salaried rather than self-employed.
Main legal rules
General cases
The situation must be interpreted on a case-by-case basis, taking into account all the objective circumstances, even if this means ignoring the clear clauses of the signed contract (principle of substance over form).
To qualify as an employee, here are the different criteria to consider:
Having only one or very few customers.
Not employing any staff.
Not acting in one’s own name.
Not having proper premises.
Absence of business investments.
Not assuming the risk of default or loss.
Not determining freely the terms of working and being subject to instructions of others.
Not freely fixing the working schedule.
Please note: these criteria are not cumulative, and each criterion may carry more weight than the others, depending on the individual situation.
Particular cases
In addition to the cases mentioned above, there are also special cases in which you can qualify as an employee. These are as follows:
A non-executive director of a company or business is considered an employee, even if he or she is the owner or shareholder of the business at the same time.
A sole proprietor cannot be an employee even if he pays himself a salary through his business. This is simply a deduction from the profit.
An artist, sportsperson or lecturer is in principle self-employed rather than an employee.
You may have employee status in relation to your employer, and self-employed status in relation to other customers. The two statuses can then be combined.
Tutoring at home is more of a self-employed activity, but tutoring at school is an employed activity.
Cleaning or gardening work with own equipment for several households is the self-employed activity, but cleaning in the same household is more of an employed activity.
Childminding in one’s own household is more of a self-employed activity, but is more of a paid activity if in the child’s parents’ household.
Recommendations
If you feel that the person hired is more of a freelancer
Check whether he is registered as a sole trader in the commercial register. This is a good indication that he is self-employed.
Check whether he is registered as a VAT taxpayer. Also a good indication that he is self-employed.
Check whether it has a website for placing orders, open to all potential customers.
Make sure it has several customers. Does it have references, customer reviews, etc.?
Include a clause in the freelance contract requiring the freelancer to inform us regularly if their status changes.
Include a clause in the freelancer’s contract that passes on any social security charges or taxes due, if any, to their salary, so that you can take action against them if it turns out that they have employee status from the point of view of the relevant authorities.
