Overview of termination of open-ended contracts in Switzerland

Termination of employment

Any Swiss or foreign company that dismisses an employee employed in Switzerland must comply with the following rules: 

1. Notice of termination is strictly regulated by law. 

2. Abuse of a fixed-term contract may result in its requalification as a permanent contract. 

3. 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. 

4. Employees are protected against dismissal in certain cases, such as illness or pregnancy, and for fairly long periods. 

5. 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 2^nd year of service. 
  • It is 3 months from the 10^th 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 2^nd to the 5^th year of service. 
  • 180 days from the 6^th 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. 

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.