SWITZERLAND: An Introduction to Employment

Employment Practice Area Overview Switzerland 

Compared to the legislation in Switzerland's neighbouring countries, Swiss employment law is rather liberal and provides for some flexibility. Statutory Swiss employment law sets forth the general principles and contains certain mandatory provisions, for example in terms of maximum working hours or protection against dismissal.

However, outside the scope of such mandatory rules, the parties to an employment agreement can make deviating arrangements by mutual consent. Depending on the particular business sector and/or place of work, collective bargaining or standard employment agreements may apply, providing for additional mandatory provisions such as on minimum salary, additional vacation entitlements or employee participation rights.

Furthermore, it is to be noted that minimum salary requirements may also apply outside the scope of collective bargaining or standard employment agreements. While there is no general minimum salary on a federal level in Switzerland, certain cantons already provide for such requirements (Geneva, Neuchâtel, Jura, Ticino) or are about to formally introduce a general minimum salary (Basel-Stadt).

Hereinafter, certain key topics are addressed that currently affect numerous Swiss employment relationships. This overview focuses on private employment law; different rules may apply to public employment law.

Remote working 

Working from home / remotely became the new daily routine during the COVID-19 pandemic for many employees in Switzerland. While the protective COVID-19 measures implemented primarily in 2020 and 2021 have been lifted to a large extent in early 2022, allowing employees to (partially) return to the office, remote, work-from-home arrangements are likely going to stay even after the pandemic.

Hence, employers are under increased pressure to offer such flexible working arrangements, as hybrid models allowing employees to work partially from the office and remotely become increasingly popular. Considering the current expectations of employees and job candidates, employers insisting on having their workforce present at the office five days a week without legitimate business reasons might have difficulties to attract new talents and/or to retain their current employees.

However, remote working schemes pose new challenges for both employees and employers. Providing for clear regulations is therefore essential, also to set forth possible costs and expenses covered by the employer (if any). In addition, remote working / working from home in cross-border set-ups may have unwanted impacts in terms of taxes or social security if no limitations apply.

Currently, statutory Swiss employment law does not provide for clear guidance in terms of remote working / working from home. Hence, it is largely up to the employer and employees to agree on the applicable terms and conditions.

It is to be noted that there are parliamentary motions pending, demanding in substance that a uniform legal basis for working from home be established. The intention is, however, not to give employees a legally enforceable right to work from home / remotely. Rather, Swiss employment law (including the Swiss Labour Act) shall be amended to reduce possible hurdles for remote work and provide for more flexibility, also in terms of night and Sunday work (please see the next section).

Flexible working time arrangements 

Not only in terms of work location, but also with regard to working time arrangements, there is an increased trend towards more flexibility. Popular employee demands include part-time work, job-sharing, and "flextime" models, which may include a yearly target working time, allowing employees to define their working hours over a particular year and compensate additional working hours on a rolling basis, to the extent compatible with the employer's legitimate business needs.

In light of the increased demand for flexible arrangements, the provisions of the Swiss Labour Act, in particular regarding working time, breaks and rest periods are increasingly challenged and deemed outdated, as rather strict rules such as those relating to daily maximum working hours are no longer compatible with today's working reality.

Against this background, it is to be expected that changes to the Swiss Labour Act will be introduced in the near future, addressing the increased demand for flexible working time arrangements. So far, however, there is no concrete draft for a proposed revised Swiss Labour Act up for debate.

Changes to the general structure of the Swiss workforce

Given the increased trend for flexible working arrangements and remote work, many Swiss employers have started evaluating their need for a workforce physically present in Switzerland and generally the overall headcount required, as certain roles may no longer be necessary or tasks can be processed automatically, using AI. Also, several businesses suffered during the COVID-19 pandemic and will have to (further) reduce their (HR) costs going forward.

Under these circumstances, an increase in corporate restructurings is to be expected. To the extent that such restructurings include redundancies, the provisions on mass dismissals including the corresponding employee information and consultation requirements are to be considered if certain thresholds are met. Also, outsourcing certain tasks/business units may trigger information and/or consultation requirements. Compliance with such requirements is essential, also to mitigate the risk of possible disputes.

Disputes in connection with terminations of employment

Contrary to other jurisdictions, the principle of "freedom of termination" applies in Switzerland, which means, in substance, that either party is generally free to terminate the employment relationship ordinarily, i.e. subject to the applicable notice period, at any time, without a particular reason. Nevertheless, disputes about terminations do and will come in great numbers.

Termination notices given by the employer may, firstly, trigger disputes about the validity of the termination or possible interruption of the notice period in light of the timing. Termination notices given during certain protective periods (e.g. while the employee is prevented from working due to sickness) are null and void. If a protective period starts running after the employee received the termination notice, the employment relationship is prolonged accordingly.

Frequent employee claims are raised on the grounds of alleged abusive termination. While an abusive termination is also valid in the sense that it effectively ends the employment relationship (subject to the applicable notice period), claims for financial compensation can be triggered.

Further, an immediate termination (without having to respect any notice period), requires cause. The threshold for cause is rather high and often subject to legal disputes.

On the other hand, terminations initiated by one or several employees often give rise to disputes about non-compete/non-solicitation undertakings, possibly also regarding the alleged exploitation of business secrets. Such disputes are particularly common when a group of employees leave the employer in a coordinated effort, thereby also poaching clients or at least making an effort in this regard.

While post-contractual restrictive covenants are generally rather difficult to enforce in Switzerland, it is still essential that the employer provide for a clear contractual framework and possibly also aim to protect their business secrets with adequate technical means.