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Details on Site Contribution
Site contribution
Date: November 2010
Prepared by:
Dr. Martin Ammann, LL.M.
Thomas Kälin, lic.iur.
Meyerlustenberger Lachenal Attorneys at Law
Forchstrasse 452
P.O.Box 1432
8032 Zurich
Phone:   +41 44 396 91 91
Fax:   +41 44 396 91 92
E-Mail:   martin.ammann@mll-legal.com
According to the principle of freedom of contract, the parties of an employment agreement are free to agree on the content and terms of their agreement to an extent that is substantially larger than in most other European jurisdictions. Swiss employment law contains only some basic mandatory provisions. Some of them may only be modified in favor of the employee and others may not be modified at all. Most important are mandatory provisions aiming to protect the safety and the health of the employee. Public law labor protection regulations cover, among other things, working hours and breaks, special protection for young employees, pregnant women and breastfeeding mothers, work-related injury insurance and industrial accident prevention.
Compared to other countries, the legal regime governing the employment relationship in Switzerland is generally more liberal and favorable towards the employer than in many other countries. This is partly because labor unions are somehow less influential in Switzerland compared to, for example, labor unions in EU countries, but also because the unemployment rate traditionally has been and still is relatively low in Switzerland.
For issues relating to employment law, the provisions of the employment contract should be the first point of reference, taking into account mandatory statutory provisions. If the employment contract is silent on a certain issue, then the statutory provisions apply.
Applicable Law (Main Acts)
  • Swiss Code of Obligations (CO), Articles 319 to 362, SR 220 [Bundesgesetz betreffend die Ergänzung des Schweizerischen Zivilgesetzbuches (Fünfter Teil: Obligationenrecht), SR 220]
  • Swiss Federal Act on Employment in Trade and Industry, SR 822.11 [Bundesgesetz über die Arbeit in Industrie, Gewerbe und Handel, SR 822.11]
  • Swiss Federal Act on Old-Age and Survivors' Insurance, SR 831.10 [Bundesgesetz über die Alters- und Hinterlassenenversicherung, SR 831.10]
  • Swiss Federal Act on Disability Insurance, SR 831.20 [Bundesgesetz über die Invalidenversicherung, SR 831.20]
  • Swiss Federal Act on Occupational Pension Plans, SR 831.40 [Bundesgesetz über die berufliche Alters-, Hinterlassenen- und Invalidenvorsorge, SR 831.40]
  • Swiss Federal Act on Accident Insurance, SR 832.20 [Bundesgesetz über die Unfallversicherung, SR 832.20]
  • Swiss Federal Act on the Compulsory Unemployment Insurance and the Insolvency Compensation, SR 837.0 [Bundesgesetz über die obligatorische Arbeitslosenversicherung und die Insolvenzentschädigung, SR 837.0]
  • Swiss Federal Act on Health Insurance, SR 832.10 [Bundesgesetz über die Krankenversicherung, SR 832.10]
  • Swiss Federal Act on Gender Equality, SR 151.1 [Bundesgesetz über die Gleichstellung von Frau und Mann, SR 151.1]
  • Swiss Federal Act on Employee Information and Participation in Operations, SR 822.14 [Bundesgesetz über die Information und Mitsprache der Arbeitnehmerinnen und Arbeitnehmer in den Betrieben, SR 822.14]
  • Swiss Federal Act on Protection from Passive Smoking, SR 818.31 [Bundesgesetz zum Schutz vor Passivrauchen, SR 818.31]
  • Swiss Federal Act on Employment Exchange and Personnel Leasing, SR 823.11 [Bundesgesetz über die Arbeitsvermittlung und den Personalverleih, SR 823.11]
  • Swiss Federal Act on Employees Sent to Switzerland, SR 823.20 [Bundesgesetz über die minimalen Arbeits- und Lohnbedingungen für in die Schweiz entsandten Arbeitnehmerinnen und Arbeitnehmer und flankierende Massnahmen, SR 823.20]
  • Agreement on Social Security between the United States and Switzerland, SR 0.831.109.336.1 [Abkommen zwischen der Schweizerischen Eidgenossenschaft und den Vereinigten Staaten von Amerika über Soziale Sicherheit (mit Schlussprotokoll), SR 0.831.109.336.1] (similar agreements exist with several other countries)
    Frequently Asked Questions
  • Are there any formal requirements regarding an employment contract?
    A written employment contract is normally not required. An employment contract can be concluded in writing, verbally or even tacitly, i.e. an employment agreement is deemed concluded upon acceptance of a persons' work for a certain period of time, given that such work would normally only be performed for remuneration. However, certain special employment contracts, e.g., apprenticeship contracts or traveling salesmen's contracts, and some contractual clauses deviating from the statutory provisions must be in writing. The parties 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 has signed it. Upon the request of all contracting parties, the Swiss federal government or a canton can declare a collective employment contract binding for a certain branch of industry in general.
    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. However, to a certain extent it is possible to agree on terms that are different to those used in the standard contract. In such case, it is necessary to set up a formal employment contract in writing.
  • 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. However, if the salary exceeds a certain threshold (currently CHF 120'000.- per year), the employee, additionally, has to submit a regular tax declaration and will be taxed individually, whereby the withheld tax will be taken into account.
  • 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 work for reasons inherent in his person, such as illness and accident, the employer shall pay the normal wages 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. Under such an employment relationship, the employer shall pay the wages for three weeks during the first year of employment, and thereafter for an appropriate longer time, which varies from canton to canton. Most employers, however, choose to insure the wages of their employees for such absence from work. Where the insurance, as it is usually the case, offers the employee at least a protection, which is in essence equal to the protection 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, social security 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 survivor’s pension scheme, (ii) disability insurance, (iii) insurance against loss of earnings, (iv) occupational pension scheme, (v) unemployment insurance, (vi) accident insurance, and (vii) health insurance. The employees alone are responsible for their health insurance. All the other insurance contributions are split equally 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 breastfeeding women's health and safety with regard to the type and hours of work. 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 20th 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 wage 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, and may in some limited cases even vary from community to community. Besides the Swiss national holiday (August 1st), 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 (for most office employees and employees in industrial companies) to 50 (for all other employees, in particular employees in craft enterprises) 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 performance of overtime work becomes necessary, the employee is obligated to perform such work limited to feasibility and to what can be expected in good faith. Overtime work has to be remunerated at a surcharge or compensated by time off unless such compensation is contractually excluded (which is only possible within certain limits).
  • 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. However, dispensations can be granted by the competent authorities.
  • Are there any statutory provisions on gender discrimination?
    All forms of unequal treatment not justified by objective reasons related to the nature of work are prohibited by the constitution. In particular, the constitution 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 Gender Equality, employees may neither directly nor indirectly be discriminated, e.g. because of their gender, their matrimonial status, their family situation or pregnancy. Sexual harassment is prohibited. Furthermore, men and women are entitled to equal pay for work of equal value.
  • Are post-contractual non-competition obligations 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, in most cases, however, not more than one year), to a certain geographical area and to a specific branch of business. No special remuneration is required to make a non-competition clause legally valid. However, a compensation granted helps to allow a more restrictive non-compete obligation. A non-competition obligation has no effect, if the employment is terminated by the employer without specific reason given by the employee.
  • Does a notice period have to be considered when terminating the employment relationship?
    Employment contracts which were concluded for a limited period of time will end automatically upon expiration of the fixed term, without need to give notice of termination. If the parties tacitly continue their employment relationship, the provisions of a contract for an unlimited period of time apply. Employment contracts which were concluded for an unlimited period of time may be terminated by either of the contracting parties with a notice period reaching from 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 not differ for the employer and the employee.
  • Are there any formal requirements for the termination of an employment contract?
    An employment agreement can be terminated in writing, verbally or tacitly. The parties are strongly encouraged to issue a written notice. The party giving notice shall, upon the request of the other party, state the reasons for the giving of notice in writing. The termination of an employment relationship is, however, valid even if no reasons are given in the notice letter.
  • 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 in accordance with the legal or contractual notice period, except during a limited period of time 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.
  • 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 reasons 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 in such case to pay an indemnity of up to six months’ pay.
  • Does Swiss law apply in case of Non-Swiss employees or employers?
    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, unless the parties have agreed on another applicable law (which is possible within certain limits). 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, strikes are quite exceptional in Switzerland and usually of very limited impact beyond the target business.
    When drafting an employment contract, the following issues should be taken into consideration:
    1. Which law shall govern the employment agreement (an issue only in case of an international employment relationship)?
    2. Is there any collective or standard employment contract that may apply?
    3. Which mandatory statutory provisions have to be respected?
    4. Which form of the employment contract should be used?
    5. Are there any standard or other terms or conditions, such as internal company guidelines, that should be specifically incorporated into the written employment agreement?
    List of most common issues dealt with in individual employment contracts:
  • Name and details of the parties
  • Position and description of duties and competences
  • Place of work
  • Weekly working hours
  • Overtime
  • Gross monthly or annual salary and number of payments per year
  • Fixed and variable parts of salary
  • Vacation
  • Probation period (3 months maximum)
  • Duration of contract (limited or unlimited)
  • Termination of work relationship (notice period)
  • Intellectual property rights
  • Confidentiality
  • Non-Competition obligations (after the end of the employment)
    Useful Links
  • www.admin.ch - The website of the Federal Authorities of the Swiss Confederation
    The website of the Federal Authorities of the Swiss Confederation. On this site, you will find all the
    applicable laws and regulations by following the section "Documentation". Some statutes are only
    available in German, French and Italian.
  • www.ch.ch - The Swiss Portal
    A website that guides you around the administrative offices of the federal government, the cantons and the
    communes. This information portal will provide you with answers to questions you have on the
    administrative and bureaucratic aspects of daily life in general and work matters in particular, and will
    connect you directly to the appropriate government offices.
  • Federal Social Insurance Office, Switzerland
  • State Secretariat for Economic Affairs SECO