Hire in Switzerland

Switzerland regulates various types of employment contracts:

• In individual employment contracts, an employee performs work for an employer in return for payment. These involve certain rights and obligations: the employee must perform the relevant work, while the employer must pay the employee’s remuneration and social security contributions, grant the employee paid holidays, etc.
• Another common type of employment contract is a CLA. Based on negotiations between unions and employers, the CLA stipulates provisions on the conclusion, content and termination of individual employment contracts as well as the rights and obligations of the contracting parties, the scope of the agreement and how it is to be regulated. In addition, the authorities may furnish a standard employment contract for specific occupations.

The Collective Bargain Agreement is effective in Switzerland.

The Swiss Collective Bargaining Agreement (GAV) on the Hiring of Services, declared to be universally binding by the Swiss Federal Council decision of 13.12.2011, is an integral part of this framework agreement.

In addition to this framework agreement, the provisions of the Swiss Act on Employment Services (AVG), the Swiss Act of Obligations (ORG), the Swiss Employment Act (ArG), the Swiss Code of Civil Procedure (ZPO), the Swiss Earnings Compensation Act (EOG) and the Federal Act on the Universal Application of Collective Bargaining Agreements also apply.

During a probationary period, either the employer or the employee can terminate the contract at any time. This is subject to seven days’ notice. Different arrangements may be made through a written agreement, a standard contract or a CLA. However, the probationary period must not exceed the statutory limit of three months.

According to Swiss law, the maximum weekly working hours for industrial workers, office staff, technicians and other employees is capped at 45 hours. The maximum for all other workers is 50 hours in a week. Most employees perform between 40 and 42 hours of work weekly.

The maximum weekly working time may be temporarily extended, according to by regulations, for a maximum of four hours. This is allowed so long as the working time does not exceed the annual average. Such an extension may be granted by the State Secretariat for Economic Affairs (SECO) for certain categories of companies or employees or for certain establishments, provided there are compelling reasons to justify it.

The employer must allow the employee to take one day off weekly. This day is usually Sunday or, in cases where circumstances do not allow this, a full weekday instead. In certain situations, the employer can give the employee several days off together or two half days instead of one full day. This applies as long as the employee consents to the modification.

In Switzerland, top managers are not subject to a certain maximum work duration.

The working hours are determined by Article 12 of the Swiss Collective Bargaining Agreement on the Hiring of Services (GAV Personalverleih).

Overtime in excess of the maximum weekly working time of 45 or 50 hours is regulated by the conditions of the Employment Act. Overtime is defined as hours worked beyond the agreed working hours but not exceeding the statutory maximum weekly working hours. It must be compensated at a premium rate of 25% above the normal hourly wage. For office workers, this rate only applies to overtime work exceeding 60 hours per calendar year. Alternatively, by agreement between both parties, overtime can be compensated with time off equal to the same duration.

As long as overtime work is not beyond the legal maximum, different arrangements can be agreed upon in writing between both parties, outlining other compensation (e.g. at 100% instead of at 125%). By agreement, there can even be additional compensation at all. This can happen, for example, when the agreed salary arguably compensates for the overtime and overtime is not much more than what can be expected when signing the contract. Employees with family responsibilities may only be called upon to work overtime by consent.

The daily limit for overtime is generally two hours while the annual limit is 170 hours for workers whose regular workweek is 45 hours long and 140 hours for those whose regular workweek is 50 hours.

The maximum weekly working time can exceptionally be exceeded:

• due to the urgency of the work or an extraordinary work order
• for inventory-taking, clearing and liquidation activities
• to prevent or mitigate failures (unless the employer can reasonably be expected to otherwise resolve such challenges)

There are two main laws regulating Occupational Health and Safety (OSH) in Switzerland:

• The Labor Law regulates work hours, health protection, workplace building standards and the protection of personal integrity.
• The Accident Insurance Law regulates the prevention of occupational accidents and diseases which are linked to work.

The cantonal labor inspectorates (SUVA) serve as the main accident insurance authority and the State Secretariat of Economic Affairs (SECO) enforce the laws. A coordination commission (EKAS) manages the inspection system aimed at accident prevention. Companies must consult OSH services if they have higher accident risks and employ more than 10 workers.

Industrial companies (e.g. factories manufacturing and processing goods and enterprises deploying machines or automatic processes) in Switzerland are required to furnish a written health and safety policy. This document is subject to review by the Cantonal Labor Authority.

The wage categories, wage allocations and wages registered in tempdata by the contracting parties are deemed to be integral components of this CBA Staff Leasing. Employees are entitled to a 13th monthly wage, which is payable in November.

Swiss law has no specific provisions defining and addressing bonuses. According to its characteristics, a bonus will be regarded as either as a gratification or as part of the salary of the employee. The distinction between a gratification and a salary payment is significant in Swiss employment law. This is because the provisions for gratifications are much more flexible than the ones that apply to the payment of the salary.

The disbursement of a gratification depends, at least partially, on the employer’s goodwill. If the payment of a gratification has not been expressly agreed between both parties, it is considered entirely optional. If the payment of a gratification has been agreed, it is subsequently required. However, the employer is entitled to a certain freedom in fixing the amount.

In defining a bonus, the Swiss Courts rely on a number of principles that have established by case law. As per decisions by the Swiss Supreme Court, in the absence of an explicit agreement, the payment of a “gratification” becomes required if it has been paid by the employer for three consecutive years. There is an exception to this if the employer expressed reservation via a written declaration addressed to the employee. However, even if the employer expressed a reservation regarding the disbursement of the gratification, it is still mandatory if such reservation can reasonably be considered as a simple formula not reflecting the agreement between the parties.

Working contracts frequently stipulate that the payment of the bonus is contingent on the achievement of specific objectives. If the achievement of such objectives is easily measurable, courts tend to consider the bonus as part of the salary. At the same, the courts are more likely to qualify the bonus as a gratification if the objectives set out to the employee are vague or if the employer has a large discretion in determining if the employee has satisfied such objectives.

Indefinite contracts can be terminated by either party and the employment relationship can cease without providing reason or cause. This applies so long as the required period of notice is observed (‘Kündigungsfreiheit’).

The termination of an indefinite-duration contract is possible for any reason. However, the dismissal must not be wrongful or unlawful. Certain reasons cannot serve as a fair reason for a termination. This includes terminations rooted in grounds of individual characteristics, complaints made by the employee about working conditions or their agreement not being respected, union membership, mass redundancies by the employer (if the consultation process is not observed, etc. A fair process must be followed in any case.

An employer in Switzerland must not terminate the employment relationship during the following periods and any notice offered during these periods is considered void:

• while the other party is performing compulsory Swiss military service and during the four weeks preceding and following the service if the service lasts for more than 11 days.
• while the employee, through no fault of their own, is prevented from working or partially prevented from working due to illness or accident. This applies for up to 30 days in the first year of service, 90 days between the second and fifth years of service or 180 days thereafter; or
• during the pregnancy of an employee and for 16 weeks following the birth.

Unfair Dismissal / Remedies

In the case of an unfair dismissal, the notice remains valid. However, the party abusively giving notice may be required by the court to pay an indemnity of up to six months’ salary.

Collective Redundancies / Mass layoff rules

The statutory provisions regarding mass dismissals apply when the employer – within a time period of 30 days – provides notice for reasons unrelated to any particular employee and affecting:

• at least ten employees at a company usually employing between 21 and 99 employees
• at least 10% of the employees at a company usually employing between 100 and 300 employees
• at least 30 employees at a company usually employing greater than 300 employees

The stipulations regulating mass redundancies do not apply in the event that business operations have ceased by a court order or mass redundancies have occurred as a result of bankruptcy or a composition agreement with assignment of assets.

Before providing notice, the employer must consult the employee’s representative body or the employees. At the same time, the employer is required to notify the cantonal labor office in writing of the intended mass dismissal. These bodies maintain consultation rights only. Neither the employees nor the cantonal office are able to prevent a mass dismissal. Notices given over a longer period, but based on the same operational decision, must be added collectively.

If the company usually employs at least 250 employees and plans to terminate at least 30 employees within 30 days for reasons unrelated to an individual employee, the employer is required to enter into social-plan negotiations with either the employee associations party to the collective employment contract or with an organization representing the targeted employees. If these negotiations fail, an arbitral tribunal will establish a social plan through an arbitral award.

In principle, a fixed-term employment contracts end on the expiration of the agreed to duration, but can be terminated with the same period of notice as in a permanent employment contract:

• during the first three months (the trial period), 2 working days notice at any time;
• during the 4th and up to and including the 6th month, at least 7 days notice at any time;
• from the 7th month on, one month’s notice at any time.

An assignment agreed for a fixed period (fixed-term employment contract) ends automatically (subject to the conditions for the trial period) with the end of the contract.

Under all circumstances, the employment contract ends with the expiry of a valid work permit. TEs are obliged to give the Employer sufficient advance notice of the expiry of a work permit to enable the Employer to take the necessary measures to obtain an extension or renewal of the work permit.

If TEs wish to terminate a work contract, the termination must be notified to both the Employer and the business where the TEs are assigned. The business where the TEs are assigned is authorised to terminate the assignment, and consequently the employment contract, on behalf of the Employer.

The Employer may also terminate the employment contract with the TEs during a time when the TEs are unable to work due to incapacity (illness or accident), in accordance with the following retention periods:

• 30 days (calendar days) in the first year of service;
• 90 days from the second up to and including the fifth year of service;
• 180 days from the sixth year of service.

Employees have a right to a severance payment if they are over 50 years old and have performed 20 or more years’ service. If the contract doesn’t provide for a severance payment, the court will award an amount equal to between two and eight months’ salary. However, the employer’s contributions toward the employee’s pension fund throughout the entire tenure can be deducted from the severance payment. Accordingly, required severance payments are rare in Switzerland.

Under Swiss law, non-competition clauses are allowed. However, because these are likely to adversely impact the employee’s economic freedom, they are subject to a number of limitations. The non-competition restriction must be agreed upon in writing.

The prohibition has to be appropriately restricted in regard to place, time and scope so that it does not unfairly compromise the future economic activity of the employee. In any case, a non-competition clause that would compel the employee to modify his or her professional activity altogether will be deemed invalid as it would be considered contrary to public order.

• A post-termination restriction on competition is only valid and enforceable if it is limited to a specific activity, a reasonable geographic area and a reasonable time period. For the latter, this is typically no more than one year (if based on the knowledge of the employer’s clientele) and no more than three years, (if based on knowledge of manufacturing and commercial secrets).
• In addition, a non-competition restriction is only enforceable in cases where the employee has had access to the employer’s customers or to manufacturing or business secrets during their tenure – and the use of such knowledge could significantly harm the employer.
• The restriction does not apply if the employer terminates the employment relationship without the employee giving reasonable cause to do so. It also will not apply if the employee terminates it for a reasonable cause attributable to the employer.
• If an employee infringing the restriction is liable to pay a contractual penalty, the employee may exempt themselves from the prohibition by paying the penalty. However, liability for any further damage remains. When expressly agreed upon in writing, the employer can insist the employee continue to observe the non-competition restriction in addition to seeking the agreed contractual penalty and any further damages.

A non-competition clause, while common in the practice, is not required to be paired with financial compensation. Because of this, consideration is not a prerequisite to the validity of that clause under Swiss law.

Customer non-solicits – Are permissible (subject to similar restrictions to non-competes).

Employee non-solicits – Are permissible (subject to similar restrictions to non-competes).

Employers are required to document employees’ working hours (Art. 46 of the Employment Law (LTr) and Article 73 of Order 1 on the Employment Law). Employers must therefore have a system in place to document the daily and weekly working hours of their employees, including compensatory work and overtime. The employer must also calculate the worker’s days off (whether weekly or compensatory) along with any break of half an hour or longer.

The breakdown of work hours performed by employees must be retained by the company for five years. If a company fails to follow this rule, several penalties are possible. These range from a warning to a fine. In the most extreme cases of an employer infringing employment rules, namely when employees’ lives or health are at risk, the law even provides for shutting the company down.

Exceptions:

• Specific professions and businesses are excluded from the regulations on working hours and time off. For example, the staff of international organizations or agricultural companies may be exempt.
• Provisions relating to the recording of working hours do not apply to employees in “a high management position.” This includes workers with significant decision-making power or the ability to strongly influence important decisions for the company.
• The responsibility of recording working hours is completely removed for employees earning a salary subject to AVS of more than CHF 120,000 (including bonuses) and enjoying flexibility in their working hours. This removal must be agreed upon within the context of a collective bargaining agreement (for the company or the sector) and must form the subject of a specific written agreement concluded with each employee.

A partial or simplified recording, with only the total daily working hours, is possible if one of these requirements is fulfilled:

• a collective agreement concluded between the employer and the workers’ representatives (in-house or external)
• in the absence of such representation, by agreement of the majority of employees
• in companies with less than 50 workers, an individual agreement concluded in writing with the targeted employees

Trade unions are prevalent in certain sectors. Industry-level CBAs are common. Trade-union arbitrators often serve as conciliators in the event of a collective labor dispute.

Approximately one in four workers in Switzerland is a member of a trade union or similar association. Most trade unions and professional organizations belong to one of the two umbrella associations: the Swiss Federation of Trade Unions (SGB/USS) or Travail.Suisse. The level of union fees varies significantly and is contingent on a member’s occupations and income.

In addition, there are various national, cantonal and municipal organizations to protect workers’ rights, such as the cantonal labor inspectorates. In companies with 50 or more employees, workers are entitled to elect one or more worker representatives to exercise workers’ participation rights.

• There is no minimum or maximum term for a fixed-term employment contract.
• A fixed-term contract ends without notice on the date agreed at the outset.
• A fixed-term employment relationship tacitly extended beyond the agreed duration is considered to be an open-ended employment relationship.

Salaries in Switzerland are among the highest in the world but the cost of living in Switzerland is also higher than in the rest of Europe. Salaries in Switzerland are paid once a month, on the 25th of the month and payment is made by bank transfer. If the 25th falls on a weekend or on a holiday, the salary payment will be made on the following working day.

Most employers in Switzerland pay their employees’ annual salary in 13 installments. In December they receive, in effect, two months’ salary although sometimes half is received in June or July and the other half is disbursed in November or December. It should be noted, however, that a 13th month’s salary is not a bonus. Rather, in effect, it is considered a deferred payment. When a 13th month’s salary is paid, it will be stated in the employment contract.

According to employment law, the employer is required to provide the employee with a written salary payslip for every salary payment that includes detailed information on gross and net salary, deductions and surcharges. Payslips can be sent to employees by mail or email, in accordance with data security standards.

In addition, all employers must provide their employees with a salary statement, which must include all the remuneration paid. Salary statements are normally sent out at the beginning of the year. Salary statements are generally intended for employees. However, several cantons have a salary reporting requirement, whereby employers must submit salary statements directly to the cantonal tax administration.

Employees are entitled to four weeks of paid annual leave per year, of which at least two weeks must be consecutive. Employees under the age of 20 are entitled to five weeks’ paid vacation. If an employee has not yet completed one year’s service, their holiday entitlement is fixed pro rata.

The employer determines the timing of the holidays, taking into account the employees’ preferred dates to the extent they are compatible with the organization’s business needs.

Carry Over Rules

An employer cannot pay workers in lieu of granting them time to take annual leave. Unused leave generally cannot be carried over to the next year.

• All persons residing or gainfully employed in Switzerland are entitled to sickness benefits.The employer must be informed immediately of any inability to work due to illness. If the inability to work lasts for more than 2 days, employees must submit the original medical certificate issued by a Swiss doctor to the Employer within five calendar days and without being asked. The insurance benefit replaces the Employer’s obligation to continue to pay wages, in accordance with Art. 324a of the OR. The insurance begins with start of employment and ends with the last working day in every case.Swiss law requires employers to continue paying employees their full wages during illness for a certain period in proportion to increasing seniority. The minimum duration is set at three weeks in the first year of service. After that, wages are to be granted for appropriately longer periods. This amount will depend on the duration of the employment relationship and the particular circumstances.

  Case law within in each Canton has determined how these “appropriately longer periods” are to be interpreted. The following is the so-called “Bernese scale,” as elaborated by the superior court of Canton Berne:

  • during the first year of employment: three weeks of full salary
  • second year: one month of full salary
  • Three to four years: two months of full salary
  • Five to nine years: three months of full salary
  • 10 to 14 years: four months of full salary
  • 15 to 19 years: five months of full salary
  • 20 to 25 years: six months of full salary

  Other agreements can be reached but they must be specified and concluded in writing for each individual employee (e.g. in their employment contract), in the standard employment contract or in a CLA Consequently, most employers subscribe to an insurance for a daily allowance to be able to pay their employees 80% during prolonged absences due to illness. Wage continuation applies for the duration of the employee’s inability to work but no longer than 720 days within 900 consecutive days.

• Time off is granted for the below events. However, the amount of time is not specified by law. The employee should check relevant employment regulations to find out what rules apply in the company they work. Typically, time off granted is between one and three days. There is no obligation to make up for lost working time.Reasons listed in the law:
  • Accident
  • Legal obligations (e.g. military service)
  • Public office

  Additional reasons:

  • Marriage
  • Death of a close relative
  • Moving home, etc.

Volunteer Work Leave

• Employees under 30 years of age are entitled to one week of leave without pay per year week for the purpose of carrying out volunteer work for a social or cultural organization. The employee enjoys no statutory salary entitlement during such leave. However, an individual agreement or CLA may award more favorable provisions to the employee.

Also, employers must provide leave of absence to employees for the performance of their compulsory military duties.

Maternity Leave

• Employees are entitled to maternity leave for a minimum of 14 weeks following the birth of a child, which is to be taken as one single period. Interruptions are not possible.
• Under Switzerland’s mandatory loss of earnings insurance program, a female employee who has worked at least five out of the nine months before birth, is entitled to receive 80% of her regular pay as a daily allowance subject to a maximum of 220 Swiss francs per day.
• If the employee does not qualify for this program, she is entitled to take leave under the sick leave provisions of the Code of Obligations.
• There are no specific provisions for maternity leave prior to the birth of a child. However, pregnant employees can take sick leave during this time if they cannot work.
• The employer must not reduce the holiday entitlement of a female employee who is prevented from working due to pregnancy for up to two months or has received maternity benefits.
• A woman is not allowed to return to work for the first eight weeks after the birth of a child.

During a worker’s pregnancy, an employer:

• must ensure her job does not threaten her health, providing other work if necessary
• must allow her to take unpaid leave if she desires
• may not require her to work overtime
• may not allow her to work between 8 p.m. and 6 a.m. after the eighth week prior to birth.

Employers may not terminate pregnant workers or new mothers for the first 16 weeks following childbirth.

Breastfeeding Break

During the first year of the life of the child, the time used for breastfeeding is counted as working time and remunerated for 30 to 90 minutes. This amount will depend on the number of hours worked a day. This time can be taken off at once or divided according to the individual needs of the child.

Paternity Leave

Any employee who becomes a father can, within the first six months after the child’s birth, take two weeks off (10 working days). These two weeks can be taken either consecutively or in the form of individual days off.

During the paternity leave, the father has no salary claim against his employer but a claim for a daily allowance equal to 80% of his daily salary. This is capped at up to 196 Swiss francs daily, against the governmental social insurance. The father must be employed at the time of the birth, covered by the old age and survivor’s insurance scheme during the past nine months and employed for at least five months of that period.

Some companies have recently introduced more generous parental policies, offering the same extended benefits to all parents, regardless of gender, natural, adoptive and single parents.

Adoption leave

Working parents who adopt a child under the age of four will be entitled to two weeks of paid leave.

Childcare Leave

Employers must grant employees up to three days of leave to care for a sick child on presentation of a medical certificate stating the same by the employee.

Switzerland’s statutory public holidays are as follows: New Year’s Day (January 1), Ascension Day, Swiss National Day ( August 1) and Christmas Day (December 25). All other public holidays (Easter, Whitsun, Corpus Christi, etc.) are decided on a cantonal basis in each member state of the Swiss Confederation, with each canton being able to decide whether or not to grant a holiday on these days. Generally, nine public holidays are granted, depending on the canton.

If a public holiday falls on a Saturday or Sunday, the day off will not be moved to a weekday.

Employees who work on a public holiday are entitled to a 50% premium in addition to their regular rate of pay. Employers may only appoint those employees who consent to perform work on a holiday.