02 November 2021

Moving to Switzerland - Employment law

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While other European countries such as Germany, Spain, Italy and France have become less attractive to immigrants, Switzerland is the only European country to improve its ranking in the top 10 of the Global Talent Study 2020.

While other European countries such as Germany, Spain, Italy and France have become less attractive to immigrants, Switzerland is the only European country to improve its ranking in the top 10 of the Global Talent Study 2020. Switzerland gained one rank, overtaking France to become the seventh most popular country for employees from abroad.

Switzerland's attractiveness as a country for employees is not surprising: wages and purchasing power are high and the taxation on the income of natural persons is moderate. At the same time, the Swiss economy needs specialists, and the coronavirus pandemic in particular, has shown how critical the shortage of specialized workforce is in certain areas.

Switzerland is also attractive for employers because it has one of the most liberal employment laws in the world. The purpose of this article is to draw attention to three selected features of Swiss employment law that should ideally be considered before signing a Swiss employment contract.

1.            Extensive freedom to terminate employment contracts

Simply put, in Swiss employment law the principle prevails that a dismissal is always permitted unless it is exceptionally prohibited and therefore void (e.g. after the probation period if issued during blocking periods such as pregnancy and 16 weeks thereafter, and during certain periods of illness and accident). However, there is no absolute freedom of dismissal in Switzerland either. For example, statutory minimum notice periods are set which are above the European average (one month in the first year of service, two months in the second to ninth year of service and three months thereafter).

Despite the freedom to dismiss, a termination in Switzerland may be considered wrongful. In Art. 336 CO, the law stipulates a non-exhaustive catalogue of cases in which terminations are abusive (e.g. if it is given because of an attribute pertaining to a person such as religion or age). However, terminations can also violate the principle of good faith in other ways and thus be abusive. Even in the case of a wrongful termination, there is no right to reinstatement and the dismissal is effective despite the wrongfulness. In this case, a compensation amounting to a maximum of six months' salaries may be claimed which in this amount is rather rare.

Besides, only the Gender Equality Act, which aims to promote actual equality between men and women, recognizes temporary reinstatement for the duration of the proceedings (Art. 10GEA).

Unlike in most European legal systems, however, termination in Switzerland is possible without any formal requirements, unless otherwise agreed. Thus, in these cases, a notice of termination can also be validly given verbally, by e-mail or even by Whatsapp. For reasons of proof, however, it is always advisable to give notice in writing or to call in witnesses.

In addition, a termination can also be made without any reasons at all. However, the party receiving the notice may, by law, request a written statement of the reasons for the termination in order to ascertain any indications of an abusive termination.

Switzerland's liberal employment law is an important locational advantage as in some casesit also provides job seekers with greater opportunities. As a result, an employer does not have to be completely sure when hiring an employee whether he or she will still fit into the company after the probation period.

2.            Popular non-competition clause

The labour market in Switzerland is very flexible due to liberal legislation, allowing companies to hire or fire staff at short notice and without complications, depending on their economic needs.

In this context, it should be noted that even a validly agreed post-contractual non-competition clause generally extinguishes if the employment relationship is terminated by the employer. The only exceptions are cases in which the employee gives the employer reasonable cause for termination. Then the post-contractual non-competition clause remains in force. Likewise, the non-competition clause extinguishes if the employee gives notice of termination for a justified reason for which the employer is responsible.

Under Swiss employment law, however, the non-competition clause can only be validly agreed under certain conditions and in writing. As a rule, non-competition clauses are formulated in a very restrictive manner and, if strictly observed, could frequently lead to a de facto ban on working. It is therefore worthwhile in the event of a dispute to check whether the non-competition clause meets the requirements of material, locational and temporal restrictions. Without linking the non-competition clause to a contractual penalty and/or a clause on actual fulfilment, the prohibition usually is little effective. It is then difficult for the employer to prove that he has suffered damage and in what amount.

In any case, it is advisable during the contract negotiations to carefully examine the competition clause in advance and, for example, to negotiate a compensation for the non-competition clause or to shorten its duration.

3.            Relevance of the employment reference letter

In the Swiss job market, the employer's reference letter is more important than abroad. When looking for a job in Switzerland, an employer's reference letter is still generally considered to be more important than references.

For this reason, it is worth knowing a few principles of Swiss employment law. According to Swiss employment law, an employee may at any time request a reference letter from the employer, stating the nature and duration of the employment relationship as well as the employee's performance and conduct. Alternatively, the employee may only request a so-called confirmation of employment, which is limited to information on the nature and duration of the employment relationship. An interim report is issued during the employment relationship and a final report at the end of the employment relationship. The final reference letter in particular must take appropriate account of the total duration of the employment relationship.

Both the final and the interim reference employment letter must be truthful and complete but should not impede the employee's professional advancement and must therefore be formulated in a benevolent manner. The limit of benevolence in the drafting process is the employer's liability risk for incorrect information. In this context, it is worth mentioning that incapacities to work may or must also be mentioned in the reference if they had a significant influence on performance and/or conduct. They must also be mentioned if they have led to dismissal or if the duration of the incapacity to work would give the reader a false impression of the professional practice and experience actually acquired.

When examining an employer's reference letter, in addition to the overall impression of the wording, care must be taken to ensure that it contains all the essential information that could provide a potential future employer with details of the employment relationship, the main tasks, performance, merits and conduct.

Our team of employment law experts will be happy to advise you on all questions relating to your move to Switzerland and, independently of this, on your legal concerns. We look forward to hearing from you.