09 October 2019

Stumbling Blocks regarding Alteration Notices

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Adapting employment contracts to changing economic and operational conditions is a recurring challenge, especially in today's fast-paced modern world. However, caution must be exercised when issuing notices with the option of altered conditions of employment (‘alteration notice’) in this context.

Adapting employment contracts to changing economic and operational conditions is a recurring challenge, especially in today's fast-paced modern world. However, caution must be exercised when issuing notices with the option of altered conditions of employment (below described as ‘alteration notice’) in this context: not every such notice is legal.


What is an Alteration Notice?

In principle, the following applies: the content of an employment contract cannot be unilaterally amended - in particular not to the extent that it contains inferior conditions after the alteration. Nevertheless, there are situations in which employers have the need to quickly and efficiently implement a change to the contract. They often - knowingly or unknowingly - use the instrument of an alteration notice for this purpose.

The primary purpose of the alteration notice is not to terminate the employment relationship. Rather, the employment contract is to be adapted and continued in a new form. Accordingly, there are different manifestations of an alteration notice:

1. The employer terminates the employment relationship and at the same time submits a new contract offer to the employee. If the employee accepts the offer, the rules of the new employment contract apply. If he rejects it, the termination is legally effective.

2. The employer issues a conditional dismissal: the dismissal shall only come into effect if the employee does not agree to the contract amendment.

3. The employer first submits an offer for an amendment to the contract. Only if the employee rejects the offer, the employer gives a notice of termination. The threat of termination is often already present when the new offer is submitted - the employee therefore usually knows, which consequences go along with a rejection of the offer.

When is an Alternation Notice Permissible?

With the alteration notice, the employer puts pressure on the employee: either he accepts the new conditions or the employment relationship ends. Despite this exertion of pressure, the alteration notice shall in principle be deemed admissible. If, however, the exertion of pressure exceeds the permissible level, an abusive alteration notice is given. As a consequence, the employee may claim compensation of up to six net monthly salaries.

According to Federal Court rulings (BGE 123 III 246), a dismissal with notice of dismissal is deemed to be abusive if

  • the position of the employee is worsened by the alteration;
  • the deterioration is inequitable; and
  • no operational or market reasons justify the amendment of the contract.

The following applies: the less drastic the contractual change, the lower are the requirements for the operational or market-related justifications. Also not considered inequitable is a dismissal in respect of a substantial change, which the employee has caused by his conduct.

It is important that the notice periods are observed even in the event of an alteration notice. An alteration can only legally enter into force on the next possible termination date. The decisive point in time lies within the expiration of the reflection period granted to the employee. If the employer tries to enforce the amendment to an earlier date, the exertion of pressure is inequitable and abusive.

In addition, there are other scenarios, in which alteration notices are regarded as abusive. Abusiveness, for example, also exists:

  • if the employee has rejected an employment contract offered to him which would violate statutory provisions or an applicable collective (GAV) or normal employment contract (NAV) and the employer therefore terminates it; or
  • if the employee is granted too little reflection time.

The list is not exhaustive, but it is intended to give an idea of when alteration notices may be abusive. As always, the circumstances of the individual case are decisive.

May an Alteration Notice be given during the Employee's Illness?

The temporal protection against dismissal also applies to the alteration notice: An alteration notice given during a blocking period (e.g. due to illness, pregnancy, military service, etc.) is null and void, whereby the nullity only affects the notice of termination and not the change offer itself. Therefore, on the other hand, it is also permissible to conclude an agreement on a contract amendment during a blocking period.


Attention with mass alteration notices

It is often the case that an employer does not only want to restructure one employment relationship, but several at the same time, for example in the context of a reorganisation or harmonisation of employment contracts. It should be noted that, depending on the number of persons affected by a notice of dismissal, the provisions on mass redundancies (Art. 335d - 335k OR) may apply. This can be avoided by a staggered amendment of the contract if objective reasons exist.


Caution should be exercised in the event of alteration notices. If the employee's position deteriorates without objective justification, or if the notice period is not observed when the offer is submitted, there is a risk that the termination will be classified as abusive. However, if there are operational or market reasons, the alteration notice can be an efficient means of adapting a contractual relationship to changed circumstances.