Every employment relationship comes to an end eventually. And, whether it’s because the employee resigned, is dismissed, or retires, there are certain rules that apply to the end of the employment relationship in Switzerland. These are set by employment law and collective bargaining agreements between employers’ associations and trade unions.
In general, Switzerland is known for its flexible approach to termination, meaning neither employers nor employees need a specific reason for ending an employment contract. This allows employers to take a flexible approach to talent, scaling their workforces up and down as needed.
That said, there are still certain conditions that need to be met to ensure dismissals are fair and not abusive, which employers need to know about. Employers should also understand the notice periods that apply for both parties and the restrictive covenants (post-termination restraints) that employers can impose on their employees in Switzerland. We’ll cover all of this and more in this section of our global hiring guide.
Both employers and employees in Switzerland need to respect the appropriate notice period when ending an employment contract. These are set by Swiss labour law and depend on how long the employee has been engaged.
Statutory notice periods in Switzerland are the same for employers and employees:
Notice is counted from the last day of the month in which it is given. For example, if an employee who has been employed for less than one year is given notice on 13 June, their last day of employment will be 31 July.
Collective bargaining agreements can also provide different notice periods, which employers and employees must abide by. It’s also possible for employers to agree on different terms within their individual employment contracts, as long as they are at least as favourable to the employee as the statutory requirements and those set out in the relevant collective agreement.
Both employers and employees in Switzerland should give notice in writing. Because termination of a contract is only valid from the time when the other party receives the notice, the most common way of giving notice is by registered letter.
For either party, the notice letter must contain:
In Switzerland, neither employers nor employees need to give a reason for terminating an employment contract. However, if the other party requests the reason, it must be provided. There are certain things that can never be justifications for terminating an employee’s contract, such as pregnancy.
During the probationary period, the statutory notice period for either party is one week (seven days).
Severance pay is only mandatory in Switzerland when an employee is over 50 years of age and has worked for a company for more than 20 years. The statutory requirement is two months’ salary. However, this obligation is eliminated if the employer has contributed to the employee social security scheme.
The rules for termination of employment in Switzerland are generally quite flexible compared to other European countries. Crucially, employers don’t need to give a specific reason to terminate an employee’s contract as long as they abide by the relevant statutory notice period and the termination isn’t abusive or unfair. However, they must provide a reason if the employee requests it.
Despite the relaxed attitude towards termination of employment in Switzerland, there are still certain circumstances when employers may not terminate an employee’s contract. For example, it’s illegal to dismiss an employee for the following reasons:
If an employer dismisses an employee for any of the above reasons, they could face an unfair dismissal case. Employees can also bring a case for unfair dismissal if the employer does not respect the proper notice period or if their contract is terminated for discriminatory reasons.
Termination without notice in Switzerland is only possible under certain limited conditions. Specifically, the continuation of the employment relationship must no longer be reasonable. Examples of situations when this might apply are if the employee has committed fraud, refused to work, or carried out activities that compete with the employer’s business. In most cases, employers must nonetheless give the employee a prior written warning before proceeding with termination.
Because employers don’t need to give a reason for termination of employment in Switzerland, it’s possible to dismiss an employee due to financial or organisational reasons. However, there are special rules in place for mass redundancies.
Under the Swiss Code of Obligations, employers considering mass layoffs must first inform and consult with employees and inform the cantonal labour office in writing. Employers can also sometimes avoid dismissals through unemployment insurance, which pays 80% of the loss of earnings of employees for a fixed period. Employees can refuse this compensation and continue to receive their full salary instead, but they run the risk of being dismissed.
In Switzerland, fixed-term contracts terminate automatically on their expiration date. It’s generally not possible for either the employer or the employee to terminate the contract early.
Post-termination restraints are restrictions that employers can impose on their employees after the end of the employment contract. They are designed to protect businesses from any harm that could be caused by their former employer using their insider knowledge of the company. Post-termination restraints are also called restrictive covenants.
Here are the types of post-termination restraints that are permissible in Switzerland:
Post-termination restraints are subject to certain limitations in Switzerland. For example, non-compete agreements are only permissible when the employee has knowledge of their employer’s clientele or manufacturing or commercial secrets, and where the use of this knowledge would cause significant harm to the employer.
Any restraints must also be limited in terms of time, geographical location, and scope. They may not unfairly limit the employee’s future economic activities by preventing them from making a living. Typically, this means that restraints can’t exceed one year if they’re based on the employee’s knowledge of the company’s clientele, or three years if based on their knowledge of its trade secrets. Unlike in some other countries, there’s no obligation to compensate employees during the restriction period.
In some cases, employees in Switzerland can waive certain rights in the context of a settlement agreement. This is usually in exchange for a lump sum payment from the employer. In Switzerland, waivers of mandatory entitlements are only valid if they are made against well-balanced concessions. That means that the payment the employee receives must be proportional to the rights they have waived.
A transfer of undertakings is when one company is wholly or partially acquired by another. As in many countries, there are strict rules on what happens to employees when the entity they work for is transferred to another business. The rules on transfers of undertakings in Switzerland are defined by the Swiss Code of Obligations and are similar to the requirements under EU law (even though Switzerland is not part of the EU).
The rules apply when either a single business unit or an entire company is transferred to another entity. However, the business must maintain its structure and organisation after the transfer for the rules to be applicable. There’s no requirement for any assets to be transferred to the acquirer in addition to employees.
When an entity is acquired, employment agreements are automatically transferred to the new employer. All rights and obligations of both parties also transfer. Employees can object to a transfer of undertakings; in which case their employment agreement will terminate on the expiration of the statutory notice period.
If a transfer of undertakings is expected to cause redundancies, terminations, or changes in working conditions, employers must consult with the works council or employees prior to making any decision. The works council or employees must be given the possibility to make suggestions on how to avoid these measures.
There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in Switzerland — or you could end up facing legal issues.
Our solutions ensure your business is protected from risk when a relationship with a worker comes to an end — whatever the reason. We can also help you to avoid missed opportunities by re-deploying talent where possible.
Freedom of termination means an employer or employee in Switzerland can generally end an indefinite employment contract without having to prove a specific statutory reason.
The employer must still follow the applicable notice period in Switzerland and cannot dismiss an employee for an abusive reason or during certain statutory protected periods.
Under Article 336 of the Swiss Code of Obligations, a dismissal can be abusive when it is based on reasons such as an employee exercising a constitutional right, making a good-faith employment claim or participating lawfully in trade union activities.
An employee can also ask the employer to provide the reason for termination in writing.
Immediate dismissal is different. Ending employment without notice requires serious cause, such as conduct that makes continuing the employment relationship unreasonable.
In summary, employers in Switzerland generally do not need a statutory reason to terminate an indefinite contract but notice periods and dismissal protections still apply.
After probation, the statutory notice period in Switzerland is one month during the first year of service, two months from the second through ninth year, and three months from the tenth year onwards.
Unless the employment contract provides otherwise, termination takes effect at the end of a calendar month.
During probation, the statutory notice period is seven calendar days. The termination must reach the other party while the probation period is still running, although employment itself can end after probation has expired. The seven-day notice period can generally expire on any day and does not have to end at the end of a week or month. The contract, standard employment contract or collective labour agreement may modify or exclude the probationary period, subject to the applicable legal limits.
The standard statutory periods are therefore:
Length of service | Statutory notice |
During probation | 7 calendar days |
1st year | 1 month |
2nd to 9th year | 2 months |
10th year onwards | 3 months |
The employment contract or an applicable collective labour agreement can change these periods within the limits allowed by Swiss law.
Yes. Employers and employees can agree to a longer notice period than the statutory minimum in an employment contract.
The standard statutory periods are one month in the first year after probation. These periods can be changed through a written agreement, standard employment contract or collective labour agreement.
As a general rule, the employer and employee must have the same notice period. If their contractual notice periods are different, the longer period generally applies to both parties. A statutory exception can apply where the employer has reduced the employee’s notice period for economic reasons or has expressed an intention to do so. In that situation, the parties may agree that the employee will have a shorter notice period.
Swiss law also limits how far the statutory period can be shortened. After probation, a notice period below one month is generally only permitted through a collective labour agreement and only during the first year of service.
In summary, a Swiss employment contract can provide a longer notice period, but employers should check that the terms apply correctly to both parties.
A dismissal in Switzerland can be abusive when employment is ended for a reason prohibited by Article 336 of the Swiss Code of Obligations, such as retaliation for an employee asserting their employment rights.
Examples include dismissal because the employee:
A dismissal can also be abusive if an employer terminates employment specifically to prevent an employee from receiving an employment entitlement. Swiss case law has recognised additional situations, including certain dismissals connected with workplace bullying where the employer failed to address the problem. Other potentially abusive situations include dismissals intended to frustrate claims that are about to arise, dismissals connected with elected employee-representation duties and dismissals made during a collective redundancy without completing the required consultation procedure. Gender-discriminatory and retaliatory dismissals may also engage the separate protections and remedies of the Gender Equality Act.
An abusive dismissal generally still ends the employment relationship, but the affected employee can claim compensation of up to six months’ salary.
No. Severance pay is not required for most employee terminations in Switzerland. However, a statutory severance entitlement can apply to employees aged 50 or over who have completed at least 20 years of service with the same employer.
Under the Swiss Code of Obligations, qualifying employees can be entitled to a long-service severance payment when employment ends. The amount is determined by the employment relationship and statutory rules and can range between two and eight months’ salary.
However, employer-funded occupational pension benefits can be credited against the statutory severance entitlement. Because Switzerland has mandatory occupational pension arrangements for eligible employees, this can reduce or eliminate the separate statutory payment in practice.
An employment contract, collective labour agreement or termination agreement can also provide severance pay in Switzerland beyond the statutory rules.
When employment ends in Switzerland, employers must pay outstanding salary, unused holiday entitlement that must be paid out, and any other contractual or statutory amounts owed to the employee.
Final pay can include salary through the termination date, unpaid bonuses or commissions that have become due and compensation for remaining annual holiday that cannot be taken before employment ends.
Employers should also check whether the employee is owed overtime or other contractual payments. A 13th-month salary, where contractually agreed, may need to be calculated proportionately.
Statutory or contractual severance must be included where the employee qualifies. Pension and social insurance administration also needs to be completed when the employee leaves.
The employee can request an employment reference certificate, which should cover the nature and duration of employment as well as performance and conduct. Alternatively, the employee can request a certificate limited to the nature and duration of employment.
A fixed-term employment contract in Switzerland normally ends automatically on the agreed end date without either the employer or employee having to give notice.
For example, a six-month contract normally ends once the six months have been completed. The contract may also end on an objectively identifiable event, provided the event and resulting end date can be determined sufficiently clearly. Employers should still confirm the end administratively and complete final payroll, pension, insurance and employment-certificate obligations.
If the employee continues working after the agreed expiry date and no new fixed term is established, the employment relationship generally becomes an indefinite contract.
Employers should also be careful with repeated fixed-term contracts. Successive fixed terms without an objective reason can be considered abusive where they are being used to avoid statutory employee protections. Swiss law does not prescribe a fixed maximum number of renewals. The legal assessment focuses on whether there is an objective reason for the successive contracts and whether the structure is being used to circumvent employee rights.
A fixed-term contract can include an agreed right to terminate early with notice. Immediate termination for serious cause is also possible under the applicable Swiss rules.
Yes. Post-employment non-compete clauses can be enforceable in Switzerland, but only when specific legal requirements are met.
The clause must be in writing, and the employee must have had access during employment to the employer’s customers or to manufacturing or business secrets were using that knowledge could cause significant harm to the employer.
The restriction must also be appropriately limited in time, place and type of business. Swiss law generally limits a non-compete to no more than three years except where special circumstances justify a longer period. A court can reduce an excessive restriction.
Importantly, a non-compete generally ends if the employer terminates the employee without the employee giving good cause for the dismissal. It can also end when the employee resigns for a good reason attributable to the employer. The restriction also ends when the employer no longer has a substantial interest in maintaining it. Employers should therefore reassess the clause at termination rather than assuming that every signed non-compete remains enforceable.
Contractual penalties and injunctive enforcement must be drafted carefully. Unless the written agreement expressly preserves the employer’s right to require the employee to stop the competing activity, the employer may be limited to the contractual penalty and any additional proven loss permitted by law.
An employee who resigns without another job lined up can have their Swiss unemployment benefits suspended for between 1 and 60 eligible days. The actual number depends on how seriously the unemployment insurance authority assesses the employee’s responsibility for becoming unemployed.
This is known as a suspension of benefit entitlement (Einstelltage), rather than a fixed resignation penalty.
A resignation does not automatically mean the employee loses unemployment insurance altogether. The authority considers the circumstances and whether the employee had a valid reason for leaving. A suspension can also apply where an employee is dismissed through their own fault, refuses suitable work, does not make adequate job-search efforts or fails to comply with reporting and RAV requirements. Repeated breaches can result in a longer suspension.
Employees are also expected to begin looking for another job before their current employment ends. For an indefinite contract, job-search efforts should begin once termination is known, covering up to the final three months of employment.
In summary, resigning without another job can delay unemployment payments, with a suspension of 1 to 60 days based on the circumstances.
CXC helps businesses manage employee offboarding in Switzerland carefully and compliantly, from reviewing the termination requirements through to final payroll and employment documentation.
Through our Employer of Record service in Switzerland, CXC helps manage notice periods, protected periods, fixed-term expiries and the documentation required when employment ends. We also calculate final salary, outstanding holiday pay and other payments due to the employee.
For more complex employee exits, CXC can provide local support around notice periods, non-compete clauses, collective labour agreements and other Swiss employment requirements before the termination is finalised.
CXC also coordinates the payroll, benefits and employment administration needed to close the employment relationship correctly and support a respectful employee experience.
With more than 30 years of workforce management experience, CXC supports businesses managing employee exits across Switzerland and multiple markets.
Speak to our team to learn more about managing employee offboarding in Switzerland with CXC.
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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