SWITZERLAND Law and Practice Contributed by: Philippe Nordmann, Marion Bähler, Dario Glauser, Christian Hagen and Samuel Lieberherr, Walder Wyss Ltd
4.4 Termination of Employment Contracts Freedom of Termination Principle
not reasonably be expected to continue the employment until the expiry of the applica - ble notice period or the agreed fixed term and acts within just a few days of becoming aware of the good cause. While even termina - tions without good cause result in immediate termination of the employment, the (non-) existence of good cause determines the further legal consequences of a termination with immediate effect, such as an additional penalty payment of up to six monthly sala - ries (in the case of an employer’s termination without good cause). While statutory law does not provide for sev - erance payments, this may, in particular, be provided for in employment contracts or col - lective bargaining agreements (subject to the respective prohibition for members of the board of directors, the executive board and the advi - sory board, and persons close to them, of Swiss stock corporations whose shares are listed on a stock exchange). Termination Agreements As a matter of principle, the parties may agree on mutual termination of their employment relation - ship in a termination agreement. This, however, requires that such termination agreement is not concluded to circumvent statutory provisions protecting the employee’s interests (such as mandatory provisions in connection with inca - pacity for work due to illness or accident) but rather constitutes an actual “settlement”. It is against this background that respective termina - tion agreements usually provide for an additional ”voluntary” severance payment that shall com - pensate the employee for fixing an exact termi - nation date (the exclusion of any statutory pro - longation of the employment in connection with an employee’s incapacity for work) and/or which shall compensate the employee for waiving his
Ordinary terminations of employment (ie, termi - nations observing the applicable notice period) do not require a particular lawful reason, so Swit - zerland may be described as an “employment at will” jurisdiction. If the other party so requests, the party giving notice must state its reasons for termination in writing. Limitations to the principle However, there are important limitations to the aforementioned principle of freedom of termina - tion, as set out in the following. • Terminations must principally observe the applicable notice period (during which the employer remains obliged to pay the employ - ee’s compensation). • Terminations may never be issued in bad faith (so-called abusive terminations), whereas such bad faith is specified in a non-exhaus - tive legislative enumeration of circumstances (eg, bad faith is assumed if a termination is the result of the other party asserting claims under the employment relationship in good faith). While even an abusive termination is valid, it entitles the terminated party to a penalty payment of up to six monthly salaries (provided that said party submits a written objection against the termination before the expiry of the notice period and brings the claim before the competent court within 180 days of the end of the employment relation - ship). • Terminations with immediate effect (ie, with - out observing the applicable notice period or an agreed fixed term) require the existence of good cause. This is only very exception - ally assumed if the terminating party may
801 CHAMBERS.COM
Powered by FlippingBook