Employment 2025

SWITZERLAND Trends and Developments Contributed by: Philippe Nordmann, Irène Suter-Sieber, Jonas Knechtl and Gustaf Heintz, Walder Wyss

Swiss-EU Relations For several years now, Switzerland and the EU have been negotiating on how to renew and amend their bilateral agreements, with one of the main points of discussion being the question of how to safeguard the EU’s principle of freedom of movement for its citi - zens without it negatively affecting Swiss salaries and working conditions. Switzerland was able to successfully negotiate a clari - fication of the existing safeguard clause with the EU. This means that Switzerland can now independently initiate a procedure to activate the safeguard clause if the application of the Treaty of Free Movement (TFM) leads to serious economic or social difficulties in Swit - zerland. If the joint committee of the TFM fails to reach an agreement, Switzerland can refer the matter to the arbitration panel without the EU’s consent. The arbitral tribunal will then decide whether serious economic or social difficulties exist. If so, Switzerland may independently take appropriate protective measures against the EU. However, if this leads to an imbalance, the EU may take compensa - tory measures within the scope of the TFM. Even if the arbitral tribunal denies the existence of serious economic or social difficulties, Switzerland may decide to take appropriate measures to address the identified issues. However, it must then accept that the EU could initiate dispute settlement proceed - ings for breach of the TFM and implement proportion - ate compensatory measures under one of the internal market agreements. While the negotiations between Switzerland and the EU were formally concluded on 13 June 2025, it is cur - rently still unclear if and when Switzerland will be able to ratify the revised agreements given that the agree - ments will likely be subject to a national referendum. New Case Law Regarding COVID-19 Vaccine Mandates During the COVID-19 pandemic and in light of many countries’ far-reaching entry restrictions, Swiss Inter - national Air Lines required its pilots and cabin crew members to provide proof of vaccination against the COVID-19 virus citing health and safety but also

operational reasons for its decision. Most employees complied with the airline’s instructions or chose one of the alternatives offered by the airline. However, a small percentage of employees did not comply, and, after having been let go by the airline, filed for wrong - ful termination. In deciding on four of these cases, the district court of Bülach ruled that the airline had been within its rights to require its pilots and cabin crew members to pro - vide proof of vaccination against COVID-19 during the COVID-19 pandemic and subsequently dismissed the former employees’ claims for wrongful termination. Swiss scholars expect these decisions to set a prec - edent regarding employer-imposed vaccine mandates in the Swiss private sector. Retention and Sign-on Bonuses Jurisprudence On 19 February 2025, the Swiss Federal Supreme Court (SFSC) issued yet another ruling in line with its very restrictive jurisprudence regarding retention and sign-on bonuses. Therein, the SFSC qualified a disputed bonus as a salary component rather than a gratuity (ie, discretionary payment) citing that the employer and the employee had agreed on the pay - ment of the bonus in principle as well as on its amount and its payment dates. As a result of this qualification, the SFSC ruled that the agreement between the par - ties, which had made the payment of the bonuses conditional on the employee still being employed by the employer on the dates the bonuses became due, to be unenforceable since such conditions are only permitted in case of gratuities. The SFSC therefore ordered the employer to pay the employee, whose employment with the employer had ended just before one of the agreed upon due dates, a prorated bonus. This ruling has drawn substantial attention and criti - cism from Swiss legal scholars, not only because the SFSC did not take into consideration the overwhelm - ing criticism from the Swiss legal community of the SFSC’s jurisprudence on the enforceability of pay - ment conditions regarding salary components, but also for the very brief legal reasoning the SFSC offered as to why it chose to overturn the two prior instances’ qualification of the bonus as a gratuity.

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