Terminate an employment agreement
⚡TL;DR
- You can generally terminate an employment agreement without reasons for the next term, subject to the notice periods.
- A termination for cause is a measure of last resort and should happen quickly after the occurrence of the fact justifying it.
- Consider offering a termination agreement to get post-termination legal certainty.
Swiss employment law is rather liberal in comparison to other European countries and a termination of employment can generally be done without giving any reason, subject to the notice periods.
However, upon request of the employee, the company has to provide the reason for the termination. Bad performance or restructuring can be acceptable reasons. If the reason for termination is, however, due to the attributes of the employee (e.g., age, gender, political views), or because the employee makes valid claims against the company (e.g., for use of safe tools), the termination may be deemed abusive and a payment of up to 6 months salary may be due.
Ordinary termination
An ordinary termination is possible subject to notice periods. The notice periods are typically agreed on in the employment agreement (see best practices here: Employment Agreement). If nothing is agreed, the notice periods are:
- 7 days in the probation period
- 1 month for the end of a month in the first year of service.
- 2 months for the end of a month in the second to ninth year of service.
- 3 months for the end of a month from the 10th year of service.
Best practices
Probation period: The probation period is extended to 3 months.
Termination notice: The termination notice is limited to the legal minimum of 1 month and allows for termination with effect during the month (and not only at the end of a month).
Fixed-term employment agreements can only be terminated before their end if it was expressly agreed by the parties.
Termination for cause
- What is it? Termination with immediate effect is a measure of last resort and requires material cause.
- When is it possible? This may be that the employee commits a criminal offence against the company or any of its employees (such as stealing or sexual harassment), discloses company secrets to third parties, or appears drunk at work multiple times.
- Should I warn the employee first? Unless the employee's conduct is very severe, a written warning should first be issued, and the extraordinary termination only be issued as a second step if the misbehavior continues.
- How to act? An extraordinary termination has to be pronounced shortly after the event that led to the termination (reflection period 1-2 days), not a few weeks later.
Book a call with us here to discuss a potential termination for cause as soon as possible. This requires careful consideration and can have costly consequences.
What to consider before giving notice of termination?
Before giving notice of termination to any employee, consider the following:
- Protected employees: Any termination is null and void if an employee is sick, pregnant (or within 16 weeks of having given birth), or in military service at the time of termination.
- Older employees: Special consideration is also to be given to older employees. The company must explore all other options (e.g., re-training) prior to dismissing older employees. Otherwise, it may be an abusive termination.
- Mass dismissal: If more than 10 employees (or more depending on size) are dismissed within 30 days, the special mass dismissal procedure may have to be observed.
- Garden leave: The company can place employees on paid leave during the entire notice period or parts thereof. The garden leave period does, however, only partially count as holidays (thus reducing the payment for untaken holidays).
How to give a notice of termination?
- Form: The termination notice should be given in writing in a form that allows proof of receipt (either registered mail or, if in person, with a signature by the employee to confirm receipt or, if the signature is refused, with two company representatives present as witnesses).
- Content: It should contain the end date and reference to contact HR for all questions, notably around insurance.
When to offer a termination agreement?
In most cases, it is highly recommended to offer a termination agreement with the employee after having given the termination notice.
This gives legal certainty around the payout and reduces the risk of an extension of the employment contract in case of illness.
Best practices
If a termination agreement is made with an employee, the following is implemented:
Confidentiality: A confidentiality clause is in place and covers the previous employment relationship and the termination agreement.
No claim: A confirmation by the employee that they shall have no claim whatsoever against the company upon the performance of the termination agreement is included.
- Ordinary termination:
- The employee's signature should confirm the receipt of termination. There’s a line for that on the termination notice.
- If the employee refuses to sign a confirmation, explain calmly that it is only an acknowledgement of receipt and not an agreement. The employee is not waiving any rights by signing a confirmation.
- If the person continues to refuse, the termination is still valid. Make a record of the conversation and involve two suitable persons for reasons of evidence. As a rule, these will be managers or personnel managers. Follow up with a written termination notice sent in writing.
- Always (without exception) formulate the termination letter politely and neutrally.
- Termination for cause: Book a call with us here, or reach out to us in another way, as soon as possible after learning about the fact that might justify a termination for cause.
- Termination agreement: Book a call with us here to set up the right termination agreement for your company and ensure its validity in front of the authorities.