I INTRODUCTION

The employment law in Switzerland is mainly based upon the following sources, set out in order of their priority:

  • a the Federal Constitution;
  • b public law, in particular the Federal Act on Work in Industry, Crafts and Commerce (the Labour Act), and five ordinances issued under this Act regulating work, health and safety conditions;
  • c civil law, in particular the Swiss Code of Obligations;
  • d collective bargaining agreements, if applicable;
  • e individual employment agreements; and
  • f usage, custom, doctrine and case law.

The following sources also play an important part in Swiss employment law:

  • a the Federal Act on the Equal Treatment of Women and Men;
  • b the Federal Act on Personnel Recruitment and Hiring-out of Employees;
  • c the Federal Act on Information and Consultation of workers (the Participation Act);
  • d the Federal Data Protection Act;
  • e the Federal Merger Act;
  • f the Federal Act on Private International Law; and
  • g the EC/EFTA Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters (the Lugano Convention);
  • h the Agreement on Free Movement of Persons between Switzerland and the EC/EFTA; and
  • i the Federal Act on Foreigners.

In Switzerland disputes that fall within the jurisdiction of the court of first instance cannot be heard unless there has first been an attempt at conciliation before a conciliation authority. However, in financial disputes with an amount in dispute of at least 100,000 Swiss francs, the parties may mutually agree to waive any attempt at conciliation. If no agreement is reached before the conciliation authority, the conciliation authority records this fact and grants authorisation to proceed. The plaintiff is entitled to file the action in court within three months of authorisation to proceed being granted. Claims arising from an employment relationship must be filed with a district court. Some cantons have established specialised employment courts. Appeals from the district courts are submitted to the cantonal court and subsequently to the Swiss Federal Supreme Court.

For amounts in dispute not exceeding 30,000 Swiss francs, a simplified procedure is provided. Up to that amount, the parties shall not be charged any court fees and the judge shall ex officio establish the facts and appraise the evidence at his or her discretion.

Federal, cantonal and communal authorities – except the courts – in general do not play a very important role with regard to individual employment contracts. In some areas, however, the authorities may play a greater role, such as in the issuing of work and residence permits, notification of collective dismissal, or authorisation for night shifts or work on Sundays.

II YEAR IN REVIEW

There has not been any major revision of the employment law in Switzerland in 2016.

As Switzerland voted in favour of the ‘initiative against mass immigration’ in 2014, the Federal Council enforced a considerable reduction of the work permit quotas for non-EU nationals (third-state nationals) and for assignees from the EU or EFTA, but has now increased it again for 2017. The total number of L permits for the calendar year 2017 is limited to 4,500 (instead of 4,000) and the total number of B permits to 3,000 (instead of 2,500). Further, the parliament found a solution for the implementation of the initiative against mass immigration in compliance with the bilateral treaties with the EU. As a consequence, a new law will be enacted. Employers in regions with an unemployment rate above average will have to announce open jobs to the unemployment office and interview candidates proposed by the unemployment office. However, they will not be forced to employ such proposed candidates.

Swiss law provides for a strict obligation of companies to maintain detailed time-keeping records (including the start and ending times of the working day and break times) of nearly all of their employees. A huge disparity has evolved over the last few years between this obligation and the reality of day-to-day operations in many businesses. After lengthy negotiations with social partners, the Swiss Federal Council announced that two new articles that are supposed to simplify the time recording obligation entered into force on 1 January 2016. According to these two articles, employees who meet certain requirements will no longer be required to record their hours or, if still required to do so, they can keep track of these in a simplified form. In order to make use of the two new articles, companies must meet high requirements; for example, employers are required to have a collective agreement in place. Based on the new rules, many companies have had to implement new work-time policies and systems. This process is expected to continue.

III SIGNIFICANT CASES

i Variable pay and termination of employment

Swiss law makes an important distinction between salary and a ‘gratification’, which is fully discretionary. The term ‘bonus’ is not regulated in employment law. Hence, a bonus either qualifies as (variable) salary or as gratification.

The Swiss Federal Supreme Court has often had to deal with bonus entitlements, in particular with pro rata entitlements in the case of terminated employment agreements. The Code of Obligations distinguishes between entitlements to salary and, as outlined above, gratification (and does not mention ‘bonus’). Whereas the employee has a statutory right to receive a (variable) salary, the entitlement to gratification only exists in the case of an agreement. Without any agreement it is basically at the discretion of the employer to provide gratification. Whether the bonus is considered (variable) salary or gratification is crucial as only in the latter case may the employer have a chance to deny a (pro rata) entitlement of an employee leaving the company.

The qualification of a payment as either salary or gratification firstly depends on the wording of the employment agreement. Additionally, the communication of the employer when granting a payment is taken into account. But even if the agreement between the parties provides that the payment is not mandatory and the grant remains at the full discretion of the employer, the payment may still be qualified as salary. This is the case, for instance, if the amount of the payment exclusively depends on objective factors, for instance, if the amount of the payment can be calculated according to a certain formula. Further, the employee might have a right to the payment if the employer’s reservation of the voluntary status of the bonus payments is considered rhetoric without any real meaning. Courts tend to assume this when bonus payments are made continuously for a number of years.

In addition to that, the Swiss Federal Court has stated that only payments that are of secondary nature compared with the salary itself can be considered as a gratification. Larger bonus payments are therefore categorised as salary. By developing this case law, the Swiss Federal Court ruled in 2013 that if the salary exceeds an average salary by several times so that an employee has by far covered the standard costs of living (e.g., if the employee receives a ‘very high salary’), the secondary importance of the bonus is no longer a criterion in assessing whether that bonus will be considered gratification or salary.2 After this ruling, it was not clear how such a ‘very high salary’ will be determined. With the decision of 11 August 2015, the Swiss Federal Court clarified the situation.3 According to this ruling, a ‘very high salary’ is to be assumed if the total yearly remuneration amounts to five times the Swiss median salary (private sector) or exceeds this threshold (i.e., 354,000 Swiss francs). According to the opinion of the Swiss Federal Court, whenever a ‘very high salary’ will be granted, a bonus will be qualified as gratification unless the bonus documentation indicates otherwise.

The distinction between salary and gratification is relevant because if a bonus qualifies as (variable) salary, then the employee has a right to also receive a bonus during any period of gardening leave (e.g., based on past bonus payments) and any condition that the employee may not be under notice to receive a bonus is considered void.

IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP

i Employment relationship

Article 319 et seq. of the Code of Obligations sets out the mandatory, semi-mandatory and optional provisions relating to individual employment contracts. An individual employment contract can, basically, be made in writing, orally, or even implicitly (with a few exceptions, such as apprenticeship contracts, which must be in writing) and the law stipulates no time limits with regard to the conclusion of an employment contract. However, certain provisions must be agreed in writing if the parties want to deviate from the provisions set forth in the Code of Obligations (e.g., notice periods or probation periods). Collective bargaining agreements may also stipulate that deviations from the provisions must be set out in writing.

Furthermore, Article 330b of the Code of Obligations states that for employment relationships with an indefinite term or with a term of more than a month, the employer must provide the following information in written form to the employee no later than one month after the starting date:

  • a names of the contracting parties;
  • b starting date;
  • c the employee’s function;
  • d salary (including bonuses, allowances, and other remuneration); and
  • e working time per week.

The written form is usually recommended for all individual employment contracts. In addition to the above elements, it is advisable to include the following:

  • a the term of the employment relationship;
  • b rules on probation and notice periods that deviate from the law;
  • c holiday entitlement;
  • d rules on continued payment of wages when ill or pregnant; and
  • e other specific agreements made during contractual negotiations (e.g., non-compete agreements).

Changes to an employment contract can be made by mutual agreement, by concluding an amendment agreement or by issuing a formal notice of change.

ii Probationary periods

If not stated otherwise in the employment contract, the first month of employment is considered the probationary period. During this period, the employment agreement may be terminated with seven days’ notice. The parties may mutually agree on a longer probation period, which may not exceed three months. Any inability to work during the probation period (e.g., due to illness) may extend the probation period.

iii Establishing a presence

A foreign company that is not registered in Switzerland may hire employees to work in Switzerland. It may also hire Swiss employees through a Swiss agency or a third party without registering. A foreign company may also hire an independent contractor, however, due care must be taken that such contractor does not qualify as an actual employee because the risks involved can be substantial (e.g., lack of insurance coverage).

Whether an independent contractor may create a permanent establishment for tax purposes (PE) depends on the form of organisation and the work performed. The more a contractor gives the appearance of being a part of the organisation of the foreign company, for example, with offices acting in the name or on behalf of the company, the higher the risk of creating a PE. A company that establishes a PE is subject to taxation in Switzerland.

Generally, the foreign company and its Swiss employees become subject to the same social security regime as any Swiss company. Therefore, the foreign company must register with all social security organisations and establish a pension scheme for the employees. The employees’ social security contributions must be withheld by the foreign company. Withholding of income tax only applies to employees that do not have a permanent residence permit.

V RESTRICTIVE COVENANTS

Pursuant to Swiss employment law, an employee may make a commitment to the employer to refrain from any competing activity during and for a period after termination of the employment relationship. A post-termination non-compete clause is only binding if the employment relationship gives the employee access to customer data, manufacturing secrets or business secrets, and if the use of such knowledge could significantly damage the employer. According to the Swiss Federal Supreme Court this is never the case when the relationship between client and employer or between client and employee is strongly personal. The non-compete clause must be made in writing and shall be reasonably limited in terms of place, time and subject to preclude an unreasonable impairment of the employee’s economic prospects. The maximum duration of a post-termination non-compete clause is three years. The law does not require consideration for the post-termination non-compete covenant.

A judge may limit an excessive prohibition of competition. If an employer gives consideration in return for a non-compete agreement – although this is not legally required – it is more likely that the covenant will be fully enforceable. A prohibition on competition lapses if the employer no longer has a significant interest in upholding the prohibition. Furthermore, it also lapses if the employer terminates the employment relationship without justification.

VI WAGES

Switzerland does not have a minimum wage written into law. Nevertheless, many collective employment contracts do include minimum wages. In light of the freedom of movement of labour within the European Union, the authorities started to implement mandatory minimum wages in areas where undercutting of market standard wages by foreign labour has become an issue (for example, in Geneva, the government implemented minimum wages for the retail sector).

On 1 January 2014, the ‘fat cat’ or Minder initiative introduced a prohibition of certain compensation payments to senior management of listed Swiss stock corporations. The prohibited payments are, inter alia, severance payments, sign-on bonuses and bonuses for certain M&A transactions.

i Working time

The Labour Act determines the maximum weekly hours of work, distinguishing between two categories of employees:

  • a workers employed in industrial enterprises and white-collar workers (office workers, technical staff and other salaried employees) as well as sales staff in large retail undertakings; and
  • b other workers, mainly workers in the construction sector and craftsmen, workers in commerce, as well as sales staff in small retail undertakings.

The maximum hours of work are fixed at 45 hours a week for the first category and 50 hours a week for the second. If both categories of employees are employed in the same enterprise the maximum of 50 hours applies to both categories. Within these limits the effective hours of work are fixed by collective agreements and individual contracts.

Work between 11pm and 6am is considered night work. As a rule, night work is forbidden. However, a special permit for such work may be issued if the employer evidences a special or urgent need. In any case the night work may not exceed nine hours in a maximum time frame of 10 hours, including breaks. If the employee provides services on only three out of seven consecutive nights, the night work may amount to 10 hours in a maximum time frame of 12 hours, including breaks. Employees may be entitled to a time or salary premium when working at night.

The Labour Act does not apply to very senior management personnel with regard to working hours and overtime. Very senior management personnel are those employees who are allowed to make important decisions that can affect the structure, the course of business and the development of a business or a part of business.

ii Overtime

Under Swiss law there are two categories of overtime work. The first category is addressed in Article 321c of the Code of Obligations and concerns cases in which the employee works more than the working hours stipulated in the contract, up to the maximum working time allowed under the Labour Act. Pursuant to the Code of Obligations, any overtime not compensated by time off must be paid by the employer with a supplement of at least 25 per cent of the applicable wage, unless there is an agreement to the contrary in writing (i.e., a collective agreement or individual employment contract). Thus, an agreement may provide that no supplement applies or that any overtime is included in the standard wage. Generally, the second option is used in management contracts.

The second form of overtime work relates to the hours worked in excess of the Labour Act limits of 45 or 50 hours (see Section VI.i, supra). The payment of a wage supplement of 25 per cent of the hourly wage is a mandatory provision from which the parties may not depart by agreement (in contrast to the first category of overtime). The Labour Act specifies that for white-collar workers and sales staff in large retail undertakings, the supplement is due only if the total overtime work performed exceeds 60 hours per calendar year. Additionally, the overtime of a single employee may not exceed two hours a day except on a free weekday or in a case of urgency and may not, for employees with a maximum working time of 45 hours a week, exceed 170 hours a year. For employees with a maximum working time of 50 hours a week, the maximum overtime per annum may not exceed 140 hours.

VII FOREIGN WORKERS

Switzerland has a dual system for the admission of foreign workers. Nationals from EC or EFTA countries benefit from the Agreement on Free Movement of Persons and, in general, do not need a work permit if residence is taken in Switzerland, subject to certain restrictions and exceptions for nationals from Bulgaria, Romania and Croatia. With regard to non-EC and non-EFTA nationals, only a limited number of management-level employees, specialists and other qualified employees are admitted from all other countries (subject to a quota as determined by the Federal Council).

If non-EC or non-EFTA nationals (without residence in Switzerland) work in Switzerland temporarily for more than eight days for a non-Swiss company, such employees must be reported to the authorities in advance even if no work or residence permit is required. Furthermore, the employer must comply with the standard working conditions, including minimum salary levels. For certain employment sectors, reporting, or even a permit, is required from the first day of work.

There is no limit as to how many foreign employees may work for one company and no obligation on the employer to maintain a list of foreign workers.

All foreign employees resident in Switzerland but with no permanent residence permit are subject to tax at source. Foreign workers are subject to the same working conditions and benefits as Swiss employees.

Pursuant to the Federal Act on Private International Law, the applicable law regarding employment relationships is the country where the employee usually performs his or her duties. The parties may, however, agree that either the law of the country in which the employee has his or her permanent residence or the law of the country in which the employer is domiciled apply. Consequently, it may be possible to submit foreign workers of foreign entities to the laws of their home country. However, social security obligations may not be overridden by such choice of law.

VIII GLOBAL POLICIES

The employer may establish general directives and give specific instructions about the execution of work and the conduct of employees in the company. Furthermore, the employer must take prescribed measures to protect the life, health and integrity of the employees and in particular to take care that the employee is not subject to sexual harassment or discrimination. Therefore, it is very common in Switzerland to set up rules on accepted behaviour and the consequences in case of non-compliance. Usually, employees must accept that they will comply with the rules in writing. There is no strict requirement, however, that employees sign such policies, but it is recommended to have evidence on file that an employee received the policy. Further, the employer must ensure that employees understand the language in which policies are written and that the current version of the rules are easily accessible (e.g., on company intranet).

The purpose of the Federal Act on the Equal Treatment of Women and Men (ETA) is to ensure equal treatment at work by means of a general prohibition of discrimination based on gender – including a prohibition of sexual harassment. The ETA provides for sanctions in case of non-compliance of the employer.

IX TRANSLATION

In principle, there are no regulations regarding the required language of employment documents. However, employees need to be able to understand the employment conditions because otherwise such conditions may not be enforceable. Therefore, it is recommended to translate all employment conditions into a local language. This is very important in particular for the main documents such as the employment contract and general employment conditions.

There are no formalities for the translation. However, it should be clearly stated which language shall prevail in the event of any conflict between the languages. Further, it needs to be noted that formal translation by a recognised translator may be necessary if only foreign documents exist in case of a court dispute. This is not the case when the document was already translated when it was entered into.

X EMPLOYEE REPRESENTATION

Pursuant to the Participation Act, employees may elect a works council in companies with at least 50 employees. The works council representatives must be informed of all matters on which they need information to fulfil their tasks, and they must be consulted on the following matters:

  • a security at work and health protection;
  • b collective dismissals;
  • c affiliation to an occupational pension fund and termination of the affiliation agreement; and
  • d transfer of undertakings.

The establishment of a works council must be passed by a resolution of at least one-fifth of all employees. Once a positive decision has been made, the election of the representatives may take place. The number of representatives must be determined by the employer and the employees according to the size of the company but may not be below three. The employer must inform the works council at least once a year about the impact of the course of business on the employees. Within the framework of the Participation Act the works councils may decide how to organise themselves.

Apart from the Participation Act, the law sets out no special rights for works councils within the company, but such rights are recognised by some collective agreements.

Generally, a substantial number of companies with more than 50 employees do not have a works council.

XI DATA PROTECTION

i Requirements for registration

Private persons must register their database if they regularly process sensitive personal data or personality profiles; or if they regularly disclose or transfer personal data to third parties. However, because the employers must collect certain data of the employees pursuant to social security laws, tax law and also the Code of Obligations (e.g., with regard to the data required to issue a reference letter), they are exempted from the duty to register. If, however, companies collect additional data that need not be collected by law, there could be a duty to register.

Pursuant to the Federal Data Protection Act, personal data must be acquired lawfully, and processing must be lawful, in good faith and not be excessive, and is only allowed for the purpose indicated for the processing or evident under the circumstances or given by law. Employment law further extends the scope of protection granted under the Act. Article 328b of the Code of Obligations only allows the processing of data that refers to the employee’s aptitude for the job or is necessary for the performance of services.

Personal data must be protected from unauthorised processing through adequate technical and organisational measures. The employee must be informed about the collection and processing of sensitive personal data or personality profiles (see Section XII.iii, infra), for example, in a data protection and privacy policy. An employee may at any time request access to his or her employee file.

ii Cross-border data transfers

Cross-border data transfers without the employee’s consent are permitted if adequate cross-border data protection agreements are in place and information about such agreements is given to the Federal Data Protection and Information Commissioner or if the respective countries provide for an adequate level of data protection. With regard to the processing of data of private individuals, the Commissioner has established a list of countries that have implemented equivalent data protection legislation, which is publicly available on the internet.4 For example, the level of protection provided for private individuals by EU countries is deemed adequate. In the aftermath of the CJEU decision dated 6 October 2015 (C-362/14) declaring the European Commission’s Safe Harbor decision (2000/520/EC) to be invalid, neither US federal law nor the laws of any US state are considered to provide for an adequate level of data protection from a Swiss point of view. The processing of personal data may be assigned to third parties by agreement or by law if the data is processed only in the manner permitted for the instructing party itself; and it is not prohibited by a statutory or contractual duty of confidentiality.

iii Sensitive data

Personal data pursuant to the Data Protection Act means all data that refers to a certain person. Sensitive personal data means all data on:

  • a religious, ideological, political or trade union-related views or activities;
  • b health, personal life racial origin;
  • c social security measures; and
  • d administrative or criminal proceedings and sanctions.

The processing of sensitive personal data is only allowed if the relevant person is informed about the controller, the purpose of the processing and the categories of data recipient if a disclosure of personal data is planned.

iv Background checks

As a rule, the employer may not conduct background checks or have these checks performed by third parties without the explicit consent of the applicant. Even if the applicant consented to a background check, the check would be – in consideration of the applicant’s privacy – limited to information that strictly relates to whether the applicant fulfils the requirements of the job. For instance, any questions in regard to the applicant’s health must be directed to find out whether the applicant is currently fit to work. Any further investigations to find out whether there is a general risk that the applicant could become ill in the long term would not be allowed.

XII DISCONTINUING EMPLOYMENT

i Dismissal

A contract concluded for an indefinite period terminates after a notice given by either of the parties (ordinary termination). In principle, no cause to terminate an employment relationship is required. The minimum notice period is set forth in the Code of Obligations. The parties may not, however, reduce such period to less than one month, subject to any longer periods set forth in collective bargaining agreements. Nevertheless, because of the protection against abusive termination, the employee has a statutory right to be informed of the reasons for the termination in writing, on request.

A termination of an employment agreement must not be abusive. A party that abusively gives notice of termination of the employment relationship must pay an indemnity to the other party. The termination of the employment contract by either party is considered abusive if, for example, it occurs for one of the following reasons:

  • a personal characteristic of one party (e.g., race, creed, sexual orientation, age), unless they are relevant to the employment relationship or significantly impair the cooperation within the enterprise;
  • b the other party makes use of a constitutional or contractual right; or
  • c where the sole purpose was to frustrate the formation of claims arising out of the employment relationship.

If any of the parties has a ‘significant cause’ it may terminate the contract at any time, without prior notice (extraordinary termination or summary dismissal) and may claim compensation for the damage caused from the other party. But, if the employer terminates the contact with immediate effect without a significant cause, the employer must compensate the employee for the damage that has thus been caused to him or her plus a penalty of up to six months’ remuneration.

Generally, if an employee aged 50 or older leaves employment after 20 or more years of service, the employer must pay a severance compensation of between two and eight months’ salary. Such severance pay, however, is not very common in Switzerland, because the employer can deduct the contributions made to the (mandatory) pension plan from the mandatory severance pay.

The parties may agree upon (immediate) termination of an employment agreement at any time. The Code of Obligations sets forth no explicit provisions with regard to a termination agreement. However, according to the case law, the mandatory provisions of the Code shall be taken into account and the agreement must include benefits for both employer and the employee. Otherwise, the judge may declare the termination agreement as null and void.

No categories of employees are protected from dismissal in general. But there are certain periods during which a notice of termination is invalid. After the probation period has expired, the employer may not terminate the employment relationship at the following times:

  • a when the employee is performing military service or civil defence;
  • b when the employee is prevented from working through no fault of his or her own due to sickness or an accident (for a certain period depending on the year of employment, up to 180 days);
  • c during pregnancy and for 16 weeks following the birth of the baby; or
  • d when the employee participates in an official aid project in another country.

Any notice to terminate an employment contract during such period is invalid. Any notice served before such period starts is suspended when the period begins and then recommences after recovery from illness or accident or expiration of the protection period.

In principle, an employee who is dismissed by ordinary termination may be released from his or her duty to work (gardening leave) at any time. The employer must continue to pay salary until expiry of the ordinary termination period, but the employer may set off any income generated by the employee during the time of the release (if the employee was allowed to start a new job).

Apart from the regulations regarding mass dismissal the company has no duty to inform any authority about a dismissal (exceptions apply in regard to apprenticeship contracts).

ii Collective dismissals

The Code of Obligations provides special rules regarding collective dismissals. Article 335d of the Code defines ‘collective dismissals’ as notices of termination in enterprises issued by the employer within a period of 30 days for reasons unrelated to the person of the employee and that affect:

  • a at least 10 employees in companies usually employing more than 20 and fewer than 100 persons;
  • b at least 10 per cent of all employees in companies usually employing more than 100 and fewer than 300 persons; and
  • c at least 30 employees in companies usually employing at least 300 persons.

Regarding collective dismissal, the employer must inform and consult with the works council or the employees. Employers must also inform the cantonal labour office of every planned collective dismissal.

Non-compliance with the procedural rules by the employer constitutes abusive termination of the affected employment, which may lead to damages payment and additional remunerations and in the case of substantial non-compliance the terminations can be found void and reinstatement ordered.

Companies normally employing 250 employees or more and making within a period of 30 days at least 30 employees redundant have to negotiate with the employees or their representatives a social plan to work as a safety net for the dismissed employees. For companies beyond that threshold no obligation to issue a social plan for the terminated employees exists. However, there can be obligations to negotiate or issue a plan based on collective agreements. In addition, any mandatory early retirement obligations set forth in the pension plan regulations of a company should be considered.

XIII TRANSFER OF BUSINESS

Generally speaking, the Swiss law applicable to the transfer of undertakings is quite similar to the provisions laid out in the European Union Council Directive 2001/23 of 12 March 2001. Pursuant to Article 333 of the Code of Obligations, the employment relationship is transferred from the employer to a third party, if the employer transfers the enterprise or a part thereof to such third party and if this transfer does not take place within a restructuring scenario. Article 333 of the Code of Obligations is also applicable if a single business unit of the enterprise is transferred. However, it is required that the business unit maintains its structure and organisation after the transfer, although it is not required that any assets are transferred together with the employment relationship. Article 333 may also apply in the case of an outsourcing or re-sourcing. It depends on how the outsourcing or re-sourcing is structured, namely, the services that are outsourced or re-sourced, the assets transferred and the organisation of the provision of the services before and after the outsourcing or re-sourcing.

If a transaction qualifies as a (partial) business transfer, the employment relationships existing at the time of the transfer (including the ones under notice) are automatically transferred, including all rights and obligations as of the date of transfer, unless an employee objects to the transfer. If an employee objects to a transfer, the employment relationship is terminated upon the expiration of the statutory notice periods even if longer or shorter contractual notice periods apply.

It is important to note that the current employer and the new employer are jointly and severally liable for an employee’s claims that have become due before the automatic transfer and that will later become due until the date upon which the employment relationship could have validly been terminated.

If the business transfer takes place within certain restructuring scenarios, the automatic transfer of employees dedicated to the transferred business does not take place. Only the employees chosen by the buyer will transfer. Also, the purchaser is – within certain restructuring scenarios – not jointly and severally liable with the seller for pre-transaction claims of the employees.

If a collective employment contract applies to any employment relationship transferred, the new employer would need to comply with it for one year unless the collective employment contract expires earlier or is terminated by notice.

If any redundancies, terminations or changes in the working conditions are planned in connection with a business transfer, the works council, if any, or otherwise the employees need to be consulted in due time before the decision to make employees redundant is made or the changes in the working conditions implemented. This consultation process is also necessary if the employees will be dismissed or the changes implemented after the transfer (by the new employer), because such dismissals and changes would be seen as a result of the transfer of the business if implemented within the first few months after the transfer. It is very important to note that the consultation process needs to be conducted before any decisions in regard to any measures are made. The employer needs to give the works council or the employees at least the possibility to make suggestions on how to avoid any measures, specifically on how to limit the number of dismissals.

The employer has to provide all pertinent information to the works council or to the employees. According to the case law, the employees or the works council need to have at least 14 days to make their suggestions or proposals. In the case of a breach of the duty to consult, the employer could become liable for any damages of the employees. Further, the government can force the involved parties to conduct the consultation process (which could delay a contemplated transfer considerably) and can fine the parties. In addition, it is argued by some scholars that any terminations issued or implemented changes are void.

After the consultation, or directly if no consultation is required, the works council or the employees, if no works council is established, need to be informed in due time before the transfer of:

  • a the reasons for the transfer;
  • b the results of the consultation process (if any required); and
  • c the final legal, economic and social consequences of the transfer for the employees (including the number of dismissals; changes in the working conditions).

XIV OUTLOOK

i New data protection law

The legislative process for a new data protection law has been started. The federal council has published the draft of a new data protection law. However, it is expected that the draft will be discussed and amended heavily during the legislative process.

Footnotes

1 Ueli Sommer is a partner at Walder Wyss Ltd and heads the firm’s employment practice.

2 BGE 139 III 135.

3 BGer 4A_653/2014 as of 11 August 2015.

4 www.edoeb.admin.ch/themen/00794/00827/index.html?lang=en.