6. Cost-Reduction Strategies

To what extent can employers implement the following cost-reduction strategies as a result of COVID-19, and what are the primary limitations on each? 

• Furloughs.

According to Swiss employment law, the employer may in principle, determine the time of the holidays. In doing so, he must take into account the wishes and needs of the employees. If the employer determines the time of the holidays, he must give sufficient advance notice. Under normal circumstances, holidays must be determined at least three months in advance. Some scholars argue that during the pandemic the three months rule does not apply. As of today, there is not case law or pending claims before the courts on this issue.

• Salary reductions.

Salary reductions cannot be introduced unilaterally by the employer. The employer either needs the consent of the employee or is required to introduce a salary reduction by giving notice, and at the same time, offer new employment with a lower salary. Salary reductions need to be economically justified.

• Redundancy.

There are no special regulations on redundancy during the pandemic. Swiss labour law upholds the freedom of both parties (employer and employee) to terminate the employment in accordance with the contractual arrangements. Special consultation obligations apply in case of collective redundancies.

• Facility closure.

There are no special regulations regarding facility closures during the pandemic.