Under Swiss law, an employment contract is a contract whereby the employee is obliged to perform work in the employer’s service for either a fixed or an indefinite period of time, and the employer is obliged to pay salary either based on time periods or based on the work performed. As compared to other contracts involving the rendering of personal services, the most distinctive feature of the employment contract is that the employee’s personal and organisational dependence reflects a relationship of legal subordination, i.e. the employee is not free to choose the time, place or type of work he or she will perform. By contrast, for example, contracts for legal services concluded between attorneys and their clients typically lack such legal subordination and, accordingly, do not qualify as employment contracts. Consequently, different statutory rules will apply.
Except for a few special agreements – such as the apprenticeship contract, the employment contract with a commercial traveler or the employment contract between a commercial staff supplier and an employee (which all require written form) – an employment contract is not subject to any specific form and may even be agreed verbally or by implication. Certain contractual provisions are, however, only valid if agreed in writing (e.g. restrictive covenants, exclusion of compensation for overtime, notice periods differing from statutory law, etc.). Moreover, Switzerland has implemented European Union Directive No. 533/91.
Consequently, where the employment contract has been concluded for an indefinite duration or for longer than one month, within one month of the beginning of the employment relationship, the employer must inform the employee in writing of:
- the names of the contracting parties;
- the date of the beginning of the employment relationship;
- the employee’s function;
- the salary and any additional benefits;
- the length of the working week
The parties are free to enter into an unlimited or a fixed-term contract. The sequence of several fixed-term contracts between the same parties may, however, be regarded as circumvention of the employee’s protection against dismissal (if there is no objective reason for such sequence). In this case, the employment contract is considered to be unlimited.
During the trial period, either party may terminate the contract at any time by giving seven days’ notice; the trial period is, by statutory law, considered to be the first month of an employment relationship. However, if agreed in writing, the trial period may be extended to three months. Where the period that would normally constitute the probation period is interrupted by illness, accident or performance of a non-voluntary legal obligation, the probation period is extended accordingly. During the trial period, the statutory rules on termination at an inopportune juncture (pregnancy, illness, accident, military service, et al.) do not apply.
Any employment contract concluded for an indefinite period of time may be unilaterally terminated by both employer and employee, subject to statutory notice periods ranging from one to three months, depending upon the length of service (during the trial period of a maximum of three months, the employment relationship may be terminated with a notice period of seven days). These notice periods may generally be altered by mutual consent, provided that they are the same for both employer and employee.
Both employers and employees have a right to terminate the employment contract immediately and without notice for cause, regardless of whether or not the contract was concluded for an indefinite period of time and regardless of any statutory notice periods, which would apply to an ordinary termination. By statute, there is cause if the terminating party cannot reasonably be expected to continue the employment relationship, but ultimately, determination of just cause is left to the courts to decide. As a general rule, the case law is quite strict and only severe breaches of the employee’s duties (e.g. criminal acts against the employer, but never the mere underperformance of an employee) are considered to be just cause.