Transfer of undertakings in Switzerland

Employees’ Rights in Case of a Transfer of Undertaking

Swiss law applicable to 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. Art. 333 CO 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.

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 the employee objects to the transfer. If an employee objects to the transfer, the employment relationship is terminated upon the expiration of the statutory notice period even if longer or shorter contractual notice periods apply.

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, must be consulted in due time, prior to the decision that employees are made redundant 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 dismissal and changes would be seen as a result of the transfer of business if implemented within the first few months after the transfer. It is 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.

Requirements for Predecessor and Successor Parties

The current employer and the new employer are jointly and severally liable for any employee’s claim that have become due prior the transfer, and that will later become due until the date upon which the employment relationship could have validly been terminated. If a collective employment contract applies to any employment relationship transfer, the new employer would need to comply with it for one year, unless the collective employment contract expires earlier or is terminated by notice.