Responses by André Lerch, employment lawyer in Zurich
Is there a requirement for employers to legally justify redundancies and if so, what reasons do they need to provide?
Swiss employment law does not state any statutory reasons for redundancy. However, if the employee on the receiving end of the termination requests more information, then employers are required to state the reasons in writing. Special procedures apply in case of mass dismissal: The employer has to inform the employees about the reasons behind such a measure.
What is the statutory minimum notice period for redundancies (if any)?
The minimum notice period is one month, but longer notice periods can be agreed in the employment contract. Swiss law requires equality of the notice periods to be given by the employer and employee. An employment relationship can be terminated with immediate effect for “significant cause”.
What is the statutory minimum calculation for redundancy payments (if any)?
There are no statutory redundancy payments for younger employees. However, in practice when large redundancy schemes are implemented, an employer works out severance payments based on a collective agreement with a trade union or employee group.
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 2 and 8 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 severance pay.
According to law, what are the main steps that employers must take during a redundancy process?
There are no statutory procedures provided by law. Collective bargaining agreements or individual agreements frequently state that the notice must be in writing or must even be served by registered mail. Again, special rules apply in case of mass dismissal: The employer must inform and consult with the works council or the employees. Employers also must inform the local labour office of every planned collective dismissal.
What are the consequences for employers who fail to comply with redundancy laws? What kind of compensation can employees claim, and is the amount capped?
The employee is entitled to a compensation for up to 6 months’ salary if the dismissal was abusive. Notices given during certain periods (e.g. during pregnancy or, depending on the duration of employment, illness) are also considered to be null and void. In case of a mass dismissal, a penalty of up to two months’ salary has to be paid if the employer has not properly consulted with the employees. If the special rules of mass dismissal apply and the employer fails to inform the local labour office, the dismissal will not become effective.
Statutory minimums aside, what is the standard practice for making redundancies and calculating payments at banks in your market?
Banks normally do not go beyond the statutory requirements. In case of termination agreements, however, some banks pay an additional months’ salary on top of that owed for the notice period. This is because of the practice of the Federal Supreme Court, which considers termination agreements not binding if such they are unbalanced in the favour of the employer.