Termination of Employment Contract: FAQs You Need to Know

A termination of employment is a significant decision, whether initiated by the employer or employee, and often marks a major turning point in one’s professional life. Proper planning and execution are crucial, as a simple notification is not sufficient. Only a legally effective termination is valid under Swiss employment law, ensuring legal certainty and helping to avoid conflicts. This guide provides everything you need to know to professionally manage a termination of an employment contract.

This article was written with contributions from Tseyang Garne and Katharina Kornejewez

Employment Contract Termination: What You Need to Know

Ending an employment relationship is a major step that requires careful preparation and legal compliance. This article explains the proper procedure for early termination of an employment contract under Swiss employment law. It also highlights essential information regarding deadlines and formal requirements. A checklist is included to ensure a smooth termination while adhering to legal regulations.

The legal framework for private employment agreements is covered in Articles 334 and following of the Swiss Code of Obligations.

arbeitnehmer

Types of Employment Contract Termination

Swiss labour law recognizes two primary forms of termination of contract. The ordinary termination, governed by Article 335 of the Code of Obligations, applies to most open-ended contracts. However, terminating an employment contract involving a fixed-term contract requires specific legal considerations.

In contrast, a dismissal without notice (also known as extraordinary termination) occurs only in exceptional situations and requires valid reasons. Such cases are only applicable under serious cases outlined by the law. If the dismissal occurs during a period of protection, such as sick leave, it may not be legally enforceable.

💡 Note: This guide focuses solely on ordinary termination.

Formal Requirements for Terminating an Employment Contract

It is crucial to use the correct wording when terminating an employment contract. Although written form is not legally required, most contracts specify whether termination must be in writing. What matters most is that termination occurs within the applicable deadline to avoid legal issues.

If the employment contract does not specify this, a verbal notice is generally sufficient. However, a written statement is strongly recommended to prevent misunderstandings and to have proof—especially when intending to terminate the employment relationship with immediate effect. A termination notice should be clear and precise and, ideally, always be in writing.

A termination letter should be sent by registered mail or delivered in person. In the case of personal delivery, it is advisable to request written confirmation, particularly if the contractual agreement or a collective employment contract contains specific provisions.

Content of the Termination Letter

An employee reviews the legal grounds for termination of an employment relationship without notice at the workplace.

employment contract

How should one draft a resignation letter? A legally valid letter must provide specific details:

  • Correct and precise details of both parties (employer and employee), including names and addresses.
  • Essential details of the termination of the employment contract, including the contract title and date, to ensure clarity and legal certainty.
  • The date on which the contract may be terminated, considering the statutory notice period.
  • Signature and date of the dismissal letter.

 

In Switzerland, it is not necessary to provide a reason for termination unless the other party requests it. If a reason is required, it should be communicated within 180 days.

Checklist for a Contract Cancellation Letter

A well-prepared resignation letter ensures a smooth and professional process. Use this checklist to ensure all essential details are included:

  • Names and addresses of both the employee and employer.
  • Reference to the employment contract and its start date.
  • Date of termination and the effective end of the notice period.
  • Indication that the letter should be submitted directly to a supervisor or the HR department.
  • If applicable, the use of a template to ensure compliance with contractual formalities.
  • A request for written confirmation of the termination.
  • Optional: A brief note on whether a new job has already been secured.
  • Handwritten signature and date.
  • If withdrawing the resignation is an option, this should be explicitly stated, as parties are free to agree on such terms.

 

By following this checklist, you ensure that your termination letter is both professional and legally sound.

checkliste

Notice Periods

Acting within the legal timeframe is crucial for a valid termination of the employment relationship. These deadlines can be specified in the employment contract by the parties or in a collective labor agreement. However, there are cases where comes to terminating a contract without notice is legally permissible, such as in cases of severe misconduct.

According to Article 335a of the Swiss Code of Obligations, the same notice periods must apply to both employer and employee. If different periods are agreed in the employment contract, the longer period applies to both. Employees should be aware that this provision ensures equal treatment.

The following section explains the legal notice periods.

Termination of an Employment Contract During the Trial Period

A distinction is made between whether the employee is still in the trial period or not. According to Article 335b, Paragraph 1 of the Swiss Code of Obligations, a notice period of seven days applies during this phase. The trial period can last a maximum of 30 days, and the final day of the notice period can fall on any day.

Once the trial period ends, and unless specific notice periods have been agreed upon, the statutory regulations under Article 335c OR apply. It is essential to clearly define the end of the notice period to avoid misunderstandings. Additionally, a well-crafted application letter can be helpful for a quick transition after unemployment. The notice periods vary depending on the length of employment:

  • First year of service: 1 month, ending at the end of the month
  • From the second to the ninth year of service: 2 months, ending at the end of the month
  • From the tenth year of service: 3 months, ending at the end of the month

 

For an indefinite employment contract, the employment does not end automatically and must be actively terminated, for example, by a notice given on a specific period. The above legal notice periods apply to indefinite employment contracts. Using a proper template for giving notice of termination helps ensure compliance with legal requirements.

datum

For example: If an employee started working on January 1, 2023, and the employer issues a dismissal letter on February 29, 2024, the employee is in their first year of employment. Therefore, the two-month notice period applies, meaning the employment will end on April 30, 2024.

Protection Against Dismissal During Illness or Accident

If an employee resigns, certain periods apply during which the employment relationship can be terminated only under specific conditions. In such cases, the notice period may also be interrupted.

This is known as dismissal at an inopportune time. The employer may not terminate the contract during:

  • Compulsory military or civil service
  • Illness or accident if not caused by the employee, as long as their incapacity for work persists
  • Pregnancy and the first 16 weeks after childbirth
  • A mandated service assignment for an aid mission abroad

 

A dismissal during these periods is invalid. The employer must issue a new termination notice once the protected period ends.

If termination was given before the protected period started, it remains valid. However, the notice period is suspended and resumes only once the restriction ends.

Wrongful Termination: Your Rights and What You Can Do

A wrongful termination is legally valid, but the affected party is entitled to compensation under specific circumstances. In such cases, the affected party can claim compensation of up to six months’ salary from the terminating party.

The law clearly defines what constitutes an abusive termination in the case of a lawful dismissal. A termination is considered abusive if it occurs for the following reasons:

kündigung arbeitsvertrag schweiz vorlage
  • Dismissal due to a personal characteristic of the employee.

Example: Termination of the employee’s contract due to their religion.

  • Dismissal for exercising a constitutional right.

Example: An employee whose contract is terminated after participating in a protest.

  • Dismissal to avoid claims arising from the employment relationship.

Example: An employer decides to terminate an employee’s contract to prevent them from receiving a bonus.

  • Dismissal because one party asserts their legal claims in good faith.

Example: An employee consistently works two extra hours per week and requests rightful overtime pay. The employer retaliates by terminating their contract—this is considered unjustified termination.

  • Dismissal due to military or civil service obligations.

Example: An employee must serve in the military, and the employer terminates their contract despite prior knowledge of this duty.

Last Working Day and End of the Notice Period

The employment relationship officially ends with the end of the notice period. Unless otherwise agreed, the last working day is the final day of this period.

By following the necessary guidelines to terminate employment, employees and employers ensure that all requirements are met, even in situations where continuing the employment relationship is unreasonable. In cases where a mutual agreement cannot be reached, disputes may arise, making it essential to adhere to legal standards. This approach helps avoid legal disputes and misunderstandings regarding the termination of the employment contract.

vectra team

Handling Termination in a Legally Secure and Professional Manner

The right to terminate an employment relationship is a significant step that both parties should carefully plan. Once the reasons for termination have been clearly defined, it is crucial that both employee and employer understand the decision. Under the principle of freedom of termination, either party may choose to end the contract, provided all legal conditions are met.

Additionally, knowing all legal requirements helps prevent misunderstandings and potential conflicts. In certain cases, the employer must inform the employee about possible alternatives before proceeding with the final termination without the need for further negotiation.

With the right information and a structured approach, the process can be handled fairly and in compliance with legal standards. However, if an employer initiates termination without mutual consent, they must ensure that all obligations, including severance pay, are met.

How can Vectra Advisors help?

Vectra Advisors are your first-choice legal experts. Our LAWYERS+ support you quickly and pragmatically with all your legal needs. Let’s talk and get started!

Your contact for this topic:

alex bardin

Alex Bardin, Legal Expert