Termination of Employment Contract: Important Information
The termination of an 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.
Employment Contract Termination: What You Need to Know
Ending an employment agreement 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 meeting all legal regulations.
The legal framework for private employment agreements is covered in Articles 334 and following of the Swiss Code of Obligations.
Types of Employment Contract Termination
Swiss labour law recognizes two primary forms of termination of contract. The ordinary termination in 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 termination with immediate effect (also known as extraordinary termination) occurs only in exceptional situations and requires valid reasons.
💡 Note: This guide focuses solely on ordinary termination.
Formal Requirements for Terminating an Employment Contract
It is crucial to choose the right format 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.
Content of the Termination Notice
How should one draft a termination notice? A legally valid termination notice 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 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 one to two weeks.
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.
- A request for written confirmation of the termination.
- Handwritten signature and date.
By following this checklist, you ensure that your termination letter is both professional and legally sound.
Notice Periods
Acting within the legal timeframe is crucial for a valid termination of the employment contract. These deadlines can be specified in the employment contract by the parties or in a collective labor agreement. However, there are cases where immediately terminating a contract is legally permissible, such as in cases of severe misbehaviour.
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 three months, 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. The notice periods vary depending on the length of employment:
- First year of service: 1 month
- From the second to the ninth year of service: 2 months
- From the tenth year of service: 3 months
In the case of a fixed-term employment contract, the employment automatically ends on the contractually agreed date. Early termination is only possible in exceptional cases.
The deadlines mentioned above apply to an open-ended employment contract. The deadline in each case ends at the end of the month. Templates are helpful for implementing the legal requirements correctly and transparently.
For example: If an employee started working on January 1, 2023, and the employer issues a termination letter in February 2024, the employee is in their second year of employment. Therefore, the two-month notice period applies, meaning the employment will end on April 30, 2024.
Protection Against Termination at an inopportune juncture
There are certain periods during which the employment relationship can only be terminated under specific conditions. In such cases, the notice period may also be interrupted.
This is known as termination at an inopportune juncture. The employer may not terminate the contract during:
- Compulsory military or civil service
- Illness or accident if not caused by the employee
- 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 a wrongful termination in the case of a lawful dismissal. A termination is considered wrongful if it occurs for the following reasons:
- 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.
- 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 officially ends with the end of the notice period. Unless otherwise agreed, the final day of this period is the last working day.
Following the guidelines and advice for terminating an employment contract ensures that all requirements are met, even in cases where it is unreasonable to continue the employment relationship. This avoids legal problems and misunderstandings when terminating the employment relationship.
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.
Additionally, knowing all legal requirements helps prevent misunderstandings and potential conflicts.
With the right information and a structured approach, the process can be handled fairly and in compliance with legal standards.
