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Here we start with a series of questions that trustees give us and which Jurilo.ch answered for them in a time and cost saving way.

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When will Jurilo.ch help you too?

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question

“What should be included in an employee participation program?”

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Yurilo's answer

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An employee participation program (MBP) is a labor and tax-relevant instrument that enables employees to participate in the company — typically in the form of shares, options or profit sharing. For such a program to be legally effective and practicable, it should meet certain minimum content and legal requirements.

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Key contents of an employee participation program:

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1. Legal basis and form:
- The program should be written, in particular if it is part of the employment contract or an additional agreement (Art. 320 (1) OR).
- It may also be regulated in regulations that become part of the employment relationship.

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2. Participation conditions:
- Clear definition of which employees can participate (e.g. by function, seniority, performance).
- Any conditions, such as a trial period, minimum employment period or waiver of termination.

3. Type of participation:
- Shares (with or without voting rights), options, virtual shares (phantom shares), profit sharing, etc.
- For options: exercise conditions, vesting periods, duration, exercise price.

4. Evaluation bases:
- How is the value of the investment calculated? (e.g. market value, book value, company valuation)
- For unlisted companies: valuation method and time of valuation.

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5. Vesting and blocking periods:
- Timing of the transfer of ownership (vesting).
- Blocking periods for sale or exercise.

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6. Withdrawal and termination of employment:
- Regulation of what happens to investments in the event of dismissal, retirement, disability or death.
- The company's repurchase rights or obligations.

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7. Loss of participation:
- Conditions under which participation expires (e.g. in the event of termination without notice by the employer in accordance with Art. 337 OR).

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8. Tax treatment:
- Transparency about tax consequences for employees (e.g. taxation upon allocation or exercise).
- Reference to reporting requirements vis-à-vis tax authorities.

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9. Confidentiality and Confidentiality:
- Protection of trade secrets, in particular when knowing sensitive company data.

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10. Jurisdiction and Applicable Law:
- As a rule, Swiss law and place of jurisdiction at the employer's registered office or the employee's place of residence in accordance with Art. 34 Code of Civil Procedure.

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Legislative framework

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- The MBP must not violate mandatory employment law (e.g. equal treatment requirement, wage protection under Art. 322 OR).
- A clear distinction must be made between wage components and participations, in particular with regard to social security contributions and continued payment obligations.
- Listed companies must also comply with stock exchange regulations (e.g. disclosure requirements in accordance with financial market legislation).

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conclusion

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An employee participation program should be carefully designed to avoid employment, tax and corporate law risks. It is recommended that such a program be developed in close coordination with legal and tax experts.

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sources

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- https://www.fedlex.admin.ch/eli/cc/27/317_321_377

- Art. 320, paragraph 1 OR
- Article 322 OR
- Art. 337 OR
- Article 34 Code of Civil Procedure