JURILO - Our Legal Bot in Action

Our Legal - Bot in Action:
‍A justified termination without notice requires a valid and compelling reason. Any circumstance which, in good faith, makes it unreasonable to expect the continuation of the employment relationship should be deemed such a reason. A particularly serious misconduct or breach of contractual obligations is required; otherwise, the continuation of the employment relationship for the duration of the ordinary notice period is considered reasonable. The misconduct must be objectively capable of destroying or seriously undermining the relationship of trust between the parties, and such destruction or serious undermining must in fact occur. Finally, termination without notice must be effected without delay—generally within a maximum of two to three working days.

If no compelling reason exists, a termination without notice is still legally valid; however, it must then be deemed unjustified.

Legal consequences:

In all cases, termination without notice takes immediate effect and ends the employment relationship at once.

Any employment contract may be terminated by mutual consent through a termination agreement (Art. 115 CO). Such an agreement is not subject to any formal requirements and may even be concluded implicitly, although a written form is strongly recommended for evidentiary purposes. The essential prerequisite is a clear and unequivocal agreement between the parties to end the employment relationship; in particular, any waiver by the employee of existing rights must be approached with caution. Pursuant to Art. 341(1) CO, an employee’s waiver of statutory claims is prohibited during the employment relationship and for one month thereafter.In the context of a termination agreement, it is therefore especially important to ensure that adequate compensation is provided for any accrued entitlements, such as unused vacation or overtime. Most provisions in a termination agreement, however, relate to future rights — for example, the waiver of statutory protection periods against dismissal under Art. 336c CO. In such cases, any waiver must likewise be accompanied by appropriate consideration, such as financial compensation. A termination without adherence to the notice period is permissible where the employer waives the employee’s obligation to work and the employee waives the corresponding salary, provided this is based on mutual concessions and the employee’s own interest in ending the relationship. Where the termination agreement is initiated at the employee’s request, it is treated as a voluntary resignation, which may lead to a suspension of unemployment insurance daily allowances for up to 60 days pursuant to Art. 30 UIA.

To ensure that a bonus qualifies as a voluntary benefit and does not give rise to a legally enforceable claim, particular care must be taken in drafting the bonus clause. The clause should explicitly state that the bonus is a discretionary benefit granted by the employer, not a fixed component of the employee’s salary, and awarded solely at the employer’s discretion. Furthermore, the clause should avoid specifying fixed or measurable targets (e.g., sales or profit thresholds) whose achievement would automatically create an entitlement to payment. The bonus amount should also remain open and variable, reinforcing its voluntary nature. It is advisable to include a provision for the employer to review and adjust the bonus annually. Finally, the clause should make it explicit that even repeated payments do not establish any future entitlement and therefore do not create any obligation under applicable law.

The requirements for a non-competition clause under Art. 340 et seq. CO may be summarised as follows:

Formal requirements:
1. Written agreement (Art. 340(1) CO)
2. Employee’s legal capacity to act (Art. 340(1) CO)

Substantive requirements:
1. Employee’s access to: The customer base and/orManufacturing and trade secrets
2. Potential for significant harm to the employer through the use of such knowledge (Art. 340(2) CO)

Limitations:
1. Pursuant to Art. 340a(1) CO, the clause must be appropriately restricted in:
- Geographic scope and duration (maximum of three years by law)
- Subject matter
2. It must not impose an unreasonable restriction on the employee’s professional or economic advancement.

The employer’s obligation to continue paying wages despite the existence of daily sickness benefit insurance depends on whether an equivalent insurance arrangement has been taken out and whether the formal requirements have been met.

If the insurance benefits cover at least 80% of the salary for 720 days within a 900-day period, this is deemed equivalent to the statutory obligation to continue paying wages. The employer must contribute at least half of the premiums for the daily sickness benefit insurance. During any waiting period, the employer must pay at least 80% of the salary; however, a waiting period of two to three days is generally permissible. The daily sickness benefit insurance arrangement must be agreed in writing.

If these conditions are met, the insurance arrangement is considered equivalent, and the employer is released from the obligation to continue paying wages. If any of the above criteria are not met, the arrangement is not deemed equivalent, and the employer remains obliged to continue wage payments in accordance with Art. 324a CO, even if daily sickness benefit insurance exists and may in fact provide benefits.

In principle, an employee may engage in secondary employment even with a full-time workload. However, important limitations apply:

1. Duty of Loyalty (Art. 321a CO):
- The employee must not compete with the primary employer.
- Performance in the primary role must not be impaired.
- The legitimate interests of the employer must not be adversely affected.

2. Authorisation Requirement:
- Many employment contracts include a provision requiring notification or prior approval for secondary employment.
- The employer may prohibit secondary employment for valid and material reasons.

3. Working Time (Labour Act; ArG):
- The statutory maximum weekly working time of 45 or 50 hours (depending on the industry) must be observed, including all secondary employment.
- The prescribed rest periods must be ensured.

Under Swiss employment law, there is generally no right or entitlement to severance pay upon termination of an employment contract.

The Swiss Code of Obligations contains no statutory basis for such a claim.Exceptions giving rise to a severance entitlement may occur where a company has adopted a social plan providing for severance payments, or where an employer makes voluntary payments to a large group of employees, in which case an individual employee may, at most, derive a claim from the principle of equal treatment (Art. 328 CO). However, the latter situation is rare and only recognised under strict conditions. In the field of public employment law, various cantonal personnel statutes provide for severance payments upon reaching a certain age threshold combined with a specified number of years of service (for example, the Canton of Zurich Personnel Act).

In principle, the following rules apply to the compensation of overtime with time off:

1. Employee consent required: The compensation of overtime by granting time off requires the employee’s consent. Such consent may arise either from the employment contract itself (or from personnel regulations incorporated as an integral part of the contract) if it has been agreed that overtime will be compensated with time off and the employer may direct such compensation, or from a separate release agreement in which the compensation of overtime is expressly agreed.

2. No unilateral offsetting:In the absence of the employee’s consent or a corresponding agreement, overtime during a leave period cannot simply be deemed compensated — even if the employer unilaterally orders it. In such cases, overtime must always be paid.

3. Exception for extended leave periods:In the case of an extended leave of absence, a refusal by the employee to accept compensation in the form of time off may constitute an abuse of rights.

Yes, an employee may, in principle, work during a leave of absence, provided there are no contractual or statutory provisions to the contrary.

A key consideration is the prohibition on competition under employment law. By virtue of the duty of loyalty, the employee may not engage in any activities that compete with the employer’s business during the leave period. This applies irrespective of whether a post-contractual non-competition clause is in place.If the employee earns any additional income during the leave of absence, such income must be offset against the salary payments made by the employer, unless the parties have agreed otherwise.

Under Swiss employment law, there is generally no statutory obligation for an employer to issue a warning prior to dismissal.

However, a warning may be advisable or even necessary in certain situations. Case law recognises an exception for older employees with many years of service. In such cases, courts have held that the employer owes an increased duty of care, meaning that the employee must generally be given an opportunity — in the form of a probationary period — to improve performance or conduct before termination. Failure to observe this requirement may result in the dismissal being deemed abusive. Ultimately, the assessment depends on the specific circumstances of each individual case.

Another exception may arise in connection with immediate terminations. As a rule, no prior warning is required for termination without notice for just cause. However, if an employee has previously been warned for misconduct and explicitly threatened with immediate dismissal in the event of a recurrence, even less serious misconduct may justify immediate termination if the same behaviour is repeated.