In Switzerland, employment contracts are primarily governed by the Swiss Code of Obligations (CO), but also by the Federal Labor Act (LTr) and its ordinances (OLT). These regulations provide a clear legal framework for the creation, drafting, modification, and termination of employment contracts (Art. 319 et seq. CO). The conclusion of an employment contract is subject to the principle of contractual freedom (Art. 19 CO), meaning that the parties are free to negotiate the terms and conditions of their agreement, subject to mandatory legal provisions and those outlined in collective labor agreements (CCT). An employment contract can be defined as an agreement where an individual (the employee) commits to work for another person or a company (the employer) in exchange for remuneration. Employment contracts can be for a fixed term (CDD) or an indefinite term (CDI), depending on the needs of the company and the parties’ preferences.
Types of contracts (CDI, CDD, Temporary, etc.)
- Indefinite Term Contract (CDI): The most common type of contract in Switzerland, providing a stable and lasting employment relationship without a set end date. Either party can terminate the CDI, subject to notice periods agreed upon or specified by law or collective agreements.
- Fixed Term Contract (CDD): A contract for a limited duration, which can be renewed multiple times. CDDs are typically used for seasonal work, temporary replacements, or specific projects requiring additional labor.
- Temporary or Interim Contract: This contract is between a temporary employment agency and an employee, who is then assigned to a client company for a specified period. It is often used to meet short-term needs or handle seasonal fluctuations.
- Part-Time Contract: This can be for a fixed or indefinite term, with reduced working hours compared to a full-time job. The specifics of part-time work are defined in the contract, tailored to the company’s needs and the employee’s preferences.
Drafting and essential clauses
A well-drafted employment contract should be precise and comprehensive to avoid conflicts or misunderstandings later on. Essential clauses include:
- Parties: Names and addresses of both the employer and the employee.
- Position: The role occupied by the employee and the tasks assigned.
- Workload: The percentage or rate of employment.
- Remuneration: Base salary and any benefits, bonuses, or perks.
- Working Hours: Work hours, rest days, and paid leave.
- Duration: Length of the contract (CDI, CDD, etc.) and renewal or termination terms.
- Working Conditions: Specific conditions such as workplace location, uniform requirements, etc.
- Employee Obligations: Professional duties, confidentiality, diligence, etc.
- Termination Conditions: Notice periods, grounds for termination, etc.
- Special Clauses: Negotiable clauses such as non-compete agreements, geographical mobility, profit-sharing, etc.
Certain clauses are subject to legal and regulatory limits. For example, non-compete clauses must be justified by the company’s legitimate interests and comply with legal form and substance requirements.
Modification and termination of the contract
Employment contracts in Switzerland can be modified or terminated in various ways, depending on the circumstances. If both employer and employee agree, a contract can be modified. For changes to essential terms, the employee’s consent is required.
Termination can occur in different forms:
- Fixed-Term Contracts: No notice is required to terminate a CDD at its conclusion (Art. 334 para. 1 CO).
- Indefinite Term Contracts: Either party can terminate, but notice periods must be observed (Art. 335 para. 1 CO).
- Probation Period: Typically the first month of employment, during which either party can terminate the contract at any time (Art. 335b para. 1 CO).
Employees on sick leave or who have suffered an accident are protected from dismissal by the employer. This protection varies based on the length of service: 30 days during the first year, 90 days from the second to the fifth year, and 180 days from the sixth year onward (Art. 336c para. 1 let. b CO). Women are also protected during pregnancy and for 16 weeks following childbirth (Art. 336c para. 1 let. c CO).
If a party terminates the contract abusively, compensation is required (Art. 336a CO). For serious misconduct making continued employment impossible, the contract can be terminated immediately without notice (Art. 337 CO). Serious misconduct includes significant violations such as theft, violence, harassment, or disclosure of trade secrets.
Given the complexities of employment law, it is advisable for both employers and employees to consult a labor law attorney in case of disputes or difficulties to protect their rights and interests, especially considering deadlines and other obligations.
