Employment contracts in Switzerland

In Switzerland, employment contracts are primarily regulated by the Code of Obligations (CO), as well as the Federal Act on Labour (LTr) and its ordinances (OLT). These laws provide a clear legal framework for the formation, drafting, modification, and termination of employment contracts (art. 319 et seq. CO). Contract formation is subject to the principle of contractual freedom (art. 19 CO), meaning parties are free to negotiate the terms and conditions of their agreement, subject to mandatory legal provisions and other stipulations in collective labor agreements (CCT).

An employment contract is defined as an agreement where an individual (the employee) commits to work for another person or company (the employer) in exchange for remuneration. Employment contracts can be for a fixed term (CDD) or an indefinite term (CDI), depending on the company’s needs and the parties’ wishes.

Types of contracts (CDI, CDD, Temp, etc.)

Indefinite Term Contract (CDI): Most common in Switzerland. It signifies a stable, enduring employment relationship without a time limit. Either party can terminate it, subject to a notice period agreed upon by the parties or specified by law or a collective agreement.

Fixed Term Contract (CDD): For limited duration and can be renewed. Used for seasonal jobs, temporary replacements, or specific projects requiring additional workforce.

Temporary Employment Contract: Between a temp agency and an employee, who is then made available to a client company for a specified duration. Used for specific or seasonal needs.

Part-Time Contract: For a definite or indefinite duration, with reduced working hours compared to full-time employment. Work arrangements are defined in the contract.

Contract drafting and essential clauses

Contract drafting should be precise and complete to avoid later conflicts or disagreements. Essential clauses include:

  • Parties: Names and addresses of the employer and employee.
  • Position: Employee’s job title and assigned tasks.
  • Percentage: The employee’s working rate.
  • Remuneration: Base salary and any additional benefits, bonuses, or allowances.
  • Working Hours: Work hours, rest days, and paid holidays.
  • Duration: Contract duration (CDI, CDD, etc.) and renewal or termination modalities.
  • Working Conditions: Specific work conditions like workplace location, uniform requirements, etc.
  • Employee Obligations: Professional duties like confidentiality and diligence.
  • Termination Conditions: Modalities of contract termination, including notice period and reasons.
  • Special Clauses: Negotiable clauses like non-compete, geographical mobility, profit-sharing, etc.

Note that some clauses are subject to legal and regulatory limits, such as the non-compete clause.

Modification and termination of contract

Various options exist for modifying or terminating a contract in Switzerland, depending on circumstances. Modifications require employee consent for essential clauses. Termination methods include:

  • Fixed-Term Contracts: No notice needed for termination (art. 334 para. 1 CO).
  • Indefinite-Term Contracts: Either party can terminate, subject to notice periods (art. 335 et seq. CO). During the probationary period (usually the first month), termination can occur at any time (art. 335b para. 1 CO).
  • Protection Against Dismissal: In case of illness, accident, or pregnancy, employees are protected from dismissal for specific durations depending on their years of service (art. 336c para. 1 let. b and c CO).
  • Abusive Termination: Compensation required if a party terminates the contract abusively (art. 336a CO).
  • Immediate Termination for Just Cause: Possible if a grave fault makes the continuation of employment impossible (art. 337 CO). Serious breaches include theft, violence, harassment, or disclosure of trade secrets.

Legal advice is recommended for any contract-related difficulties or disagreements, whether you are an employer or employee, to protect your rights and interests. This is especially important as defending your rights often involves adhering to deadlines and other legal requirements.

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