Swiss Employee Termination Law: Notice Periods, Protections and Process

Swiss employment law operates on the principle of freedom of termination — either party may end the employment relationship by giving notice, without being required to state a reason. This makes Switzerland one of the most flexible jurisdictions in Europe for employers. However, this flexibility is bounded by notice periods, protected periods and prohibitions on abusive dismissal that every employer must understand. Getting it wrong exposes the company to compensation claims of up to six months’ salary.

The Principle of Freedom of Termination

Under Art. 335 of the Swiss Code of Obligations (OR), an employment contract of indefinite duration may be terminated by either party. Unlike many EU jurisdictions, Swiss law does not require:

• A valid reason for ordinary termination
• Prior warning or performance improvement plans (though these are strongly recommended as best practice)
• Approval from any public authority or works council
• A social selection process

This does not mean termination is unrestricted. The law imposes procedural requirements and substantive protections that, if violated, render a dismissal “abusive” (missbräuchlich) and trigger compensation.

Notice Periods

Statutory Minimum Notice Periods

Art. 335c OR sets the following minimum notice periods, measured from the end of a calendar month:

Key Rules

• End-of-month rule: Notice takes effect at the end of the month following delivery, unless the contract specifies otherwise. Example: notice given on 15 March takes effect on 30 April (1-month notice) or 31 May (2-month notice).
• Probationary period: The statutory default is one month, extendable to a maximum of three months by written agreement. During probation, the 7-day notice period applies, and notice can take effect on any day (not month-end).
• Contractual extension: Parties may agree to longer notice periods than the statutory minimum, but the same notice period must apply to both employer and employee (Art. 335a OR). A contract specifying 6 months’ notice for the employee and 1 month for the employer is void — both periods would default to 6 months.
• Shorter contractual periods: The statutory minimums can only be reduced through a collective labour agreement (GAV/CCT), and only for the first year of service.

Protected Periods (Sperrfristen)

Swiss law prohibits termination during certain periods. If the employer gives notice during a protected period, the notice is void and must be reissued after the protection ends.

Art. 336c OR — Employer Restrictions

The employer may not terminate during:

Interaction with Notice Periods

If an employee falls ill after notice has been validly given, the notice period is suspended (paused) for the duration of the protected period, then resumes and extends to the next month-end.

Example: Employee with 2-month notice period receives notice on 15 January (effective 31 March). Employee falls ill on 1 February for 45 days (in their 3rd year of employment, entitled to 90 days protection). The notice period is suspended during the illness and resumes after recovery, extending to the next month-end. The termination date shifts accordingly.

This interaction between notice periods and protected periods is one of the most complex areas of Swiss employment law. For high-stakes terminations, always calculate the potential extended termination date assuming the employee utilises full protection.

Abusive Dismissal (Missbräuchliche Kündigung)

Arts. 336–336b OR define categories of abusive dismissal. An abusive dismissal is legally valid — the employment ends — but the employee is entitled to compensation of up to six months’ salary.

Grounds for Abusive Dismissal

Dismissal is abusive if motivated by:

1. Personal characteristics unrelated to the employment — race, religion, nationality, political opinion, sexual orientation (Art. 336(1)(a))
2. Exercise of a constitutional right — provided it does not breach the duty of loyalty (Art. 336(1)(b))
3. Frustrating a claim — terminating to prevent a claim from arising (e.g., dismissing before a bonus vesting date) (Art. 336(1)(c))
4. Union membership or activity (Art. 336(1)(d))
5. Employee representative role (Art. 336(1)(d))
6. Retaliation — dismissing because the employee raised a legitimate complaint or exercised a legal right (Art. 336(1)(d))
7. Whistleblower retaliation — dismissal in retaliation for good-faith reporting of irregularities (added by revised Art. 336(1)(d))

Compensation

If a court finds the dismissal abusive, it may award compensation of up to six months’ salary (Art. 336a OR). The employee must:

1. Object in writing during the notice period (a mandatory precondition)
2. Attempt conciliation at the local conciliation authority (Schlichtungsbehörde) within 180 days of termination
3. File suit within 180 days of the failed conciliation

Important: Failure to object in writing during the notice period extinguishes the right to claim abusive dismissal. Employers should be aware that a written objection letter does not affect the validity of the termination — the employee must still leave at the end of the notice period.

Summary Dismissal (Fristlose Kündigung)

Art. 337 OR permits immediate termination without notice for “important reasons” (wichtige Gründe). Summary dismissal is the nuclear option and is justified only when the breach of trust is so severe that continuing the employment relationship, even for the notice period, is objectively unreasonable.

Accepted Grounds

Swiss courts have accepted summary dismissal for:

• Theft, embezzlement or fraud against the employer
• Persistent refusal to perform work despite warning
• Serious breach of confidentiality
• Competing with the employer during employment
• Physical violence or serious harassment in the workplace
• Falsification of credentials or qualifications

Unaccepted Grounds

Courts have rejected summary dismissal for:

• Isolated lateness or absences (unless after repeated written warnings)
• Poor performance (requires prior warning and improvement opportunity)
• Personality conflicts between colleagues
• Minor policy violations

Process for Summary Dismissal

1. Investigate promptly — the employer must act immediately after learning of the misconduct. Waiting more than 2–3 business days may be interpreted as tacit acceptance
2. Hear the employee — provide the employee an opportunity to explain before making the decision
3. Declare termination — deliver notice of summary dismissal verbally and in writing, stating the date of immediate effect
4. Document the grounds — maintain a file of evidence supporting the dismissal

Consequences of Unjustified Summary Dismissal

If a court finds that the summary dismissal was not justified, the employer owes:

• Salary for the remainder of the notice period that would otherwise have applied
• Compensation for wrongful termination — up to six months’ additional salary
• Any outstanding holiday pay, pro-rated 13th salary and bonus entitlements

Termination Process Best Practice

Step-by-Step for Ordinary Dismissal

1. Document the reasons internally — even though no reason is legally required, documenting protects against abusive dismissal claims
2. Check protected periods — verify the employee is not in a protected period (illness, pregnancy, military service)
3. Calculate the correct notice period — based on years of service and contractual terms
4. Prepare the termination letter — include the termination date, any release from duties (Freistellung), and reference to the employee’s right to request a work certificate
5. Deliver in person — hand the letter to the employee in a private meeting, with a witness present. If personal delivery is impossible, send by registered post (the notice takes effect on delivery, not posting)
6. Conduct an exit meeting — discuss handover, return of equipment, final salary calculation and pension transfer
7. Issue the work certificate — the employee is entitled to a work certificate (Arbeitszeugnis) at any time upon request (Art. 330a OR)

Release from Duties (Freistellung)

Employers may release an employee from the duty to work during the notice period (“garden leave”). Key points:

• The employee remains employed and is entitled to full salary, pension contributions and all benefits during the release period
• Outstanding holiday entitlements may be set off against the release period, but only if the release period is significantly longer than the holiday balance
• Non-compete clauses may be unenforceable if the employer terminates without the employee being at fault
• The employee must remain available and refrain from competitive activity during the release period

Final Salary Calculation

The final pay must include:

Collective Redundancies

If the employer intends to dismiss 10 or more employees within 30 days (in a business with 20–99 employees) or 10% of the workforce (in a business with 100–299 employees), the collective redundancy rules of Art. 335d–335g OR apply:

1. Consultation obligation — the employer must consult with employees or their representatives before making final decisions
2. Notification — the cantonal employment office (RAV/ORP) must be notified in writing
3. 30-day waiting period — dismissals cannot take effect until 30 days after notification to the cantonal office
4. Social plan — mandatory for companies with 250+ employees undertaking mass redundancies

For companies navigating significant restructuring, the cost implications of collective redundancies — including potential social plan obligations — should be modelled carefully in advance.

Work Certificate (Arbeitszeugnis)

Every employee is entitled to a work certificate upon request (Art. 330a OR). Swiss law requires that the certificate be:

• Truthful — it must accurately reflect the employee’s performance and conduct
• Benevolent — it should not unnecessarily hinder the employee’s future career
• Complete — covering the nature and duration of employment, quality of work and conduct

The tension between truth and benevolence has generated extensive case law. A negative or coded certificate can be challenged in court, and employers may be liable for damages if an unfair certificate demonstrably harms the employee’s career prospects.

Donovan Vanderbilt is a contributing editor at ZUG BUSINESS, the institutional intelligence publication of The Vanderbilt Portfolio AG, Zurich. His coverage spans Swiss employment law, workforce regulation and corporate compliance for international businesses operating in Switzerland.