Employment and labor law governs the most important issues surrounding the employment agreement and its termination. For employees in Switzerland, it is crucial to know their employee rights — for example, in the event of termination, when renegotiating an employment agreement, during wage negotiations, when a contract is amended, when negotiating a dissolution agreement, or in connection with incapacity to work.
Employment Law: Employment Agreement, Dismissal, Resignation and Dissolution Agreement, Reference Letters, and Insurance Issues
Dismissal: What Rights Do Employees Have when the Employer Gives Notice?
The termination of an employment agreement has legal and financial consequences. If the employer dismisses an employee, employees should know their rights. Not every dismissal is automatically valid, and employees should be aware of their rights and the applicable statutory and contractual provisions. The key factors are whether notice periods were observed and whether statutory defenses apply. In certain cases, employees can challenge the dismissal or are entitled to compensation.
Invalid Dismissal
In certain situations, employees enjoy special defenses. In the event of illness, following an accident, or during pregnancy, an employment agreement cannot simply be terminated. A dismissal during this period is generally void.
Unfair Dismissal
Even if a dismissal is formally valid under Swiss law, it may be deemed unfair, for example, if the employer gives notice due to the employee’s personal characteristics or after an employee has asserted their rights. In such cases, the employee may request compensation from the employer. In this situation, it is particularly important to act promptly. Employees who have been dismissed should seek legal advice from an expert immediately after notice is given. Those who seek and negotiate their compensation out of court may, depending on the circumstances, avoid long and expensive court proceedings.
Dismissal with Immediate Effect
A dismissal with immediate effect ends the employment agreement immediately. It is permitted only in serious cases, such as gross misconduct on the part of the employee. In such cases, it is worth carefully examining the situation and assessing the possibility of compensation, as the employee will no longer receive wages from the day of the dismissal with immediate effect. The reference letter must also be carefully reviewed in this case. Employees who have been dismissed with immediate effect should seek legal advice from an expert before or immediately after notice is given.
Garden Leave
Following a dismissal, the employer may suspend the employee from their work obligations. Suspension is generally irrevocable. The employee is then released from the obligation to work but continues to receive wages until the end of the notice period. It is important to clarify which rules apply (for example, taking vacation or remaining available to work). As a rule, the employee’s fiduciary duties remain unchanged until the end of the contract, which means that earning income from other sources during the garden leave is not permitted.
Unfit to Work During the Notice Period
If the employer gives notice, the notice period is generally suspended while the employee is unfit to work. This means that the notice period is extended. The maximum duration of suspension is specified by statutory law (waiting period).
It is important for employees to notify the employer of their illness immediately and to submit a medical certificate.
Workplace-related incapacity to work can raise additional legal issues. Such a situation may exist if the incapacity to work arises in connection with the workplace, for example due to overwork, workplace conflicts, or bullying.
Early Termination of Employment Through a Mutually Agreed Dissolution Agreement
Employment can be terminated early through a dissolution agreement. In this agreement, the parties may deviate from the statutory provisions regarding termination. For example, the notice period can be contractually extended or shortened. The parties may also agree on a lump-sum payment, outplacement, or other support in the job search, which employers regularly offer in practice during mass layoffs.
Other Ways of Termination: What You Should Be Aware of.
The termination of employment has legal and financial consequences. Different rules apply depending on the situation, when the employee resigns or when both parties mutually agree on terminating employment (dissolution agreement). Knowing your rights helps you avoid disadvantages and negotiate more effectively.
Resignation
An employment agreement also ends when the employee resigns. Regardless of the reason for resignation, notice periods and contractual provisions must be observed. It is important to clarify in a timely manner until when obligations under employment law remain in effect (especially wages, fringe benefits such as bonuses, and work duties), what the termination process entails, and what other benefits an employee is entitled to in the event of termination.
Dissolution Agreement, Dismissal or Resignation
A dissolution agreement is a form of contract amendment and can be entered into between an employer and an employee. This way of termination may offer more flexibility to the parties than by dismissal or resignation under statutory law, as the parties contractually define the termination and the according terms. Typical benefits include an individually agreed-upon departure date, financial compensation, and provisions regarding garden leave.
A dissolution agreement also carries risks. Seek legal advice from an expert when negotiating contract amendments and before concluding a dissolution agreement.
Other Employee Rights
When employment ends, the question arises as to what benefits an employee is entitled to. Ungranted vacation days and overtime generally must be compensated or paid out. Outstanding wage claims, bonuses, or expenses should also be reviewed. A clear settlement of financial claims and resolution of the terms of termination help avoid future conflicts.
Has Your Employment Agreement Been Terminated? Take This Quick Test to Assess Your Entitlements.
Through dismissal, resignation or by amendment (dissolution agreement).
A contract to terminate the employment agreement.
If this has been agreed upon or if special circumstances occur.
These must generally either be taken as time off or paid out.
Generally, upon termination of the employment agreement.
Yes, there is an increased duty of care toward employees approaching retirement. This depends, for example, on age, length of service, proximity to retirement, work performance, and the severance offer (if any).
Unfit to Work: What Consequences Can the Employee Expect?
In the event of an employee’s illness or accident, or a female employee’s pregnancy, special defense provisions apply. This defense is limited to a specific period (waiting period). During this time, the employee may not be dismissed. If the inability to work starts after the employee is given notice, the notice period is extended accordingly.
A Reference Letter as a Record of Performance: What Are the Employee’s Entitlements?
Under employment law, employees are entitled to a reference letter. This serves as a record of their work performance. The reference letter must meet certain formal and substantive requirements and be truthful and favorably worded. There are two types:
- Interim reference letter: An employee can request one any time during the employment relationship (in principle, even during the probationary period). Always request an interim reference letter immediately after dismissal or before your supervisor or manager will change.
- Final reference letter: It is issued on the last day of the employment relationship.
A reference letter is an important document when searching for a new position and is often required during the recruitment process. Employees should request the interim reference letter from their employer well in advance.
The reference letter is a key document for professional development. It must accurately reflect the work performed while not unnecessarily hindering future career opportunities. In practice, questions frequently arise regarding the wording, content, and enforcement of corrections.
The burden of proof is of central importance: Anyone who requests or disputes a specific assessment in the (interim or final) reference letter must also be able to substantiate their claim in the event of a dispute.
Right to a Reference Letter
Employees are entitled to a reference letter at any time — both during employment and after. A distinction can be made between a simple reference letter (only details regarding the work performed) and a qualified reference letter (additional evaluation of performance and conduct). In practice, the qualified reference letter is standard, but the employee can generally choose the form of the reference letter freely. The reference letter must be clearly, completely, and comprehensibly worded. Unclear or contradictory statements can be problematic and are not permitted.
A Favorable and Truthful Employment Reference
A reference letter must meet two requirements: It should be worded favorably while also reflecting the employee’s actual performance. In practice, this combination often leads to standardized phrasing that can be interpreted in different ways. Hidden negative statements are not permitted, which is why a careful review of the reference letter is advisable.
Burden of Proof in the Event of a Dispute
If there are disagreements regarding the content or wording of a reference letter, the question of the burden of proof arises. Put simply:
- Whoever demands a better evaluation must prove that the corresponding performance was delivered.
- The employer, on the other hand, must be able to substantiate negative evaluations.
This allocation of the burden of proof is crucial when changes to the reference letter are requested and negotiated between the parties.
Correction and Enforcement
If a reference letter is incomplete, unclear, or factually incorrect, a correction may be requested. In practice, this is initially handled through direct communication with the employer. An amended job reference can often be obtained through legal negotiations without resorting to court proceedings.
Do You Have Questions About Your Reference Letter? – Take the Quick Test Here.
Yes, both during and after employment.
The reference letter must not unjustifiably hinder professional development, but it must correspond to the facts.
No, unclear or deliberately misleading wording is not permitted.
Yes, for example, if a reference letter is factually incorrect, unclear, or incomplete.
In the event of internal changes (such as changing your position, the supervisor or the manager), when conflicts are brewing, or before or immediately after dismissal.
Social Security in Labor Law: What Social Security Benefits Are Employees Entitled To?
Social insurance plays a central role when employment ends, for example, to compensate for lost wages. Employees should know which insurance benefits are provided and how long the coverage lasts.
Salary Insurance
It is very common for employers to take out salary insurance for their employees, thereby ensuring continued wage payments if an employee becomes unfit to work for a longer period. Salary insurance primarily safeguards wages in the event of a prolonged illness. Depending on the contract and terms, the insurance covers a portion of the lost wages when the employer is no longer obligated to continue paying wages. It is important to carefully review the insurance terms, as the duration and amount of benefits may vary.
Accident Insurance (UVG)
Employers are generally required to take out insurance for their employees against occupational and non-occupational accidents. Accident insurance covers medical expenses and pays daily benefits (salary compensation) in the event of incapacity to work due to an accident. In cases of permanent disability, disability pensions or compensation for loss of integrity may also be provided. Insurance coverage generally continues after employment.
Unemployment Insurance (ALV)
Unemployment insurance provides financial support to employees who are unable to find new employment following termination of their employment agreement. Eligibility requires that contributions were made prior to becoming unemployed (typically, a contribution period of at least 12 months is required) and that the conditions under insurance law are met. In addition to daily benefits, unemployment insurance also offers financial support and guidance for job searches and continuing education programs.
Your Next Steps – Legal Advice on Employment and Labor Law in Zurich
Issues related to employment and labor law and employment agreements are complex. If you are unsure about your rights or how to proceed in the event of termination, it is worth seeking personalized guidance and legal advice. Alternatively, have us review your reference letter to ensure it does not negatively impact your career prospects.
Contact Rechtsatelier® Zurich for a personal consultation on employment law—so you understand your legal situation and avoid any disadvantages
Our legal services for employees:
- Legal advice (for example, regarding a reference letter, incapacity to work, or termination)
- Legal coaching
- Legal negotiation (e.g., for negotiating an employment agreement, wage negotiations, bonus negotiations, negotiating a contract amendment, termination of a contract, or a dissolution agreement)
- Mediation with the employer and other parties to the dispute