01 April 2025

Phased Retirement Model in Switzerland: Opportunities and Legal Aspects

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  • Employment / Immigration

The part-time retirement model in Switzerland: opportunities, legal aspects, and especially employment contract design for a flexible and financially secure retirement.

  • Natascha Figoutz

    Legal Associate

  • Michèle Stutz

    Legal Partner

The transition from working life to retirement is a significant step and should be well planned. In addition to partial or early retirement, the phased retirement model provides a possible solution to facilitate this transition. In countries such as Germany and Austria, this model is already well established and legally anchored. But does this model also work in Switzerland, and what legal aspects need to be considered?

1. What is the Phased Retirement Model?

There are various forms of phased retirement. The most common is the so-called block model. Working time is divided into two phases: the working phase and the release phase. In the first phase of phased retirement, the employee continues to work full-time at half their salary, thus accruing a credit with the employer. This phase typically lasts for half of the total phased retirement period. In the second half, the employee is released from work but continues to receive a part-time salary. The advantage for the employee is that they receive a regular income throughout the entire period until reaching the statutory reference age.

  • Example: The employee works full-time for two years while receiving 50% of their original salary (working phase). In the following two years, they are fully released from their work obligations but continue to receive 50% of their salary (release phase).

2. Legal Basis in Switzerland

Switzerland has no specific legal provisions for the phased retirement model. Likewise, there are currently no court rulings or established legal opinions on the matter. Implementation therefore depends on individual agreements between employer and employee as well as industry-specific regulations.

3. Benefits for Employees and Employers

The phased retirement model enables employees to remain employed with a regular income until their official retirement. In the second phase, they are released from their work obligations but still receive a salary. The advantages for employees are clear: in practice, they can retire before reaching the statutory reference age while remaining employed and receiving a regular income until that point. For employers, one potential benefit of the phased retirement model is that it fosters employee retention, especially when offered as an attractive option for older employees. This can reduce turnover and help companies retain experienced professionals for longer.

4. Contractual Freedom of the Parties: Agreements in the Employment Contract

Due to the lack of legal provisions, the details of the phased retirement model must be contractually established. This can be done either by supplementing an existing employment contract or by concluding a new one. The phased retirement model can be designed flexibly to meet the needs of both parties. Important points that should be explicitly regulated include:

  • Workload and Salary: A reduction in working hours and a corresponding salary adjustment must be clearly defined in the contract. Typically, the employee works full-time in the first phase but receives only a reduced salary (e.g., half), while in the second phase, they are fully released from work but continue to receive the reduced salary (see example above).
  • Duration: The total duration of phased retirement is contractually agreed upon and usually ranges from four to six years. The working phase typically lasts two to three years, followed by an equally long release phase.
  • Protection Against Dismissal: General labor law provisions apply even within the framework of phased retirement. This means that dismissals must comply with legal or contractual requirements.
  • Social Security Aspects: A salary reduction negatively impacts social security benefits, particularly disability pensions, retirement capital, daily sickness benefits, and death benefits. Since pension fund contributions are usually calculated proportionally to salary, a salary reduction regularly leads to lower retirement benefits. Employees should be informed in detail about the impact on their entitlements.

5. Labor Law Pitfalls and Challenges

Implementing the phased retirement model can present labor law challenges. For example, what happens if one party terminates the employment contract before the entire phased retirement period is completed (if this option is possible, which is usually the case), the employee falls ill, or takes up secondary employment during the release phase? It is also essential to clarify whether there is an entitlement to bonuses during the release phase or whether a non-compete clause applies. These and other aspects should be explicitly regulated in the employment contract to prevent future conflicts.

6. Conclusion

The phased retirement model offers advantages for both employees and employers but requires careful planning and consideration of legal and social security regulations. A well-drafted contractual agreement is essential to avoid future uncertainties. With the right agreements in the employment contract, the phased retirement model can serve as an attractive tool for transitioning into retirement and enhancing employee retention.

Our labor law experts are happy to assist you in legally structuring phased retirement models for both employers and employees. Get tailored advice to find the optimal solution for your specific situation. We look forward to hearing from you.

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