12 February 2020

Wrongful termination of employment relationships

  • Articles
  • Legal
  • Employment / Immigration

Despite the principle of freedom to dismiss in Switzerland the termination of an emplyoment realtionship may be considered wrongful and lead to a compensation claim.

  • Manuela Fuchs

    Senior Legal Associate

  • Michèle Stutz

    Legal Partner

Principle: Freedom to dismiss

In Switzerland, the principle of freedom to dismiss applies to employment relationships based on private law. Both contracting parties (i.e. the employer and the employees) may terminate the employment contract taking into account the contractual or statutory notice period. Neither the employer nor the employee needs any special reason for a termination. Accordingly, this situation significantly differs from the laws of other European countries such as Germany or France.

Cases of wrongful termination

Despite the freedom to dismiss, a termination may be considered wrongful. Art. 336 CO stipulates cases of wrongful termination. In principle, both a dismissal by the employer and by the employee may be qualified as wrongful. In practice, however, mainly employees claim that they have been wrongfully dismissed by the employer. Therefore, the following refers to employers’ notices of termination.

In practice, the so-called "revenge termination" is frequently invoked. A termination is qualified as “revenge termination” if the employment relationship is terminated because the employee asserted claims under the employment relationship in good faith. There are numerous court decisions on “revenge terminations”. For example, a termination has been qualified as wrongful when an employee demanded reimbursement for unlawful wage deductions from the employer. The termination of an employee who refused to increase his contractual workload (temporarily) was also considered wrongful.

Further, the law considers a notice of termination as wrongful if it is given solely in order to prevent that claims based on the employment relationship arise. For example, a notice of termination was considered wrongful as it was given shortly before the employee would have received a seniority gift or a bonus. However, the notice of termination is only to be considered wrongful if it is exclusively given to prevent a claim.

The list in Art. 336 CO is not conclusive. Due to the extensive decisions of the Federal Supreme Court, a termination may also be wrongful for other reasons than stated by law. For example, special requirements must be met in case an employment relationship with an older employee who has already worked in the company for a very long time is terminated.

Furthermore, special attention should be paid to a termination in the event of a conflict. Due to the employer’s duty of care he is obliged to take reasonable measures to defuse the conflict before a notice of termination is given. This includes, for example, discussions with the employee, team meetings or involving a coach.

Finally, a notice of termination may also be wrongful in case it is linked to an unreasonable deterioration of the employee’s working conditions, which is neither necessary for operational nor market reasons or if the deterioration of working conditions is to be enforced on the employee without observing the applicable notice period.

Consequence: compensation claim

Even if the termination was wrongful, it remains legally binding. This means that the employment relationship will be terminated after the notice period has expired (please note that the Federal Act on Gender Equality [GEA] provides an exception). However, the employee is entitled to a compensation payment which is limited to a maximum of six monthly wages. The exact amount of compensation is at the court’s discretion. The circumstances of the specific case have to be taken into account when determining the amount. In practice, high compensations (i.e. five or six monthly wages) are rather rare.

Important: The following deadlines must be met

If an employee wants to claim compensation from the employer due to an alleged wrongful termination, he must observe the following two deadlines:

1. Objection period: By the end of the notice period at the latest, the employee must raise an objection to the dismissal with the employer in writing. The objection must be received by the employer no later than the last day of he notice period.

2. Deadline for the claim:The employee must initiate legal proceedings within 180 days after termination of employment. It is sufficient initiating conciliation proceedings. The deadline is met if the claim is filed on the last day of the 180 days period. The post stamp is decisive.

If one of the above mentioned two deadlines is not met, the compensation claim is forfeited.
Back