Swiss employment contracts are governed by Articles 319–362 of the Code of Obligations (OR). The law does not require a written contract — employment can arise verbally — but written contracts are standard and essential for clarity. This guide covers what Swiss law requires in an employment contract Switzerland, what the key clauses must say, and the non-negotiable elements that protect both employer and employee.
Why Verbal Contracts Fail Foreign Employers
Swiss law does not mandate a written employment contract — a verbal agreement is legally binding. This trips up foreign entrepreneurs who assume informality works both ways. It does not. Without a written contract, the employee’s stated version of the terms is generally presumed correct in disputes. We have seen founders lose salary disputes because they had no signed document specifying a bonus structure.
Three clauses that must be in writing to be enforceable:
- Non-compete agreements (Art. 340 OR) — an oral non-compete is void
- Fixed-term arrangements — without written confirmation, the contract is presumed open-ended
- Specific working conditions (overtime waiver, intellectual property assignment)
In practice, all Swiss employment contracts should be in writing. For foreign employees requiring work permits, a written contract is mandatory for the permit application. See our work permit Switzerland guide for full documentation requirements.
Required and Recommended Contract Elements
Swiss law requires the employer to inform the employee in writing about:
- Name and address of both parties
- Start date
- Job description and role
- Salary (amount, currency, payment interval)
- Working hours (weekly)
- Holiday entitlement
Additional terms should be documented:
- Probation period (length, notice during probation)
- Notice periods
- Place of work
- Collective agreement applicable (if any)
- Any special provisions (non-compete, confidentiality, intellectual property assignment)
Probation Period
Swiss law allows a probation period of up to 3 months (Art. 335b OR). During probation:
- Either party can terminate with 7 days’ notice (no end-of-month requirement)
- Protected period rules (illness, accident, pregnancy) do not apply to prevent termination during probation — notice still runs during a sick period
By agreement or collective labour agreement (GAV), probation can be extended to a maximum of 6 months.
If no probation is specified in the contract, a default probation of 1 month applies.
Salary
Swiss law sets no statutory national minimum wage (except for cantons that have introduced cantonal minimums, and GAV-covered industries with negotiated minimums).
Payment: Monthly in arrears is standard. Salary must be paid in CHF unless the employee works primarily abroad.
13th month salary: Not legally mandated in the OR, but extremely common in Switzerland and required by many GAVs. If a 13th month is agreed (explicitly or through practice), it becomes a contractual entitlement — employers cannot unilaterally withdraw it.
Bonus: Discretionary bonuses (Gratifikation) must be distinguished from contractual bonuses (Bonus). A discretionary Gratifikation can be withheld or reduced by the employer; a contractual Bonus (linked to performance metrics or paid consistently) becomes an entitlement.
For full payroll obligations — including social insurance deductions — see our accounting Switzerland overview.
Working Hours
The maximum statutory working week in Switzerland:
- 45 hours/week for office workers, technical employees, and retail
- 50 hours/week for other categories
Overtime is compensated either by time-off in lieu or a 25% salary premium — unless the employee is in a senior management role or the contract expressly waives overtime pay (which is legally possible above certain salary thresholds).
Holiday Entitlement
Statutory minimum:
- 4 weeks (20 working days) per year for employees aged 20+
- 5 weeks (25 working days) for employees under 20
Many employers offer 5 weeks as standard market practice. GAVs often set higher minimums. Additional public holidays (8–12 per canton) are on top of annual leave.
Non-Compete Clauses (Konkurrenzverbot)
Non-compete clauses are valid in Switzerland if:
- The employee has access to clientele, trade secrets, or manufacturing knowledge
- The clause is limited to a specific geographic area, business sector, and time period (maximum 3 years under Art. 340a OR)
- It is proportionate to the legitimate interest being protected
Financial compensation: Swiss law does not require financial compensation for the non-compete period (unlike Germany and some other jurisdictions). An employee is simply bound by the clause after termination.
Employer-triggered termination: If the employer terminates without good cause, or if the employee terminates for good cause attributable to the employer, the non-compete clause lapses automatically.
Termination in Practice: What Actually Happens
The Code of Obligations sets the framework for termination, but the practical execution catches many foreign employers off guard. A real example illustrates the friction points.
An employer terminated an employee with two months’ notice (the standard statutory period for 2–9 years of service under Art. 335c OR). The termination letter specified:
- Vacation payout: The employee had accrued but unused vacation days. Under Swiss law, unused vacation must be paid out in cash upon termination unless the employer can demonstrate that the employee had a genuine opportunity to take the days during the notice period. If notice is short or the workload is heavy during the notice period, the payout is effectively automatic.
- Release of claims (Saldoerklärung): The employer requested that the employee sign a mutual release of claims as part of the separation agreement. Under Swiss law, an employee can waive claims arising from mandatory provisions of the OR only after they have become due — not prospectively. A blanket release signed at the start of employment is unenforceable. The release must be negotiated at the point of separation, covering specific identified claims.
- Continued salary during notice: Swiss law requires full salary payment through the entire notice period, even if the employee is released from the duty to work (Freistellung). Garden leave is common in practice but does not reduce the salary obligation.
The blue pen rule for work permit renewals: One detail that trips up employers of foreign workers: the renewal application for a Swiss work permit must be physically signed in blue pen. Digital signatures are not accepted by the cantonal migration offices. This is not a legal requirement under the Foreign Nationals and Integration Act — it is an administrative practice of the cantonal authorities. If the employee or employer submits a digitally signed renewal, it will be returned, adding 2–4 weeks to the processing timeline. Plan accordingly.
Confidentiality
Employees have a statutory duty of confidentiality about employer business secrets during and after employment (Art. 321a/321b OR). A contractual confidentiality clause reinforces this and can specify what counts as confidential information.
For companies with intellectual property assets, see our IP protection Switzerland guide.
Intellectual Property
Work created by an employee in the exercise of their employment duties belongs to the employer (Art. 332 OR). The employee must transfer all rights to inventions made in connection with their work. Inventions made outside working hours on unrelated matters belong to the employee.
Case Study: Contract Gaps in a Cross-Border Hire
A European tech founder relocating from London to Switzerland hired two developers before his AG was fully registered in the Commercial Register. The employment contracts were drafted in English using a UK template, with no Swiss-specific clauses. Three problems surfaced within six months: (1) the contracts contained no probation period clause, so the default one-month probation applied — the founder had assumed UK-style six-month probation was in effect; (2) the non-compete clause referenced English law and was unenforceable under Swiss Art. 340 OR; (3) the overtime waiver was drafted for employees earning below the CHF 120’000 threshold where Swiss courts have overturned such waivers. All three issues required contract amendments, employee re-negotiations, and legal fees that exceeded the cost of proper Swiss contract drafting from the start.
Fixed-Term vs Open-Ended Contracts
Open-ended (unbefristete) contracts: Terminated by either party with proper notice. Standard for ongoing employment relationships.
Fixed-term (befristete) contracts: End automatically at the agreed date — no notice required. Restrictions:
- Fixed-term contracts should not be used simply to avoid notice obligations (courts can recharacterise repeated short fixed-term contracts as open-ended)
- Maximum duration is not statutorily capped but repeated renewal without objective justification can be challenged
Trial-then-convert: A fixed-term contract that is continued after expiry without formal renewal becomes an open-ended contract.
Applicable Law and Jurisdiction
Swiss-law contracts must be governed by Swiss law for employees ordinarily working in Switzerland (mandatory under Swiss PIL Act). Choice of a foreign governing law for a Swiss-domiciled employee working in Switzerland will be overridden by Swiss mandatory employment law provisions.
For a full overview of the legal framework, see our employment law Switzerland pillar guide.
Collective Labour Agreements (GAV)
If your industry sector has a binding GAV (generally binding / allgemein verbindlich erklärt), its terms override contrary contract terms to the extent they are more favourable to the employee. Key GAV sectors: construction, hospitality (L-GAV), cleaning, healthcare, metalworking, retail.
Before drafting a contract, confirm whether a binding GAV applies. Non-compliance with a binding GAV can result in back-pay claims plus penalties. The State Secretariat for Economic Affairs (SECO) maintains the official register of generally binding collective agreements — search it at seco.admin.ch.
You can also verify your obligations on admin.ch, and consult the statutory framework directly via fedlex.admin.ch.
Frequently Asked Questions
Can I pay an employee in a foreign currency?
Only if the employee works primarily in a foreign country. For Swiss-based employees, payment must be in CHF.
Is a non-compete clause enforceable if the employer fires the employee?
If the employer terminates without good cause — i.e., there is no fault by the employee — the non-compete clause lapses. If the employee is terminated for cause (serious misconduct), the non-compete clause remains in force.
What are the notice periods in Switzerland, and can they be shortened?
Statutory notice periods under Art. 335c OR are: 1 month during the first year of employment, 2 months from the 2nd to the 9th year, and 3 months from the 10th year onward. Notice must be given to the end of a calendar month. These periods can be extended by contract or collective agreement but cannot be shortened below the statutory minimum (except during probation, where 7 days applies). In practice, many senior contracts specify 3 or 6 months’ notice from the outset. A common mistake: employers assume they can pay in lieu of notice without the employee’s consent. Under Swiss law, the employee has a right to work during the notice period unless the employment contract explicitly permits Freistellung (release from duty to work).
What happens to accrued vacation when employment ends?
Unused vacation must be paid out in cash. The only exception is if the employer can demonstrate the employee had a genuine, unrestricted opportunity to take the vacation during the notice period and chose not to. In terminations with short notice periods or heavy workloads, this exception rarely applies. Budget for full vacation payout.
Must the employment contract be in German, French, or Italian?
No statutory language requirement exists for private employment contracts. English-language contracts are common for international employees. However, in disputes before Swiss courts, translations will be required.
Is a written employment contract required in Switzerland?
Swiss law does not require written contracts for most roles — oral agreements are legally binding. Written contracts are strongly recommended because the burden of proof in disputes falls on the party asserting a term.
What is the default probation period in Switzerland?
If no probation period is specified, a default probation of 1 month applies. By agreement, it can be extended to a maximum of 3 months, or up to 6 months under a collective labour agreement.
Is a 13th month salary mandatory in Switzerland?
Not under the Code of Obligations, but it is extremely common and required by many collective labour agreements. Once agreed or established through consistent practice, it becomes a contractual entitlement.
What is the maximum duration of a non-compete clause in Switzerland?
Under Art. 340a OR, a non-compete clause is capped at 3 years. It must also be limited to a specific geographic area and business sector to be enforceable.
What are the statutory minimum holiday entitlements in Switzerland?
Employees aged 20 and over are entitled to 4 weeks (20 working days) per year. Employees under 20 receive 5 weeks. Many employers offer 5 weeks as standard. Cantonal public holidays are in addition to annual leave.
Can a fixed-term contract be converted to an open-ended one?
Yes. A fixed-term contract that continues after its agreed end date without formal renewal automatically becomes an open-ended contract under Swiss law.
What happens if an industry collective agreement (GAV) applies to my business?
If a binding GAV applies, its terms override any less favourable contract terms. Non-compliance can result in back-pay claims and penalties. Always verify whether a GAV covers your sector before drafting contracts.
Get Expert Advice on Your Swiss Employment Contracts
Swiss employment contracts carry obligations that are easy to miss — from GAV coverage to the precise wording of non-compete clauses. Morgan Hartley and the Lawsupport team advise employers on compliant contract drafting, probation periods, and termination provisions tailored to Swiss law.
Request a Free Assessment — contact us to discuss your employment contract requirements:
- Phone: +41 44 51 52 592
- Email: [email protected]
- Address: Grafenauweg 4, 6300 Zug, Switzerland
Related guides: Employment law Switzerland | Work permit Switzerland | B permit Switzerland | Accounting Switzerland
Lawsupport (Morgan Hartley Consulting GmbH) | Grafenauweg 4, Zug | +41 44 51 52 592 | [email protected]