Swiss Employment Law: Contracts, Termination & Working Conditions

Swiss employment law is primarily governed by the Code of Obligations (OR Art. 319-362) and the Labour Act (ArG). The system is characterised by freedom of termination — either party can end the employment relationship with notice, without stating a reason. Statutory minimum notice periods range from 7 days during probation to 3 months after ten years of service. Maximum working hours are 45-50 hours per week depending on the sector. Employer social insurance contributions add approximately 15-20% on top of gross salary costs. There is no national minimum wage, though several cantons and collective agreements set binding minimums.

This guide covers the key elements of Swiss employment law: employment contracts, termination rules, working hours, and the broader employment law framework. For company formation and employer registration, see our formation guide.

Swiss Employment Law Framework

Swiss employment law is governed by three main sources:

1. Code of Obligations (OR) — Art. 319-362: The primary statute governing individual employment relationships. Covers contract formation, rights and obligations of employer and employee, termination, and protection against abusive dismissal. The OR provisions are partly mandatory (cannot be contracted away) and partly dispositive (can be modified by agreement).

2. Labour Act (Arbeitsgesetz/ArG) and Ordinances: Regulates health and safety, working hours, rest periods, night and Sunday work, and protection of young workers and pregnant employees. The ArG is public law — its provisions are mandatory and cannot be reduced by contract.

3. Collective Labour Agreements (GAV/CCT): Sector-specific agreements between employer associations and trade unions. Where a GAV applies (either by employer membership in the association or by declaration of general binding force), its terms override less favourable contract provisions.

Key characteristics of Swiss employment law:

• No at-will employment — notice periods are required
• No general unfair dismissal protection — termination is free, but “abusive” terminations trigger compensation
• No statutory redundancy pay — unless provided by contract, GAV, or social plan
• Strong social insurance system — pension, accident insurance, and unemployment insurance are mandatory
• Liberal labour market — relatively few restrictions compared to EU countries

Employment Contracts

Employment contracts in Switzerland can be oral or written, though written contracts are standard practice.

Essential terms:

• Position and duties
• Start date
• Working hours (weekly and daily)
• Salary (gross amount, payment frequency)
• Holiday entitlement
• Notice period
• Probationary period (if different from the statutory 1 month)
• Place of work
• Social insurance arrangements

Types of employment contracts:

Unlimited-term contracts (unbefristeter Arbeitsvertrag): The standard form. Continues until terminated by either party with notice.

Fixed-term contracts (befristeter Arbeitsvertrag): End automatically on the specified date without notice. Repeated fixed-term contracts may be recharacterised as unlimited-term if the repetition lacks objective justification.

Part-time contracts: Subject to the same rules as full-time contracts, with entitlements calculated proportionally.

On-call contracts (Arbeit auf Abruf): The employee works when called by the employer. Swiss law requires that irregular working arrangements do not disadvantage the employee — guaranteed minimum hours are recommended.

Mandatory written clauses: Certain provisions are only valid if agreed in writing:

• Non-compete clauses (Art. 340 OR)
• Extension of probationary period beyond 1 month (up to 3 months maximum)
• Waiver of overtime compensation for certain management positions
• Special termination provisions

Probationary Period and Fixed-Term Contracts

Probationary period (Probezeit): The first month of employment is automatically a probationary period under Swiss law, unless the contract excludes it. The parties can extend the probation to up to 3 months by written agreement.

During probation:

• Either party can terminate with 7 days’ notice
• Notice can be given at any time (not restricted to month-end)
• No protection against termination during illness, pregnancy, or military service
• All other employment rights apply normally

Fixed-term contracts:

• End automatically on the agreed date — no notice required
• Cannot be terminated early unless the contract specifically allows it
• If the employee continues working after the end date without objection, the contract is deemed converted to an unlimited-term contract
• Consecutive fixed-term contracts (chain contracts) are permitted but may be recharacterised as unlimited-term if the purpose is to circumvent notice period protections

Working Hours and Rest Periods

The working hours framework in Switzerland is governed by the Labour Act (ArG):

Maximum weekly working hours:

• 45 hours: industrial workers, office workers, technical employees, retail staff, and employees of large enterprises
• 50 hours: all other workers

These are statutory maximums. Most employment contracts and GAVs specify lower standard working hours, typically 40-42.5 hours per week.

Daily working hours:

• Maximum daily working time including overtime: generally not more than 14 hours
• Minimum break requirements: 15 minutes if working more than 5.5 hours, 30 minutes if more than 7 hours, 1 hour if more than 9 hours

Rest periods:

• Daily rest: minimum 11 consecutive hours between working days
• Weekly rest: 1 full day per week (usually Sunday), plus a half-day per week if the working week exceeds 5 days
• Night work (23:00-06:00): requires authorisation, with compensatory rest and wage supplements
• Sunday work: requires authorisation, with compensatory rest

Public holidays: Swiss public holidays vary by canton. The only national public holiday is 1 August (Swiss National Day). Each canton designates 8-15 additional public holidays. Employers must check the applicable cantonal holiday calendar.

Termination of Employment

Employment termination in Switzerland follows the principle of freedom of termination (Kuendigungsfreiheit):

Ordinary termination (ordentliche Kuendigung): Either party can terminate with notice. No reason is required.

Statutory notice periods:

Notice must be given to take effect at the end of a calendar month (unless the contract or GAV provides otherwise). The notice period begins on the day after the notice is received.

Extraordinary termination (fristlose Kuendigung): Either party can terminate immediately for good cause (wichtiger Grund) under Art. 337 OR. Good cause exists when circumstances make it unreasonable to continue the employment relationship. Examples: theft, fraud, persistent refusal to work, serious breach of duty. Wrongful immediate termination triggers damages.

Protection against termination during protected periods (Art. 336c OR): Termination by the employer is void (nichtig) if given during:

• Military or civil service
• Illness or accident (protected periods: 30/90/180 days depending on years of service)
• Pregnancy and 16 weeks after birth
• Participation in a foreign aid or peace service

If notice is given before a protected period begins, the notice period is suspended during the protected period and resumes after it ends.

Protection Against Unfair Dismissal

Swiss law does not provide general protection against unfair dismissal. However, certain terminations are classified as abusive (missbrauchlich) under Art. 336 OR:

Abusive termination grounds include:

• Dismissal due to personal characteristics unrelated to the employment (race, religion, nationality, gender)
• Dismissal because the employee exercised a constitutional right (e.g. political opinion)
• Dismissal solely to prevent the employee’s claims from arising (e.g. terminating just before a bonus vests)
• Dismissal due to union membership or activity
• Dismissal as retaliation for the employee’s good faith complaint to authorities
• Dismissal during employee representation duties

Consequences of abusive dismissal: An abusive termination is not void — it remains effective, and the employment ends on the notice date. However, the employee is entitled to compensation of up to 6 months’ salary (in practice, courts typically award 2-4 months). The employee must file an objection (Einsprache) before the end of the notice period and bring a court claim within 180 days thereafter.

Mass layoffs (Massenentlassung): If an employer plans to dismiss at least 10 employees (in companies with 20-99 employees) or at least 10% of the workforce (in companies with 100-299 employees) or at least 30 employees (in companies with 300+ employees) within 30 days, the employer must follow the mass layoff consultation procedure: inform employees, consult with employee representatives, and notify the cantonal employment office (RAV).

Overtime and Compensation

Overtime under the OR (Art. 321c): Overtime (Ueberstunden) is work performed beyond the contractually agreed hours but within the statutory maximum. The employee must perform overtime if it is necessary and they are reasonably able to do so.

Compensation: overtime must be compensated with time off of equal duration or, if not compensated by time off, with pay plus a 25% supplement — unless the contract or GAV provides otherwise. For senior management and certain professional roles, the contract may waive the overtime supplement (but not the base compensation).

Excess hours under the ArG (Ueberzeit): Excess hours are work performed beyond the statutory maximum (45 or 50 hours per week). Excess hours must be compensated with a 25% wage supplement (mandatory — cannot be waived by contract). In the alternative, excess hours can be compensated with time off of equal duration within 14 weeks, if the employee agrees.

Annual limits: The ArG limits excess hours to 170 hours per year (for the 45-hour maximum) or 140 hours per year (for the 50-hour maximum).

Practical note: Swiss courts strictly distinguish between overtime (OR — contractual) and excess hours (ArG — statutory). Employment contracts should clearly address both.

Collective Labour Agreements

Swiss collective labour agreements (GAV/Gesamtarbeitsvertrag) play a significant role in several sectors:

How GAVs work: A GAV is negotiated between an employer association and one or more trade unions. It sets minimum employment conditions for the sector — wages, working hours, holidays, overtime rules, training contributions, and pension arrangements.

Generally binding GAVs: The Federal Council can declare a GAV generally binding (allgemeinverbindlich) at the request of the contracting parties. This means the GAV applies to all employers and employees in the sector, regardless of whether they are members of the signatory organisations.

Major generally binding GAVs include:

• GAV Bauhauptgewerbe (construction industry)
• L-GAV Gastgewerbe (hospitality industry)
• GAV Reinigungsgewerbe (cleaning industry)
• GAV Personalverleih (temporary staffing)
• GAV MEM-Industrie (mechanical and electrical engineering)

Employer obligations: If a GAV applies, the employer must comply with all its provisions, including minimum wages, maximum working hours, mandatory training contributions, and pension fund affiliation. Non-compliance can result in fines, back-pay claims, and sanctions by the joint commission (paritaetische Kommission) that oversees the GAV.

Social Insurance Obligations

Swiss employers must register with and contribute to several social insurance schemes:

AHV/IV/EO (1st pillar — state pension, disability, income replacement):

• Employer contribution: 5.3% of gross salary
• Employee contribution: 5.3% (deducted from salary)
• Applies to all salaries from the first franc with no upper limit

ALV (unemployment insurance):

• 1.1% on salaries up to CHF 148,200 (employer and employee each)
• Solidarity contribution of 0.5% on salaries above CHF 148,200

BVG/LPP (2nd pillar — occupational pension):

• Mandatory for employees earning above CHF 22,050 per year
• Contributions are age-dependent (7% for age 25-34, increasing to 18% for age 55-65)
• Employer must contribute at least 50% of the total BVG contribution
• The employer chooses the pension fund (Pensionskasse)

UVG/LAA (accident insurance):

• Occupational accident insurance: paid by the employer (0.1-3% depending on industry risk)
• Non-occupational accident insurance: paid by the employee (typically 1-2%)
• Mandatory for all employees working 8+ hours per week

FAK/CAF (family compensation):

• Employer-only contribution: 1-3% depending on canton
• Funds family allowances (Kinderzulagen) paid to employees with children

Total employer cost: approximately 15-20% of gross salary on top of the gross wage, depending on the canton, industry, and pension fund arrangement.

Work With Morgan Hartley Consulting on Employment Matters

Morgan Hartley Consulting (Morgan Hartley Consulting) advises employers on Swiss employment law matters including contract drafting, termination procedures, social insurance registration, and compliance with collective labour agreements. We work with both newly established companies setting up their first Swiss employment and established businesses managing complex employee situations.

For related topics, see our guides on employment contracts, termination, and working hours.

Request a Free Assessment — or contact us directly:

Morgan Hartley, Senior Corporate Lawyer & Partner Morgan Hartley Consulting (Morgan Hartley Consulting GmbH) Baarerstrasse 135, 6300 Zug, Switzerland +41 44 51 52 592 | [email protected]

Return to our Employment Law in Switzerland hub for related guides and services.

Frequently Asked Questions

What is the minimum notice period for termination in Switzerland?

During the probationary period (first 1-3 months): 7 days. After the probationary period: 1 month during the first year of employment, 2 months from the second to ninth year, and 3 months from the tenth year onwards. Notice must be given to the end of a calendar month (unless the contract or applicable GAV provides otherwise). These are statutory minimums — contracts and collective agreements may provide for longer notice periods.

Is there a statutory minimum wage in Switzerland?

Switzerland has no national statutory minimum wage. However, several cantons have introduced cantonal minimum wages: Geneva (CHF 24.32/hour), Basel-Stadt (CHF 21.00/hour), Neuchatel (CHF 21.09/hour), Jura (CHF 20.60/hour), and Ticino (variable by sector). Additionally, many collective labour agreements (GAV/CCT) set binding minimum wages for specific sectors. In practice, Swiss market wages are among the highest globally, and the absence of a federal minimum wage rarely affects most employment relationships.

Can an employer terminate an employee without giving a reason?

Yes. Swiss employment law operates on the principle of freedom of termination (Kuendigungsfreiheit) — either party can terminate the employment relationship at any time by giving the required notice, without stating a reason. However, certain terminations are classified as ‘abusive’ (missbrauchlich) under Art. 336 OR — for example, dismissal due to the employee’s personal characteristics, exercise of constitutional rights, or union membership. Abusive dismissals do not make the termination void but entitle the employee to compensation of up to 6 months’ salary.

What are the maximum working hours in Switzerland?

The Labour Act (ArG) sets maximum weekly working hours of 45 hours for industrial workers, office workers, retail staff, and large enterprises, and 50 hours for all other workers. These limits apply to actual working time excluding breaks. Many collective agreements and individual contracts set lower standard working hours (typically 40-42.5 hours per week). Exceeding the statutory maximum requires a permit from the cantonal labour inspectorate.

How much holiday are employees entitled to in Switzerland?

The statutory minimum is 4 weeks (20 working days) per year for employees aged 20 and over, and 5 weeks (25 working days) for employees under 20. Many employers and collective agreements provide 5 weeks as standard, with senior employees or those over 50 receiving additional days. Public holidays (8-15 days depending on the canton) are separate from annual leave. Unused holiday generally cannot be financially compensated during the employment relationship.

What social insurance contributions must employers pay?

Employers must contribute to: AHV/IV/EO (old-age, disability, income replacement) at 5.3% of salary (matched by employee); ALV (unemployment insurance) at 1.1% up to CHF 148,200 (matched by employee); BVG/LPP (occupational pension) — employer contribution typically 50% or more of the total BVG contribution, varying by pension fund and age bracket; UVG/LAA (accident insurance) — employer pays the non-occupational accident premium, employee pays the occupational accident premium; and FAK/CAF (family compensation fund) at 1-3% depending on canton. Total employer social insurance costs are approximately 15-20% of gross salary.

Can employment contracts include non-compete clauses?

Yes, but with restrictions. Non-compete clauses (Konkurrenzverbot) under Art. 340-340c OR are valid only if: the employee has insight into the employer’s clientele or business secrets; use of this knowledge could cause significant harm to the employer; the restriction is reasonable in terms of scope, geographic area, and duration (maximum 3 years); and the clause is in writing. Courts frequently reduce the scope of overly broad non-compete clauses. The employer must pay compensation during the non-compete period if the contract provides for it.

What is a GAV (collective labour agreement)?

A GAV (Gesamtarbeitsvertrag / convention collective de travail) is a collective labour agreement between employer associations and trade unions that sets binding minimum terms for a specific industry or profession. GAVs cover wages, working hours, holiday entitlements, overtime rules, and other employment conditions. Some GAVs are declared generally binding (allgemeinverbindlich) by the Federal Council, meaning they apply to all employers and employees in the sector, regardless of union membership.

What happens if an employee is sick during the notice period?

If an employee falls ill during the notice period, the notice period is suspended for the duration of the protected period under Art. 336c OR. The protected periods are: 30 days during the first year of employment, 90 days from the second to fifth year, and 180 days from the sixth year onwards. Once the protected period expires, the notice period resumes and runs until the end of the next calendar month. This can significantly extend the actual termination date.

Are employment contracts required to be in writing?

No. Swiss employment contracts can be concluded orally, in writing, or by implied conduct. However, certain specific provisions must be in writing to be valid: non-compete clauses (Art. 340 OR), overtime compensation waivers for certain employees, and specific probationary period agreements exceeding the default 1 month. In practice, written contracts are standard and strongly recommended for both parties’ protection. The employer must provide written information on key employment terms within one month of starting.

Morgan Hartley Consulting (Morgan Hartley Consulting GmbH) | Baarerstrasse 135, 6300 Zug | +41 44 51 52 592 | [email protected]