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The employment relationship

Country specific laws
What laws and regulations govern the employment relationship?

The most notable laws and regulations are as follows:

  • the Code of Obligations;
  • the Labour Act and its implementing ordinances;
  • social security laws;
  • the Law on the Participation of Employees;
  • the Equal Treatment Act; and
  • the Personnel Lending Act.

Who do these cover, including categories of worker?

The above laws generally apply to all employees. The Labour Act and the Law on the Participation of Employees do not apply to true management functions.

Misclassification
Are there specific rules regarding employee/contractor classification?

Case law provides some guidance in this respect. Self-employed contractors are generally defined by their autonomy to structure their work and, as a rule, should not have a fixed workplace or use company equipment to perform their services. However, if a contractor is subordinated to the company engaging him or her, integrated in the company's workforce and spends more than 70% of his or her entire working time working for the same employer, he or she may be deemed a de facto employee.

Contracts
Must an employment contract be in writing?

Oral agreements are valid, but written agreements are market practice and thus recommended.

Are any terms implied into employment contracts?

All statutory rules are deemed to be implied unless the parties deviate from such rules by written agreement. For example, this applies to:

  • the determination of notice periods by virtue of the employee’s length of service;
  • the one-month probation period; and
  • compensation for overtime with time off or payment in lieu of time off. 

Are mandatory arbitration/dispute resolution agreements enforceable?

Mandatory arbitration/dispute resolution agreements are generally unenforceable. However, in an international employment law context, arbitration agreements limited to certain topics may be permissible if the parties agree to opt out of the applicable Swiss procedural rules.

How can employers make changes to existing employment agreements?

This depends on how the employment agreement is structured. Fundamental changes to employment agreements require employee consent. Alternatively, the employer may choose to terminate the old employment relationship (respecting the applicable notice periods) and offer the employee a new employment agreement with new conditions.

Foreign workers
Is a distinction drawn between local and foreign workers?

From an employment perspective, foreign and local workers must be treated equally and no distinction may be drawn. The necessary work permits for foreigners must be obtained and, for non-EU applicants, the employer must show that it tried to find an alternative candidate in Switzerland or the European Union. From an immigration perspective, priority is given to Swiss and EU citizens in such situations. Finally, in certain sectors, foreign employees will be subject to an automatic salary deduction by the employer for withholding tax purposes.

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