Following several amendments to the Swiss reorganisation law, as of 1 January 2014, new regulations have been implemented in the Swiss Code of Obligations. These require employers to establish social plans in cases of mass redundancies. A social plan is an agreement between employer and employees laying down measures to avoid redundancies, or to reduce their numbers, and to mitigate their consequences. Until this change, employees of private companies had no legal right to establish a social plan in Switzerland even in cases of dismissals for economic reasons. 

The new statutory requirements require employers to agree a social plan with employees, involving an arbitration court if necessary. This requirement applies to employers who have at least 250 employees, and where at least 30 employees are intended to be made redundant within a period of 30 days for reasons that are unrelated to the individual employees. In order to prevent any circumvention of this regulation, dismissals over a period of time of more than 30 days which are based on the same operational decision shall be seen as one.

Depending on the circumstances, social plans have to be negotiated:

  • With employee associations that are party to a relevant collective bargaining agreement;
  • With the organisation representing the employees; or
  • Directly with all employees, if there is no organisation representing them.

Therefore, employees who will continue to be employed after a mass redundancy exercise are also involved in the negotiation of the social plan. This is because a social plan may also include measures which affect surviving employees, for example, efforts to reduce dismissal numbers such as a reduction in working time.

In the event of a failure to agree a social plan, an arbitration tribunal is appointed and would issue a social plan in a binding arbitration award. The new statutory regulations grant the parties freedom regarding the appointment of the arbitral tribunal. The parties can appoint an institutional body or nominate an ad-hoc arbitration tribunal.

However, the new regulations contain some ambiguous and incomplete provisions. In particular, in the absence of an employee’s association or an organisation representing the employees as negotiating partner, it will be difficult for the employer to negotiate with 250 or more employees, if the employees are not well organized.

Furthermore, if the parties are unable to agree on the composition of the arbitral tribunal, the legal provisions of the Swiss Code of Civil Procedure concerning arbitration will apply in national cases. In these cases, the arbitral tribunal would consist of three members who are appointed by the competent state court.

In order to reduce the risks of delays caused by employee associations or the employees during social plan negotiations and the appointment of the arbitral tribunal, contractual provisions should be incorporated into the applicable employment contracts or the collective bargaining agreements.

The recording of working hours

Swiss law requires the accurate recording of daily working hours. According to article 46 of the Swiss Labour Law Act and article 73 of the Swiss Ordinance to the Labour Law Act, working hours and non-working time must be registered. These provisions have recently been specified by the State Secretariat for Economic Affairs (SECO) in a directive dated December 2014, which entered into force on 1 January 2014.

In this directive, the SECO divides employees in to three different categories. For each of these categories, working hours are to be recorded in a different way:

Category 1: Swiss labour law, including time recording requirements, does not apply to employees with senior management responsibilities. Therefore, employees in top management positions as, typically, CEO, CFO, etc., do not have to record their working hours.

Category 2: Employees who are not members of senior management, but do have authority to give directions to subordinated employees and/or have an important amount of discretion in relation to the carrying out of their tasks, may record their working hours in a simplified manner. Such employees need only record daily hours worked. Such simplified recording does, however, require the employee to waive his or her right to more detailed time recording in a written agreement with the employer and there must be an annual appraisal meeting.

Category 3: All other employees have to record their working hours in a comprehensive fashion, which includes the exact number of hours worked per day as well as nonworking time.

Every employer should as a minimum take the following measures:

  • Classify the employees in one of the above three categories;
  • Define the time recording system;
  • Enter an agreement with employees in the above second category.

However, the most suitable solution will always depend on a detailed analysis of the individual circumstances.