All questions

Year in review

i Termination

The Federal Supreme Court was recently asked to decide whether an employee is entitled to command claims arising from the employment relationship in the context of a termination agreement following the issuance of a notice of termination by the employer.

At first, the Court pointed out that termination agreements differ from settlement agreements in that the aim of the former is to prevent the origination of new claims, whereas settlement agreements (regulating the terms for the termination of employment relationships) imply a waiver of existing claims.

Pursuant to Article 341, Paragraph 1 of the CO, during the existence of an employment relationship and for one month after its end, the employee may not validly waive claims arising from mandatory provisions of law or the mandatory provisions of a collective employment contract. Article 341, Paragraph 1 of the CO does not prohibit the parties from terminating the employment contract at any time by mutual agreement (termination agreement), thus preventing the origination of new claims. If, however, the termination agreement implies a waiver by the employee of (existing) mandatory claims, such an agreement is only valid in the form of a genuine transaction, that is if concessions of comparable importance are made by the employer.

In the same manner, Article 341, Paragraph 1 of the CO does not prevent a transaction on the terms of the termination of employment relationships (settlement agreement), provided, however, that there is an appropriate equivalence of reciprocal concessions (i.e., that the claims waived by each party are of comparable value). The employee cannot freely dispose of claims resulting from mandatory provisions of the law or from a collective agreement and, in particular, he or she cannot waive them without corresponding compensation. As regards transactions that concern only the terms of the termination of the employment relationship (and not the termination of the contractual relationship per se), the legal provisions relating to protection from termination (namely, Article 336 et seq. of the CO, in particular Article 336c) are not affected and the parties remain subject to them. Thus, when the employer unilaterally terminates the contract and simultaneously or subsequently enters into an agreement regulating the terms of the termination of the contract, the sole acceptance of the termination by the employee is not sufficient to admit that he or she has (implicitly) waived the protection granted by Article 336 et seq. of the CO.

In the case at issue, the Swiss Federal Supreme Court determined that the employee had undertaken not to bring any action before a court arising from the employment contract or its termination (or both) that constituted a waiver of any future claim arising from mandatory rules, in particular the employee's right to challenge the ordinary termination served before: the agreement must therefore be qualified as a termination agreement, which excludes the protection of Article 336 et seq. of the CO relating to abusive termination and termination at an improper time. On the other hand, the employer had undertaken to pay a significant settlement amount to the employee (US$1.05 million), equivalent to half of a deferred discretionary bonus that was not due. The amount of this settlement largely compensates the employee's waiver and, consequently, was considered to be an equivalent concession in accordance to the relevant case law.

This new decision by the Swiss Federal Supreme Court suggests a need to carefully consider the wording of agreements relating to the termination of an employment relationship, in particular of those agreements entered into after a notice of termination has been served. In addition, the appropriateness and equivalence of the reciprocal waivers should be carefully considered.

ii Remuneration of work on demand

In 2017, the Swiss Federal Supreme Court was faced with a case of an employment agreement that defined the type of employment as 'part-time on demand (20–30%)' and stated that 'the working level and specific tasks will be agreed upon on a weekly and monthly basis with the companies' management board'. According to the unanimous view of the parties, the claimant would have deputised for the head of a certain department if that head of department was not available. However, this situation never arose. As a consequence, the parties were disputing the legal qualification of the contract entered into as well as on the pecuniary claim asserted by the claimant for his alleged standby duty.

The Court pointed out the distinction between proper and improper work on demand. In the case of proper work on demand, the employee is obliged to work in accordance with the employer's instructions and the employer can call off the employee unilaterally. Any additional duties performed outside usual working hours must be compensated. However, (1) since the employer regularly has a lower economic interest in the call-off service than in the main activity for which the employee was actually hired and (2) considering that the employee is entitled to use the standby time outside the workplace for non-work-related activities, the standby duty – subject to a different agreement between the parties – does not have to be remunerated at the same level as the main activity. Compensation for standby time may also be included in the wage for the main activity under individual or collective agreements.

In the case of improper work on demand, the employee is not obliged to perform an assignment; rather, the assignment is based on a mutual agreement (often based on a framework agreement in which the working conditions are uniformly regulated).

In the present case, the findings of facts of the cantonal court were not sufficient to legally qualify the agreement as an employment agreement for proper or improper work on demand. The case was therefore returned to the lower court.

In the light of this recent case law, special attention should be given to ensuring a proper drafting of the conditions within employment agreements regarding work on demand. Depending on the circumstances, in particular in situations where an employer may unilaterally call in an employee for extra duty, a salary may be due even if that employee has not performed any working activity, simply because the employee has made himself or herself available to work (standby time).

iii Employer's default and right to salary

The Swiss Federal Supreme Court has judged a case concerning a lawsuit brought by an employer against a former employee for the reimbursement of a loan. Among other things, the employee claimed to have offset the amount of the loan against other amounts that the employer allegedly owed him on the basis of the employment relationship, in particular pretending an indemnity was due for an unjustified immediate termination of the employment relationship. The employer had given notice of termination because the employee, after a short period of illness, had not returned to work even though the employer had urged him to do so. The employee argued that his absence was justified by the employer's delay in paying him various amounts.

When an employer is in default with the payment of a salary, the employee may start debt enforcement proceedings and, in addition, refuse to carry out his or her own duties until payment of the amount due is made; in the interim, the right to salary continues even though no work has been provided.

However, if the employer's default does not concern a salary clearly due, but only benefits that are questionable and challenged, the employee may not refuse to work. In the light of this jurisprudence, to the extent that an employee's salary claim is disputed or its enforceability cannot be easily demonstrated, it would appear that an employee should give some careful thought to the matter before refusing to work.

iv Certificate of employment and long absences

In a case brought before the Swiss Federal Supreme Court, an employee asked, inter alia, for the amendment of her certificate of employment. The employee in question, who was hired on 1 March 2014, was absent from work because of either maternity leave or illness from 30 April to 1 October 2014, from 2 July to 31 August 2015 and from 12 November 2015 to 31 May 2016. The employment relationship ended on 31 August 2016. The employer has indicated in the work certificate the absence, its duration and the reasons (maternity/illness). The employee took the view that the reasons for her absence (i.e., maternity/illness) should be deleted from the certificate of employment. She essentially argued that the statement 'illness' in a certificate of employment is detrimental – and therefore contrary to the benevolence principle – and gives rise to speculation as to the reasons for the illness. The indication 'maternity' should also be deleted, in particular because all information relating to the private sphere of the employee's life and not relevant to the future employment relationship does not need to be disclosed.

The highest Swiss court pointed out that, in principle, the formulation and wording of the certificate of employment are left to the employer. The employee is not entitled to a particular wording; the employer is therefore not obliged to endorse the wording demanded by the employee. A qualified certificate of employment (i.e., not limited to statements about the nature and duration of the employment relationship) has also to mention negative facts concerning the employee's performance, insofar as these are of relevance to an overall evaluation. This would apply to an illness that had a considerable influence on the employee's performance or conduct, or called into question the employee's suitability to perform previous tasks and thus represented an objective reason for terminating the employment relationship. On the other hand, an illness from which an employee has fully recovered, and which does not impair an evaluation of performance and conduct, should not be mentioned. Prolonged work interruptions – even if they were due to illness – should be mentioned if they are significant in relation to the total duration of the contract and would therefore create a false impression about the professional experience acquired if not mentioned.

In the specific case before the Swiss Federal Supreme Court, the absences amounted to almost half the duration of the employment relationship. Since the total length of the work interruptions was undoubtedly significant in relation to the overall length of the employment, the absences need to be mentioned in the certificate of employment. The principle of completeness and the duty of clarity also require the reasons for absence to be listed, which, in the case at issue, were maternity and illness. Stating the reasons for absence allows less room for speculation. In fact, a potential employer will ask about the reasons for the absence if they are not stated on the certificate of employment.

The drafting of certificates of employment is a difficult task for employers, who have to take into account certain principles (of benevolence and of truth or completeness), which are not always converging. In this sense, the new jurisprudence of the Swiss Federal Supreme Court certainly provides useful indications for the employer.

Outlook and conclusions

Following acceptance of the popular initiative against mass immigration in February 2014, the Swiss parliament took the decision to introduce a job registration requirement, thereby encouraging the employment of available workers in Switzerland. As a consequence, with effect from 1 July 2018, employers are required to notify Regional Employment Centres (known as RAVs) of all available vacancies relating to types of occupation in which the corresponding domestic unemployment rate is 8 per cent or higher.

As of 1 January 2020, that threshold will fall to 5 per cent. By adopting a two-stage approach, the Federal Council is easing in the new requirements for employers and public employment centres.

No significant changes to procedure that may affect employment disputes and their resolution are foreseen or expected to be announced during the next 12 months.

In more general terms, the performance of work that is not directly rooted within an employer organisation (such as the Uber model) has been a recent focus of attention for the general public on an international scale, not only in Switzerland. All the players affected (authorities, social insurers and interest representatives) are trying to cope with the opportunities offered by new technology. For the labour market to continue to operate fairly, references to the new means of making work available need to be incorporated within the existing legal framework in a proper way, without hindering the inexorable march of change. Among the currently known forms of the gig economy are 'crowd work' and 'work on demand via app', in which the demand and supply for work activities are brought together online or through the use of apps. The greatest advantage of these is the flexibility of employment opportunities, which reduces personnel costs for employers and gives employees more freedom. The main risk is the loss of legal protection for the worker. We expect major changes during the next few years to the way employment relationships are managed and, as a consequence, significant changes in the way employment disputes are resolved. In particular, we believe that the (already very thin) line between work-related and non-work-related activities will finally vanish.