Employment contracts may be terminated, any time by mutual consent, by the expiration of a fixed term or by a party’s unilateral decision, subject to the legal or contractual notice period or without notice for valid reasons.
While the first two means of extinction of an employment contract are rarely disputed, the termination of the contract on the initiative of one party is sometimes subject to controversy.
Swiss statutory law provides for protection from termination by notice for both the employer and the employee, distinguishing between abusive and untimely notice of termination.
The notice of termination of an employment relationship may be considered as abusive, if a party gives it, in particular, because of a quality inherent in the personality of the other party, because the other party exercises a constitutional right, to solely frustrate the formation of claims of the other party arising out of the employment relationship or because the other party asserts in good faith claims arising out of the employment relationship.
The party that abusively terminated the employment contract may only be condemned to pay an indemnity to the other party. Such indemnity is to be determined by a judge and may be as high as the employee’s salary for six months, above and beyond any claims for damages based on other legal grounds. Nevertheless, the termination, though abusive, remains valid.
By contrast, notice of termination given during an improper time is null and void. According to the law, is particularly untimely termination notified by a party during the employee’s pregnancy and during the 16 weeks following the child’s birth or whilst the other party is prevented from performing work fully or partially through no fault of his own due to illness (the duration of the protection varies depending on the length of the working relationship).
A party may however terminate the employment relationship at any time for valid reasons. Such reasons are considered to be, in particular, any circumstances under which, if existing, the terminating party can in good faith not be expected to continue the employment relationship.
If the working contract is terminated without notice and for unjustified reasons, the terminating party may face financial consequences but the termination remains valid.
In the case the employer dismisses the employee, the employee is entitled to compensation in the amount of what s/he would have earned if the employment contract had been terminated in compliance with the applicable notice period or until the expiration of the fixed agreement period. The court may add the employer to pay a supplementary indemnity to the employee, which may be up to employee’s salary for six months.