Swiss Permits

In the context of the global pandemic, many companies try to avoid bankruptcy by reducing their costs, among which the salaries of employees.

Before unilaterally deciding on salary cuts, be aware that Swiss law imposes mandatory rules in favor of the employee when amendments of the employment relationship disadvantage the latter (for instance: salary reduction, bonus suppression, reduction of working hours, etc.). In particular the consent of the employee is required, failing which a subsequent dismissal could be deemed unlawful and expose the employer to legal proceedings.

In order to avoid this risk, companies usually proceed with an “amendment-termination” (“congé-modification”). In the framework of this process, the employer (i) terminates the employment contract, (ii) simultaneously offers to continue the contractual relationship under the amended condition(s) and (iii) informs the employee of the termination of his/her employment contract at the end of the notice period should the amendment(s) be refused.

General conditions to validly amend an employment contract

This process of “amendment termination” is deemed valid under Swiss law, but only if the employer complies with the following conditions:

  • The “amendment-notification” is not given during an inopportune period (see art. 336c CO; e.g. while the employee is performing a Swiss mandatory service, is unable to work due to an accident or an illness or during pregnancy and the 16 weeks following the birth).
  • The company must be able to assert an interest worthy of protection. For instance, in order to justify a salary reduction, an economic interest should be demonstrated. The Swiss Federal Court has ruled that the reasons need to be “materially justified”, i.e. real and serious. The proposed amendments have to be proportionate to the goal pursued by the employer. Otherwise, the amendment would be considered unlawful.
  • The employee needs to be offered sufficient time to reflect on the amendment proposal. Once the employer has notified the employee of its intention to terminate the contract, a reasonable period of reflection (approximately 15 days) should be given to the employee to make up his mind.
  • Moreover, the proposed contractual amendments can only come into effect at the end of the termination notice period.
  • The “amendment-modification” must also comply with general mandatory provisions such as gender equity, non-discrimination, equality of treatment between the workers. The legal provisions regarding mass redundancies may also apply if the conditions are met.
  • Finally, specific conditions could apply if the employer is subject to a collective labor convention (“convention collective de travail”) or a standard employment contract enacted by federal or cantonal authorities (“contract-type de travail”), which should be verified on a case-by-case basis.

Effects of an “amendment-termination” process

If the employee agrees with the proposed contractual amendment(s), the amended employment contract will enter into force at the end of the period corresponding to the . In the event of a refusal, the employment contract will come to end at the end of the termination notice period. Note that the notice of termination is considered as having already been given on the date of the notice of the “amendment-termination”.

Employees remain free to negotiate the proposed amendment(s) during the reflection period. They should however make sure that such negotiations are not construed by the employer as a refusal, which would give effect to the termination.

Employees should be aware that the unemployment authority (“chômage”) may consider the rejection of contract amendment to be a “faulty” termination of the contract by the employee.

13/06/22 – Rachel Salem and Deborah Lechtman, attorneys-at-law at OA Legal