Swiss employment termination law explained: what global employers need to know

Terminating an employee in Switzerland requires careful attention, especially for international employers unfamiliar with local labour laws. Swiss employment legislation offers strong protection to workers, including rules around notice periods, severance pay, and protected circumstances such as illness or maternity.

Missteps during the dismissal process can lead to legal claims, financial liabilities, and damage to your company’s reputation. By understanding and complying with these legal obligations, employers not only reduce risk but also maintain trust with their workforce and protect their standing in the Swiss market.

Legal grounds for termination under Swiss labour law

Understanding legitimate dismissal under Swiss labour law is essential for international employers managing teams in Switzerland. Unlike some countries with rigid termination protections, Switzerland operates under a relatively flexible system, but this doesn’t mean employers can dismiss staff without justification or consequences.

An employment relationship may end through mutual agreement, resignation by the employee, or unilateral termination by the employer. For a dismissal to be considered legitimate, it must be based on valid grounds such as serious misconduct, consistent underperformance, operational restructuring, or genuine redundancy. These reasons should be well-documented and, ideally, communicated clearly during the employment relationship.

Swiss labour law, however, draws a clear line at “abusive dismissal” – terminations that are discriminatory, retaliatory, or carried out in bad faith. Examples include firing an employee during protected periods (e.g., maternity leave or military service), dismissing someone for exercising legal rights, or offering misleading reasons for the termination. If a court determines that a dismissal is abusive, the employee may be entitled to compensation of up to six months’ salary in addition to any notice or severance owed.

To reduce legal risks, foreign employers should follow proper procedure, document performance issues, and consult local HR or legal experts, especially when working without a local entity.

Notice periods: what employers must observe

Under Swiss labour law, employers must adhere to statutory notice periods, which depend on how long the employee has worked and whether they are still in the probation period. During probation (usually one month), the notice period is just seven days. After that, it typically ranges from one to three months.

However, employment contracts or collective labour agreements (CAOs) often set longer or more specific notice terms. Notice must always be given in writing, and the dismissal period starts on the day the employee receives it. It’s vital to calculate the notice period correctly, taking into account public holidays and working schedules. Mistakes, such as informal notices or incorrect end dates, can lead to disputes or render the termination invalid under Swiss law.

Severance pay and end-of-employment entitlements

Severance pay in Switzerland is not mandated uniformly. It is required only under specific circumstances, usually for long-serving employees beyond a certain age, unless the contract or collective agreement of employment obliges the employer otherwise.

Regardless, employees are entitled to payment for any untaken holidays, accrued bonuses, or additional wages, such as those related to 13th-month salaries. Swiss law also requires employers to provide a reference letter upon termination, and while its content must remain neutral, it must accurately describe the role and length of service.

Legal protections during specific circumstances

Swiss labor legislation imposes protected periods during which dismissals are prohibited: these include pregnancy and maternity leave, temporary illness, military service obligations, and, in some cases, leave related to family emergencies. Attempting termination during these periods can result in nullification of dismissal and potential fines up to CHF 5,000. Employers must understand these sensitive windows and plan any offboarding activity accordingly.

In Switzerland, employees who believe their dismissal was unjustified can challenge it in court, usually within 180 days. If the court deems the dismissal unfair or abusive, it may award financial compensation or, in rare cases, order reinstatement.

Swiss court proceedings tend to be efficient, and outcomes can favour employees, especially when employers lack proper documentation. To reduce legal risk, employers should maintain clear and consistent records throughout the employment relationship, particularly before termination. Useful documentation includes:

• Written warnings
• Performance reviews
• Disciplinary notes
• Termination letters and notice delivery confirmation
• Email or meeting records supporting the decision

This paper trail is critical for proving the employer’s justification and demonstrating procedural fairness in any dispute.

How a Swiss Employer of Record ensures compliance in termination processes

A Swiss Employer of Record (EOR) plays a key role in ensuring that employee terminations are handled lawfully, especially for foreign companies unfamiliar with local labour regulations. Acting as the legal employer, the EOR oversees the entire termination process to ensure compliance with Swiss law.

This includes drafting and delivering valid termination notices, calculating the correct notice period, and processing final payments, including unused holiday, bonuses, and any severance obligations.

The EOR also ensures all necessary documentation is in place, such as performance records, warnings, and dismissal letters, to defend against potential legal claims. In sensitive cases, such as dismissals during protected periods (e.g. maternity leave or illness), the EOR provides expert legal guidance to avoid unlawful termination.

For international businesses, partnering with a Swiss Employer of Record reduces the risk of legal disputes, reputational harm, and administrative errors, providing peace of mind and ensuring full compliance with local employment laws.

For example, a UK tech company terminated a Swiss employee without written notice or respecting the notice period. The employee took legal action and won compensation for unfair dismissal. The company later switched to a Swiss Employer of Record, which ensured compliant offboarding and avoided future legal issues.

Why compliance matters and what to do next

In Switzerland, lawful termination is about more than simply following timelines. It involves validating the dismissal reason, respecting protected periods, providing fair compensation and documentation, and responding to disputes in a proper manner. Missteps in any of these areas can result in court cases, financial penalties, or unfavorable media coverage.

International companies can safeguard against these risks by partnering with trusted experts, whether legal advisors or Swiss EOR providers who specialise in local employment practices. With the proper guidance in place, terminations become smooth, compliant, and respectful processes that preserve both operational needs and organisational reputation.

If your company is planning to let staff go in Switzerland, or simply wants to assess risk: contact us to learn how our Swiss Employer of Record can manage compliant, distress-free terminations on your behalf.