The employment contract in Switzerland: essential elements

The individual employment contract is governed by the Code of Obligations (CO). In Switzerland an often misunderstood principle applies: the contract is valid even without written form. But “valid” does not mean “clear”. Let’s see what is really needed.

The form: when a verbal agreement is enough

For most employment relationships, the employment contract is concluded by the mere agreement of the parties, even in oral or tacit form (whoever works and whoever pays the salary have in fact entered into a contract).

Some elements, however, are valid only if agreed in writing, including:

the post-contractual non-competition clause;
the derogation from certain rules on notice periods;
the waiver of cash payment for overtime work under certain conditions.

The advice is clear: always put everything in writing. Not because the law requires it, but because in the event of a dispute what counts is what you can prove.

The elements that cannot be missing

A well-drafted contract defines at least:

Parties: employer and employee.
Function and duties: description of the role.
Start date and any duration (fixed or open-ended).
Salary: gross amount, number of monthly instalments (12 or 13), any bonuses.
Level of employment and weekly working hours.
Place of work.
Holidays: statutory minimum of four weeks per year (five up to the age of 20).
Notice periods.

To these are often added the probation period, the overtime clause, business travel, data handling and confidentiality.

The probation period

Unless otherwise agreed, the first month counts as the probation period. The parties may extend it in writing up to a maximum of three months. During probation, termination is simpler: the ordinary notice period is seven days.

Note: if during probation the work is interrupted due to illness, accident or fulfilment of a legal obligation, the probation period is extended accordingly.

Salary, thirteenth month and deductions

The law does not set a federal minimum wage, but some collective labour agreements (CLAs) and some cantonal laws provide for one. The thirteenth month salary is not a general legal obligation: it is due if provided for by the contract, the CLA or company practice.

From the gross salary the employer withholds the employee’s share of social contributions (AHV/IV/EO — state pension, disability and loss-of-earnings; ALV — unemployment; BVG — occupational pension; the UVG accident-insurance contribution for the non-occupational part). Anyone subject to withholding tax also has the corresponding deduction applied.

Holidays and continued payment of salary

In addition to the minimum four weeks, the employer must continue to pay the salary in the event of the employee’s no-fault incapacity (illness, accident, pregnancy, military service) for a limited time, according to seniority and cantonal practice (the Bern, Basel or Zurich scale). In practice this obligation is often covered by a daily sickness benefit insurance.

Useful but optional clauses

Overtime: how it is compensated (time off or a supplement).
Non-competition clause: valid only within limits of time, place and scope.
Intellectual property: to whom inventions and copyright created at work belong.
Home office: expense reimbursement and organisational rules.

The most frequent mistakes

In our experience the recurring mistakes are: no written contract, salary indicated net instead of gross, a probation period beyond three months, holidays below the legal minimum and generic — and therefore ineffective — non-competition clauses. Each of these points, in the event of a dispute, backfires on the employer.

How we help you

SIH ONE’s People division drafts employment contracts that comply with the CO and are suited to your sector, coordinating salary and insurance aspects with payroll. Let’s set up your contracts.