Termination Rules: Ending an Employment Contract in Switzerland

How do you end a contract in Switzerland without breaking the rules or upsetting your team?

Unlike many countries, where two weeks’ notice or pay in lieu is standard, Swiss rules tie notice periods to months of service and protect employees during certain life events. For international teams, this can feel confusing.

This guide walks you through each step so you can manage notice, payroll, and benefits clearly, keeping the process fair and straightforward for everyone involved.

The Legal Ground Rules Behind Termination

Most employment terms are added in a written contract, and the Swiss Code of Obligations sets minimum standards that apply even if the contract is silent.

Ordinary termination is possible from either side, but it depends on timing and form. Protected periods stop or delay an employer’s termination. This framework still applies during probation or special leave periods, with some rules adjusted during those windows. 

Notice should be in writing, and the notice period starts on the date the other side receives it. During probation, notice periods are shorter.

There are different types of termination:

Termination by Employer

The employer ends the contract with notice. The notice must respect the contract and the legal minimum. Payroll and benefits continue to the end of the notice period. Abusive or discriminatory termination may entitle you to compensation.

Employee Resignation

The employee ends the contract with notice. The same notice rules apply. Salary, benefits, and accrued rights run until the end date. Resignation should be in writing. The notice period begins upon receipt.

Mutual Agreement

Both parties agree to end the contract. The agreement should be in writing. It should cover the last working day, pay items, unused vacation, and how references will be handled. It should be signed and dated by both parties, with a short list confirming any final payments and return of company property.

Immediate Termination for Cause

This happens rarely and applies only in case of a serious breach that makes continued work unreasonably hard. The bar is high, and the reason must be clear. If the reason does not stand, liability can follow. Document the facts and give written reasons on request.

Employee Protections and Restrictions

Swiss employment law protects employees during specific periods. An employer cannot give ordinary notice during these times. If notice was already given, the notice clock pauses and resumes after the protected time ends. 

Protected periods include sickness or accident, pregnancy, the 16 weeks after birth, and compulsory military or civil service. Anti-discrimination norms also apply. 

Termination for reasons linked to a protected characteristic or a lawful right can be abusive and trigger compensation. Protection during probation is lighter, so check the contract and dates carefully before you act.

Swiss Notice Period Rules

Notice is one of the most practical parts of termination planning. It drives payroll timing, benefits coverage, handover, and the final work schedule. Contracts often tie the end of notice to the last day of a month. Many roles in Switzerland require 1-3 months of notice. 

Written notice is common practice, and the notice period usually starts on the date the other side receives it. During probation, the notice period is shorter.

Statutory Notice Periods by Length of Service

Written contracts can vary the statutory periods within the limits of Swiss law. Periods must be the same for both parties, and any extension must follow that symmetry. In practice, many contracts extend notice for senior roles. 

Some contracts include garden leave, during which salary and benefits continue. Read the exact clause on length, start date, and how the period ends.

Probation: default 7 calendar days, unless the contract sets a different probation length and rule within legal limits. 

After probation:

• First year of service: 1 month, to the end of a month.
• Second to ninth year: 2 months, to the end of a month.
• From the tenth year: 3 months, to the end of a month.

What if the employee gets sick during the notice period? Protected periods can pause the notice if the employer gave notice. The pause length depends on the service length. If the employee gave notice, the period usually does not pause. Track dates and provide pay and insurance as required.

Payroll Continuation During the Notice Period

Salary and benefits continue through the full notice period. This includes social insurance, pension contributions, and accident insurance. Sick leave pay rules and insurance coverage still apply. 

Severance Pay in Switzerland

Many people expect automatic severance. Swiss severance law does not grant a general right to severance on termination. Severance depends on strict legal criteria or a written plan.

Statutory severance can apply in some cases, such as for long-serving employees above a certain age, but many modern pension plans replace it. Collective or company plans may add a benefit, but this is not the norm. In short, most terminations do not involve severance. Do not promise severance unless a contract or policy clearly requires it.

Payroll Obligations at Termination

Now to the items that often cause delays or disputes. Plan the final pay run early, check all accruals, and fix the end date right away. This is where clear records save time and cost. 

Final Salary Calculation

Pay any pro-rated base salary up to the last working day. Include unpaid wages, fixed allowances, and any pro-rated 13th-month salary if the contract includes it. Final pay should follow the usual payroll date, unless both parties agree in writing to a different schedule.

Unused Vacation and Overtime Payouts

Unused vacation generally must be paid out if it cannot be taken before the end date. Overtime follows the contract and the law. Time off in lieu can close the balance if both sides agree and there is time left. If not, the payout is based on the rules governing the role.

Bonuses and Variable Pay

Bonuses fall into two broad groups. Guaranteed or salary-like bonuses are usually owed pro rata if objectives are met or if the contract says so. Discretionary bonuses depend on conditions and company policy. Many Swiss contracts refer to variable pay as a “gratification,” which gives the employer greater choice. Keep records of targets, payout rules, and communication.

Social Security and Pension Adjustments

Think of these items as the post-termination checklist. The timing is tight, and delays create problems for the employee and the company.

AHV/AVS Contributions

Report the last working day to the AHV/AVS compensation office through your payroll process. Contributions run through the end date on the last salary.

Pension Fund Exit

Send the employee the pension exit documents. The pension fund (BVG/LPP) will transfer the balance to the next employer’s fund or to a vested benefits account. If the employee leaves Switzerland, different routes may apply based on domicile and fund type. The employee needs the exit form to keep coverage.

Insurance End Dates

Accident insurance (SUVA or a private LAA provider) for non-occupational accidents typically runs for 31 days after the last salary day. The employee can buy an extension at their own cost if there is a gap before the next job. Health insurance in Switzerland is individual and continues regardless of employment, but accident coverage on the health plan may need to be switched once employment-based accident coverage ends.

Additional Administrative Considerations

Give the employee a certificate of employment upon request. Swiss law allows a full reference or a short confirmation. The termination letter should be in writing, with the date of notice, the last working day, and the date the notice period ends. Align the end date with the end-of-month rule, if applicable. Collect company equipment and close access rights on or after the last day. For employees on tax at source, run a final month update with the correct canton and rate.

Common employer mistakes:

• Incorrect notice period handling
• Payroll ending too early
• Wrong severance taxation
• Missing termination documentation or delayed certificates

How Numeriq Ensures Compliant Termination

Ending employment in Switzerland can create real business risks for foreign teams. Notice periods vary by contract and seniority, and miscounts lead to extra salary and disputes. Missed steps with AHV/AVS, BVG/LPP, or SUVA can cause back payments and interest. Gaps in records raise audit exposure and delay the final payout.

Working with a Swiss EoR like Numeriq reduces these risks and saves time. We apply local payroll rules to the final run, calculate notice and pro‑rata pay, settle vacation and overtime, and close Quellensteuer correctly. Our team follows SECO and pension fund requirements. You get a predictable process and transparent reporting.

Disclaimer: This guide provides general information and is not legal advice.

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