Switzerland

    1.1 In what circumstances does the employee transfer law apply?

    The protection of employees in Switzerland upon business transfers matches EC standards.

    The employee transfer law applies to business transfers. A business is an organised grouping of resources which pursues an economic activity, whether or not the activity is central or ancillary. There is a business transfer if the business changes hands and retains its identity. There must be a change in the identity of the employer. The business retains its economic identity if the new owner continues pursuing its economic activity. Whether the economic identity is retained depends on the facts. The organisation, scope and character of the business must remain essentially the same.

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    Author: Blesi & Papa

    Date: March 2017

    1.2 Does the employee transfer law apply to (a) a sale of a business or (b) outsourcing?

    (a) Sale of a business

    The employee transfer law applies to business transfers which occur on the basis of a private law contract. It could be a sale, lease, or exchange contract, or a merger or demerger agreement. No legal relationship is needed between the old and new employer.

    The legislation does not apply if the employment relationships are governed by public law.

    (b) Outsourcing

    The employee transfer law may apply to outsourcing. This is the case if the external service provider takes over employees and/or resources and these form the core identity of the business.

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    Author: Blesi & Papa

    Date: March 2017

    1.3 In outline, what are the implications of the employee transfer law?

    If the employee transfer law applies:

    • Employment automatically transfers from the transferor to the transferee (subject to objection to the transfer by the employee).
    • This includes all rights and obligations as at the date of transfer, including seniority, accrued years of service and accrued benefits (e.g vacation and overtime).
    • The transferee must compensate the employee for any benefits that he is not able to offer in kind.
    • The transferor and transferee are jointly and severally liable for any claims by an employee which fell due prior to the transfer or fall due between transfer and the date on which the employment relationship could be terminated with notice or is terminated following the employee’s objection to the transfer.
    • Dismissals may be void if the sole reason is to avoid the transfer.
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    Author: Blesi & Papa

    Date: March 2017

    2.1 Who transfers?

    The transfer affects all employees of the transferred business, including secondees, apprentices, employees on maternity or sick leave, employees under notice of termination and those on sabbatical.

    If only part of a business is transferred, all employees relating to that part of the business transfer.

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    Author: Blesi & Papa

    Date: March 2017

    2.2 Can employees object to transferring?

    Every employee is entitled to object to the transfer of their employment. If they object, their employment contract will terminate upon expiry of the statutory notice period, the contractual notice period being irrelevant in this case.

    The law does not define the period during which employees can object to the transfer. The employer may set a deadline, which normally should be around one month.

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    Author: Blesi & Papa

    Date: March 2017

    2.3 What happens to terms of employment contracts?

    The employment relationship is automatically transferred to the transferee, including all rights and obligations (including seniority and years of service accrued), as of the date of transfer. Accordingly, the terms of the employment contracts remain unchanged.

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    Author: Blesi & Papa

    Date: March 2017

    2.4 What about other employee benefits?

    Other benefits also transfer and the transferee must in principle continue the employment relationship according to the contract agreed between the transferor and the employee. The transferee must compensate the employee for any benefits that are not offered in kind. Past employment with the transferor counts as ‘continuous employment’ with the transferee.

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    Author: Blesi & Papa

    Date: March 2017

    2.5 What happens to pension rights?

    Employers must either establish a pension fund for employees as a separate legal entity, or enter into an affiliation agreement with a collective pension fund. The assets and accounts of a pension fund are entirely independent of the employer's business. As pension funds are not part of the employer’s business, employee transfer law has no direct impact on the pension fund.

    However, where an employee becomes a member of the transferee’s pension fund, the employee’s funds vested in the pension fund of the transferor will transfer along with the employee (termination benefit) to the transferee’s pension fund. 

    In addition, a pension fund may have to be partially or totally liquidated because a group of transferring employees leave the pension fund of the transferor. In such a case, the employees have an individual or collective claim to a portion of any non-committed funds (i.e. free reserves) in addition to the (ordinary) claim for the termination benefit.

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    Author: Blesi & Papa

    Date: March 2017

    2.6 What liabilities transfer?

    The former employer and the transferee are jointly and severally liable for any claims of an employee arising from the employment relationship (e.g. compensation for overtime, vacation entitlements, salary) which fell due prior to the transfer or between then and the date when the employment relationship could be terminated with notice or is terminated following the employee’s objection to the transfer. Thereafter, the transferee takes on full liability for the transferred employees.

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    Author: Blesi & Papa

    Date: March 2017

    2.7 Do collective agreements transfer?

    If a collective employment agreement applies to the transferred employees, the employee transfer law provides that the transferee must comply with it for one year unless it expires earlier or is terminated by notice. Collective agreements may only be changed by the written agreement of all contracting parties.

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    Author: Blesi & Papa

    Date: March 2017

    2.8 How does the transferee obtain information on transferring employees?

    There are no mandatory information requirements on the transferor to pass information to the transferee. Usually, there is an exchange of information, given the transferee's need to assess the impact of the transfer. How much information can be given to the transferee depends on the stage of the transfer the parties have reached. Prior to signing, only anonymised and aggregated information may be transferred and the extent of this must be objectively justified by the information needs of the transferee at this stage. After signing, but before closing, more information may be passed to the transferee, for example, in order to help integrate the transferring employees into the transferee's structure. Data protection principles must be adhered to throughout the process.

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    Author: Blesi & Papa

    Date: March 2017

    3.1 Can employers make changes to employment contracts?

    Any changes to the employment contract require the employee’s consent. In agreement with the employee, the employment contract can be changed prior to the transfer by the transferor, or post-transfer by the transferee. This allows, for example, the harmonisation of terms of transferring employees with those of existing employees within the transferee’s business.

    If the employee does not agree to the proposed changes to the employment contract, the employer may give the employee notice of termination, with the option of altered conditions of employment. The changes (i) must have been proposed to become effective only after the notice period has ended; and (ii) must be objectively justified by business or market reasons if they are dis-favourable to the employee. The employee can then either accept the changes, so that the employment continues after the notice period has ended on the changed terms, or terminate the employment relationship at the end of the notice period. If (i) and (ii) above were not fulfilled, the employee may make a claim for unfair dismissal.

    If changes to employment contracts are envisaged as a result of the transfer, the employee representatives (or if none, the employees themselves) must be consulted in good time before the relevant decisions are taken.

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    Author: Blesi & Papa

    Date: March 2017

    3.2 When can employers safely dismiss employees before or after a transfer?

    Based on the Swiss legal principle of freedom of termination, either party to the employment contract is free to give notice of termination in compliance with the applicable notice period. This applies also to transfer situations. Hence, there is in principle no restriction on dismissals in connection with transfers of undertakings, unless the sole reason for the dismissal is to avoid the transfer. Such a dismissal would circumvent the law and would be void. If the dismissal is justified by other reasons (e.g. a restructuring of the transferred business), however, it is admissible, subject to the general principles on protection of employees against dismissal.

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    Author: Blesi & Papa

    Date: March 2017

    4.1 Who must employers consult?

    The employer need only consult if measures affecting the employees are planned as a result of the transfer. Where no such measures are planned, the employer only needs to inform.

    Information or consultation should be with the employee representatives, or if none, the employees themselves. There is no general requirement to consult a trade union, unless there are rules about this in the applicable collective agreement.

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    Author: Blesi & Papa

    Date: March 2017

    4.2	What information must they provide?

    The employee representatives or, if none, the employees must be informed of the reasons for the transfer as well as its legal, economic and social implications for the employees in due time prior to the transfer.

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    Author: Blesi & Papa

    Date: March 2017

    4.3	What does consultation involve?

    The employee representatives or the employees must be consulted in due time before a decision is made regarding measures affecting employees such as dismissals, salary cuts, or major modifications to employment conditions (e.g. relocation).

    The consultation starts by providing the employee representatives or employees with the relevant information. The employee representatives or employees must then be given reasonable time to consider the matter and propose alternative measures. Finally, the employer must consider their proposals before reaching a decision. However, the employees' consent is not required.

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    Author: Blesi & Papa

    Date: March 2017

    4.4	How long does consultation last?

    The employee transfer law does not provide for specific deadlines, but according to recent court decisions, a consultation period of ten to 20 days is normally deemed sufficient.

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    Author: Blesi & Papa

    Date: March 2017

    4.5	What happens if an employer fails properly to inform or consult?

    There are no sanctions for breaches of obligations to inform or consult. Failure to inform or consult would not lead to the transfer being declared ineffective or suspended, nor would this entitle the employees to compensation.

    However, in the case of a merger, demerger or transfer of assets under the Merger Act, the employees may frustrate its registration in the commercial register if the merging entities have not complied with their information or consultation obligations.

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    Author: Blesi & Papa

    Date: March 2017

    5.1	Identify up to three issues in this country of which employers should be aware?

    If the business (or part of it) is transferred during a debt restructuring moratorium, in the course of bankruptcy proceedings or under a composition agreement with the assignment of assets, the employment relationship only transfers to the transferee if this has been agreed between the transferor and transferee and the employee does not object to the transfer.

    Note that there is very little case law in Switzerland with regard to employee transfer law, leaving many questions open in this field.

    Collective agreements often impose particular information and consultation obligations on the employer in the event of restructurings and business transfers.

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    Author: Blesi & Papa

    Date: March 2017

    5.2	Would the employee transfer law apply on a cross-border transfer into or out of this country?

    The main doctrine is that employee transfer law will apply where employment relationships that are subject to Swiss law are affected by a cross-border transfer. An alternative approach is that transfer law will apply if the transferred business or part of it is located in Switzerland.

    In the case of a merger, Swiss law applies if at least one party to the merger is based in Switzerland.

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    Author: Blesi & Papa

    Date: March 2017

    6.1	What are the main national laws protecting employees upon transfers of businesses?

    As Switzerland is not member of the EU, the EU acquired rights legislation does not apply to Switzerland. Switzerland has, however, autonomously reproduced EU acquired rights law in its own legislation in order to align it with EU law. The relevant legal provisions are Articles 333 and 333a of the Swiss Code of Obligations.

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    Author: Blesi & Papa

    Date: March 2017

     

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