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Employment & Benefits
Each year many Swiss corporate clients ask the same question: are bonus payments under an employment contract at the full discretion of employers and therefore voluntary or do employers have an enforceable financial obligation in this regard? This article addresses the factual and legal considerations which usually play a role when HR departments prepare for the yearly bonus season.
Since 1981, the Federal Constitution has guaranteed equal wages for men and women who carry out similar work; however, a wage disparity exists that arguably cannot be explained by anything other than gender. The revised Federal Act on Gender Equality, which enters into force on 1 July 2020, aims to remedy this situation. Under the new regime, companies with 100 or more employees will be obliged to carry out an internal wage equality analysis every four years to identify any gender pay gaps.
Many companies advertise and sell sophisticated video interview software to large companies for recruitment purposes. While applicants are interviewed from the comfort of their own homes, up to 20,000 data points can be collected from this type of interview and analysed instantaneously using algorithms to find the right employee. However, many legal issues have arisen following the introduction of this software.
The basic rule 'no wages without work' dictates that employees who perform no work, including those deemed incapable of working, should not receive wages. However, Swiss employment law provides for exceptions in some circumstances. This article addresses the circumstances in which employers must continue to pay employees who are unable to work, how long employers must continue to pay such employees and the circumstances in which employers may request medical certificates.
Swiss companies have long relied on workforces that are largely homogeneous as this is believed to maximise employee performance and efficiency. However, after 2000 the industry perspective shifted as large companies came to regard diversity management as an instrument for improving equality and reputation. Today, diversity plays a crucial role in creating sustainable organisational structures and can even benefit companies economically.
On-call work is a special form of part-time work arrangement under which neither the date nor the duration of the assignment are determined in advance. Switzerland has no legislation specific to on-call work and its legal doctrine provides limited definitions. Despite a lack of coherent criteria in this regard, on-call work is an increasingly favourable option for employees who require greater work-life flexibility.
As most new job applications are compiled, sent and processed electronically, employers must bear in mind that any personal data collected should be strictly limited to that which is required to assess and finally decide on the most suitable candidate. Processing data which does not relate specifically to the selection of a suitable candidate could violate data protection and privacy rules.
In Switzerland, it is still considered inappropriate to discuss wages. Data on workers' average monthly income is difficult to obtain because no reliable statistics are available and living costs and salaries vary across each canton. The taboo surrounding wages and the lack of guaranteed equal pay for male and female workers suggests that there is still much work to be done in this regard.
Employers in Switzerland must provide work references that allow former employees to obtain new employment positions and may be liable for any false or overly negative work references that harm an employee's job search. As reviews of potential candidates' online profiles are common, the question remains as to whether candidates and employers may be held liable for professional recommendations posted on (for example) LinkedIn.
Under Swiss employment law, employees are entitled to only three fully paid care days for an ill child; there is no regulation for parents, siblings or partners. Switzerland is not as generous as other countries regarding care leave, although some Swiss companies offer staff spontaneous and pragmatic solutions to family emergencies. However, US companies in Switzerland, such as Google and Microsoft, offer a number of weeks' paid care leave per year.
A pilot was immediately terminated by his employer after lying about his absence from work using a false medical certificate. The Bulach District Court and the Supreme Court both rejected the pilot's claim of unfair dismissal, holding that his actions were not only morally disturbing, but also seriously violated the contractual obligation of fiduciary duty. The pilot has requested additional review from the Federal Supreme Court.
The Federal Supreme Court recently held that independent taxi drivers affiliated with a central headquarters are to be considered employees. Until this decision, taxi drivers connected to their headquarters by follow-up contracts only were considered self-employed. The decision means that drivers will be much better protected in future, although prices will rise for consumers as a result.
The State Secretariat for Economic Affairs (SECO) recently issued guidelines focusing on intragroup staff transfers, which often require governmental authorisation based on proven professional qualification and the provision of financial security. According to the SECO, intragroup staff leasing is permissible without a governmental licence only if it is time restricted and occurs occasionally, provides the employee with professional or linguistic experience or serves another specific purpose.
The termination of an employee with cause and without observing a notice period must meet various conditions under Swiss employment law. When an employer obtains reasonably secure and complete knowledge of the grounds for dismissal, it must decide whether to use the right to terminate the employment contract immediately. A consideration period of up to three working days is generally considered appropriate.
The place where an employee will perform his or her work is an important yet often overlooked component of employment contracts. Overlooking present and potential work locations of employees could be problematic if a dispute arises since the place of work at the time of a dispute often determines the judicial forum and the applicable employment law.
A high-ranking Geneva bank manager was dismissed in November 2015 following an internal money-laundering investigation. The Canton of Geneva Upper Employment Court awarded the bank manager a damages payment for abusive dismissal, bonuses for 2012 and 2013 and a damages compensation payment for forfeited blocked shares. The Federal Supreme Court held that there had been no abusive dismissal and that the bonuses were no longer owed.
The Supreme Court recently ruled that a medical officer called upon by an employer to render a second opinion on the working capability of an employee in case of accident or sickness remains bound by his or her professional confidentiality rules. In other words, without prior authorisation by the employee, the medical officer may express an opinion only on the existence, duration and degree of work incapacity, including the cause of absence.
Flexible management compensation remains a bone of contention in Switzerland. The board of directors of the Bank of Liechtenstein (LLB) has increasingly seen such discussions as a burden. According to the chairman of the board, in the past LLB's compensation wage regime was linked to net profits. However, this became unsatisfactory. At the beginning of 2013, LLB (which is listed on the Swiss Stock Exchange SIX) introduced a new compensation system.
The largest employee group in the Swiss labour market is workers over 50 years old. Trade unions, representatives of this age bracket and lawyers specialising in labour law are therefore demanding increased protection for older workers against age discrimination. Both employee and employer representatives have stated that the federal government's main argument against special protective regulations that fewer staff over 50 years old will be recruited is probably unjustified.
In many Swiss hospitals, mandatory labour laws are a 'dead letter': 52% of doctors do not adhere to the maximum weekly working time of 50 hours, which has been in force since 2005. On average, physicians who work full time work 55 hours per week. This is true regardless of whether they are employed by a university, cantonal or regional hospital. In particular, the self-declared workload of assistant doctors and surgeons is exceptionally high.
A staff member of a foreign embassy in Geneva approached two female passport seekers by calling them privately outside regular office hours and inviting them for dinner. The staff member was invited to attend the foreign consul's offices in order to be confronted with the alleged incidents. The Supreme Court held that an employer confronted with a significant violation of employee duties must decide whether to issue an ordinary or extraordinary termination, the decision of which will be binding.
A leading media house in Switzerland, the Tamedia Group, has been testing a new compensation model for online journalists. Writers will receive Sfr100 bonuses per quarter for the most clicked (not necessarily read) articles. In addition, the journalist with the highest number of clicks will be paid Sfr800 per trimester, with Sfr500 and Sfr300 paid to the journalists in second and third place. Entire teams will benefit from a Sfr1,500 bonus if they can increase the total number of clicks from the previous month.
In a recently published decision, the Supreme Court held that employers are obliged to disclose employment contracts and other relevant documents relating to pay and working conditions to the 26 so-called 'cantonal tripartite commissions', which serve as control bodies for protection against wage and social dumping in Switzerland.
Uber is considered by many to be a globally operating transport company with 10,000 employees in approximately 60 countries. Whether an Uber driver is an entrepreneur or an employee affects a variety of legislative areas. If Swiss employment laws apply, the employee has a basic right to perform the agreed-upon work. However, among other factors, under the relative investment comparison test applicable in Switzerland, Uber drivers are not classed as employees, as they cover all other operating costs.
Following a report issued by the federal government stating that there is no need for legislative action for remote home workers, National Councillor Thierry Burkart launched a parliamentary initiative to provide further flexibility for remote home workers. The initiative has already drawn fierce opposition from major trade unions, even though trade unions and green parties are otherwise in favour of remote home work to further the work-life balance and reduce the daily commute.
Following the issuance of specific 'fat cat' regulations in 2014, the federal government proposed that fixed and flexible compensation packages of board members and high-ranking management in state-owned enterprises should be regulated by the end of November 2016. Flexible compensation elements (particularly bonuses) can no longer exceed 50% of the fixed salary and fringe benefits cannot exceed 10% of the fixed salary.
There is an emerging trend towards part-time or even full-time remote work in Switzerland. Due to this emerging trend and in order to address the potential need for more legislative regulation, the federal government recently issued a report which comprehensively reviewed existing employment, data protection and health and safety legislation, including income tax aspects of remote work.
The consultation process for the federal government's draft bill requiring employers with 50 or more employees to conduct a wage analysis every four years recently closed. Following widespread scepticism regarding the increased wage control mechanisms, it is now proposed that only employers with more than 100 employees fall under the new regime. Certain parliamentarians have also pleaded for an automatic repeal of the proposed new law after 10 years.
The Zurich Administrative Court recently ruled that female kindergarten teachers were not discriminated against, despite receiving 13% less in salary than male professional apprenticeship teachers. According to the court, the complainants failed to demonstrate that the demands of the job had increased substantially since 1999, when the court had performed a comprehensive review of the classification of female kindergarten teachers.
It is increasingly evident that labour laws no longer reflect the needs of a modern service society. Switzerland's working hours regime is routinely breached and yet exceptions to the rules are available only in limited cases. Unsurprisingly, a professional alliance of the auditing, trust, IT and public relations sectors wants to adapt the law to ensure that senior employees and highly qualified professionals are no longer limited by maximum working hours and minimum daily rest periods.
The Zurich Supreme Court recently rendered a long-awaited decision regarding a former Swiss banker who had on a number of occasions presented CDs containing bank client data to the media. The court held that Swiss bank secrecy laws had not been violated because the banker had been employed by a Cayman Islands bank. However, the court was unwilling to accept the former banker's defence that that he had acted as a whistleblower.