In an economically challenging global context, Switzerland has continued to perform well. Its open economy remains well integrated into the process of globalisation.
Swiss GDP is one of the highest in the world and is expected to increase by 1.5% in 2017. The unemployment rate is one of the lowest globally at around 3.6%. Despite these figures, economic challenges continue to arise from the strong appreciation of the Swiss franc, as well as the weakening of banking secrecy.
Since the beginning of the 21st century, a number of European Community nationals have come to work in Switzerland thanks to bilateral agreements between the State and the EU. Although Switzerland is indeed not a member of the EU, Switzerland has entered into a number of agreements with a view to opening its market to European workers.
Switzerland is also a member of the European Free Trade Association (EFTA) and has entered into free trade agreements with various countries, including China and Canada. The number of cross-border workers has regularly increased over the course of the last decade, reaching approximately 100,000 people in the Canton of Geneva (out of a total population of around 460,000 inhabitants). As a result, Swiss workers are used to working in multicultural environments.
Several legal tools have accompanied the opening of borders, including the possibility for Swiss authorities to set minimum wage standards in sectors that suffer from wage dumping. In Switzerland, minimum wages have traditionally only been raised through collective bargaining agreements and were therefore negotiated between social partners. However, there is no national minimum wage in Switzerland – only ones that apply in certain regions. The state may impose a minimum wage in a specific business sector where there is a risk of dumping, as has been the case in the beauty sector.
Implementing a vote by the Swiss population, the Swiss Parliament recently drafted a bill requesting that the Federal Council take limited steps in occupational groups, fields of activity or economic regions with above-average employment rate.
In the scope to be demarcated by the Federal Council, vacancies that are not directly filled by employees registered at Swiss public employment services will have to be communicated first to the public employment services for them to suggest potential candidates for an interview or aptitude test. The purpose is to favour the hiring of employees already registered to Swiss public employment services and exhaust the workforce already present in Switzerland. This solution is considered as still admissible in the context of the abovementioned bilateral agreements between Switzerland and the EU. Both the government and the Swiss economic community are keen to respond to the requirements of an open economy.
Generally speaking, observers agree that Swiss employment law is well-adapted to the structure and needs of the corporations based in the Swiss market. Swiss employment law creates a favourable balance between the need to protect workers and the demand for businesses to be flexible. A system with a range of social insurance branches makes it possible to cover the risks incurred by employees at reasonable rates for companies. Employer-employee relations in Switzerland are traditionally calm and harmonious. Strikes are uncommon.
Employment law falls under different acts, among which the code of obligations and the labour act are of most significance.
The employee has to follow instructions set by the employer and comply with company rules. In return for this obligation of compliance from the employee, the employer has to protect the personality of the employee and respect specific rules regarding e.g. maximum working hours, maternity protection, safety and security standards, etc. Case law is also very important.
Swiss employment law has not been significantly amended in recent years and remains relatively liberal. In principle, dismissal remains free (penalties may be imposed if the dismissal is unfair), and the majority of employers offer permanent contracts.
There have been recent further developments in:
- Accident Insurance: the scope of this insurance has been extended in order to fill some gaps that could arise at the beginning or end of an employment term.
- Bonuses: in many recent verdicts, the Swiss Federal Court has clarified the system of variable remuneration with regard to employment law, thus providing welcome clarification.
The Court recalled that the distinction between a variable salary and a gratuity is crucial, as the rules applicable to each of these forms are fundamentally different. Additionally, the Court ruled that the law of subsidiarity, under which a bonus can only be considered as a gratuity if it remains secondary when compared with the base salary, does not apply to employees whose annual remuneration is already five times greater than the median Swiss salary in the private sector (currently around CHF370,000).
- Recording of working time: the employer has an obligation to record employees' working time. Each employer is free to adopt a recording system that suits the business activity and organisation of work within their company.
As of 1 January 2016 the law provides for the possibility, under very restrictive conditions, of waiving or of simplifying the recording of working time. For instance, a total waiver of the recording of working time is possible with respect to employees with a high level of autonomy if a collective bargaining agreement is signed (amongst other conditions). A simplified recording is possible with respect to employees who can decide a significant part of their work schedule if a collective agreement is signed (amongst other conditions).
- Redundancy schemes: traditionally, the negotiation of a redundancy scheme was not mandatory unless an undertaking had been taken in respect thereof in a collective bargaining agreement. Since 1 January 2014, companies with at least 250 employees must enter into a redundancy scheme with trade unions if collective redundancies involve more than 30 employees within 30 days (or are for the same reason but spread out over time). In the event that the partners are unable to reach an agreement regarding the content of the redundancy scheme, the content will be set by an arbitral tribunal.
- Variable pay and other compensation: since 2014, as a rule, the pay of board members and the management of Swiss public companies listed on the Swiss or foreign stock exchanges has to be approved by the general meeting of the shareholders. This so-called "Minder Ordinance" aims to strengthen the rights of shareholders. It also strictly prohibits certain types of pay, such as golden parachutes.