Caution with mass dismissal: Observe regulations!

For a mass dismissal within the meaning of the law, the number of terminations in relation to the size of the company is primarily decisive. In companies that usually employ between more than 20 and less than 100 employees, at least ten terminations are required for the mass dismissal rules to apply. In companies with 100 to 300 employees, at least ten percent of the workforce must be affected by the dismissals, and in companies with more than 300 employees, 30 or more dismissals constitute a mass dismissal.

In addition, the dismissals in question must be made within 30 days for reasons unrelated to the personality of the employees concerned. This means that only dismissals due to economic, technical or organizational circumstances are taken into account. Dismissals due to insufficient performance or undisciplined behavior are not included in the calculation. If there are mixed reasons for dismissal, the decisive reason must be identified in the event of a dispute.

Important: In the case of cessation of operations as a result of court decisions, as well as in the case of dismissals in bankruptcy or in the case of a composition agreement with assignment of assets, there is no mass dismissal within the meaning of the Code of Obligations. Other regulations apply.

Inform and consult employees before mass dismissal

If a company plans to make a large number of redundancies, it is essential to clarify in advance whether a mass redundancy is involved. If this is the case, the relevant provisions of the Swiss Code of Obligations must be complied with.

The following applies: Before the employer definitively decides on a mass dismissal, the employees must be consulted in good time. For this purpose, the employee representation or, if there is no such representation, the employees must be informed directly and appropriately about the reasons for the mass dismissal and the number and period of the planned dismissals. A copy of this notification must be sent to the cantonal employment office.

The employer must also give the employees the opportunity to submit proposals as to how the dismissals can be avoided or limited or their consequences mitigated. In this consultation procedure, the employees must be given a sufficiently long period of time. The employer is at least obliged to seriously consider the proposals. However, it is not necessary to give detailed reasons for rejecting them.

The obligation to inform and consult the workforce also exists if the mass dismissal has been decided by a foreign parent company without the influence of the Swiss subsidiary. In Switzerland, the Swiss subsidiary is the formal employer and in this capacity must comply with all legal obligations.

Information from the Labor Office: Start to the 30-day minimum notice period.

In addition to the initial employee information and after the employee consultation has been carried out, the employer must notify the relevant employment office in writing of the intended mass dismissal. A copy shall be sent to the employees or their representatives. The notification must contain the results of the employee consultation and all relevant information on the mass dismissal. The employees may also submit their comments to the Labor Office. The Labor Office is not required to verify whether the consultation procedure has been complied with. However, the Office shall, by law, seek solutions to the problems posed by the intended mass dismissal.

Important: An employment relationship terminated in the context of a mass layoff shall in any case end at the earliest 30 days after notification to the employment office or, in accordance with the contractual provisions, on a later date.

Obligation for a social plan

Companies with usually at least 250 employees that plan a mass dismissal of at least 30 employees within 30 days are obliged to draw up a social plan with the employee representatives. This sets out the measures to be taken to avoid or limit the redundancies or to mitigate their consequences. The subjects of the agreement are often internal job placement, customized outplacement including training, courses and further education, early retirement or severance payments.

Sanctions for employers in case of non-compliance with mass dismissal rules

If there is a mass dismissal and the rules of the Code of Obligations are not complied with, this has noticeable consequences for the employer at fault. According to Article 336 of the Code of Obligations, any dismissal that takes place in the context of a mass dismissal covered by the law without consulting the employee representatives or the employees is abusive. Any employee affected who raises an objection to his or her termination in good time is then entitled to a maximum of two months' salary. In addition, failure to report the dismissal of more than ten employees can be punished with fines of up to CHF 40,000.

Assemble a project team for mass redundancy

With regard to a mass layoff, it is advantageous to assemble a project team. In addition to management representatives and experts in the fields of law, tax, insurance and communications, this team should include a specialist for personnel issues in times of change. This is because a planned and necessary mass layoff is associated with considerable risks for the future of the company. In particular, unnecessary costs must be avoided.

The consequences of reputational damage and the negative impact on the morale of remaining employees associated with productivity losses are often underestimated. It is therefore important to organize and implement mass redundancies as smoothly as possible. The choice of the most suitable personnel measures for the benefit of the affected and remaining employees plays a key role.

Caroline Pfeiffer Marinho is Country Manager Switzerland at Lee Hecht Harrison in Zurich.