Wrongful dismissal

The legal consequence of wrongful dismissal is the payment of punitive damages up to a maximum of six months’ salary. Claims for compensation from other legal entitlements are reserved by law. In practice, it is rare in cases of wrongful dismissal for courts to punitive damages of more than three months’ salary.

A subcategory of wrongful dismissal is wrongful dismissal due to age. Two forms of this exist:

• The first form is based on an instance of wrongful termination that is explicitly specified in the legislation, namely Article 336 1 (a) CO, which refers to a characteristic belonging to the other party by virtue of their identity, unless this characteristic relates to the working relationship or significantly impedes cooperation with the company. This form of dismissal due to age considers the age of a person to be such a characteristic. If the employer terminates the employment relationship due to the age of the employee, the dismissal will be considered wrongful unless the employer can produce the aforementioned justification.
• The second form is relatively new (2014) and is not based on an instance of abuse specified in the law, which is possible as stated above. It relates to a construct established by the Swiss Federal Supreme Court and is based on the ‘employer’s increased duty of care towards older employees’ and the ‘moderation in the exercise of rights’ when older employees are dismissed, especially those who have additionally worked at the company for a long period of time.
  
  Here it may be said that the older an employee is, the less their length of service becomes an issue, and the longer an employee has worked at the company, the less important their age is. This means that an employer has an increased duty of care towards an employee who is 55 years old and has worked for the employer for more than 20 years. For a 64-year-old employee, even six years of service can be enough for the employee in question to benefit from this special protection which has emerged from the jurisdiction by the Federal Supreme Court.

Regarding the increased duty of care, the Federal Supreme Court has proposed procedural obligations on the part of the employer to ensure the dismissal is not categorised as wrongful. The obligations specified by the Federal Supreme Court are:

a. Obligation to inform

b. Obligation to consult

c. Obligation to search for a solution

The Federal Supreme Court held that the method and manner of the dismissal must be given special attention in the case of older employees. Namely, the employee is entitled to be informed about the intended dismissal in due time and to be heard, and the employer is obliged to look for solutions that may make it possible to maintain the employment relationship. The Federal Supreme Court also emphasised that it must still be possible to dismiss older employees, because otherwise this would be in contravention of the principle of freedom to terminate an employment contract, which is an important feature of Switzerland’s liberal employment law. In addition, the Federal Supreme Court stated that the approach outlined results from the extended duty of care. Given that termination of the employment relationship is the strongest possible sanction under employment law, it addresses the affected employee’s entitlement to treatment that is considerate and balances the interests on both sides.  

In a high-profile decision taken at the beginning of June this year, the Federal Supreme Court specified its jurisdiction with regard to wrongful dismissal due to age. The case related to a 60-year-old CEO who had worked for his employer for 37 years and unambiguously fell into the specially protected category of employees. The cantonal lower courts had affirmed that the dismissal was wrongful due to the factors of ‘age’ and ‘length of service’ after the employer failed to fulfil the three obligations mentioned above. This was criticised by the Federal Supreme Court. The Federal Supreme Court went on to state that the Code of Obligations does not recognise a general obligation for the employer to first listen to the employee and give them a warning. It also stated that an employer does not need to review every case from the perspective of proportionality to determine whether a more lenient measure would be possible. The cantonal lower court should have taken into consideration the specific position held by the employee at the company in question. Specifically, keeping a CEO employed at the same company in another position is very difficult to arrange. In the case of a CEO with a lot of responsibility and significant decision-making power within a company, greater weight is to be attached to the interest of the employer to terminate the employment relationship. With its new jurisdiction, the Federal Supreme Court has emphasised the importance of making decisions on a case-by-case basis and taking the particular circumstances of the case into consideration.