– March 23, 2021

4 tips for drawing up an employment contract

Once the desired employee has been found, an employment contract must be drawn up. Although the employment contract is regulated by the Swiss Code of Obligations (OR), many SMEs face questions when drafting an employment contract. Here are important points that employers should bear in mind.

Standard employment contract or collective employment contract: Observe regulations

Depending on the industry, it is possible that a collective or standard employment contract applies. If collective or standard employment contracts have been declared generally binding, these provisions, such as those concerning wages or holidays, must be observed. The SECO website provides information on which agreements or provisions have been declared generally binding.


Special case of hourly wages: state holiday compensation

According to current case law, financial compensation for holidays is only permissible as an exception if the employment is irregular. If this is the case, the portion of the salary intended for holidays must be clearly and explicitly stated in the written employment contract as a quantified amount or percentage and shown separately on the pay slip.


Periods of notice: Record the periods of notice

The notice periods must be the same for both parties, but in principle they can be freely chosen. After the end of the probationary period, however, the notice period must be at least one month.

The law provides in Art. 335b f. for the following notice periods in the case of an unlimited employment relationship:


  • during the probationary period: 7 calendar days (to the end of any day)
  • in the 1st year of service: 1 month
  • 2nd to 9th year of service: 2 months
  • from the 10th year of service: 3 months


According to the law, the employment relationship can be terminated at the end of a month by observing the notice period. It may be advisable to deviate from this rule in the employment contract and state that termination is possible at any time. This regulation can be advantageous for the employer if the employee becomes incapacitated for work during the notice period and the employment relationship is therefore extended due to the blocking period.

Example: If the employee is sick for 10 days, the employment relationship is extended by a whole month, as the employment relationship can in principle only end at the end of a month. However, if the employment contract states that the employment relationship can end at any time, the employment relationship is extended by exactly 10 days in our example.

In the case of fixed-term employment, it should be noted that the law does not provide for a notice period. However, the parties may agree on a notice period so that the employment relationship can be terminated before the agreed end date in compliance with the notice period.


Period of continued payment of wages during illness: daily sickness benefit scheme

According to the law, the employer is obliged to pay its employees 100% of their salary for three weeks during the first year of service in the event of illness. From the second year of service onwards, the period of continued payment of wages is based on the respective scales. Other arrangements are possible, but they must be equivalent and agreed in writing. A daily sickness benefit solution is usually equivalent, but the following points must be stipulated in the employment contract or in regulations:


  • risks covered by the insurance
  • percentage of the insured salary
  • duration of the benefit
  • modalities of financing


It should also be noted that in the event of incapacity for work, benefits paid by third parties (such as daily allowance insurance) take the place of salary payments. In some cases, these are not subject to social security contributions. As a result, the net wage may be higher than during the period of incapacity for work. This can be corrected by so-called net wage compensation. If a corresponding written regulation is included in the employment contract, it is permissible to reduce the wage to the previous net wage.

If you have any questions about the above tips or would like support in drawing up employment contracts or regulations, we will be happy to advise you.