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26 March 2020

The global economic impact of the COVID-19 pandemic threatens the existence of many companies. The set of measures adopted by the Swiss Federal Council to cushion the economic consequences and the introduction of reduced working hours to bridge a temporary shortfall in employment are giving companies a breather. In the medium or longer term, however, significant restructurings to the business may not be excluded. Employers will also have to consider collective redundancies or site closures.


Definition of "Mass Dismissal"

A mass dismissal is assumed where a certain number of termination notices – depending on the overall size of the workforce – are issued by the employer within a business for economic reasons within a period of 30 days. Individual dismissals for personal reasons (e.g. poor performance, inappropriate behaviour) are not considered.

As per the statutory thresholds, a mass dismissal is triggered where the relevant termination notices affect:

  • At least 10 employees in a business usually employing 21 to 99 employees;
  • At least 10% of the workforce in a business usually employing 100 to 299 employees; and
  • At least 30 employees in a business usually employing 300 or more employees.

Information and Consultation Requirements

Information

If the employer contemplates a mass dismissal, the employer has to inform the employees (or, where applicable, the employee representative body) hereof in writing and provide them with any additional appropriate information. As a matter of law, the written information must include at least the following:

  • Reasons for the mass dismissal (or site closure);
  • Number of potentially affected employees;
  • Number of employees usually employed within the business; and
  • Timeframe, within which the individual termination notices will be issued.

A copy of the information letter must be submitted to the competent cantonal labor office.

Consultation

Following the written information, the employer must consult with the employees (or the employee representative body, as applicable). The employee consultation is aimed at providing for a dialogue between the parties with respect to the intended mass dismissal and its consequences for the employees. The employees must at least be provided with the opportunity to make proposals on how:

  • Terminations may be avoided;
  • The number of terminations may be reduced; or
  • Their consequences may be mitigated.

The employer is not obliged to follow the employees' proposals. The employer must, however, carefully consider the employees' proposals and give at least a broad outline of the reasons if and why their proposals are being rejected.

Obligation to Negotiate a Social Plan?

Implementing a social plan is generally not mandatory in case of a mass dismissal. A legal obligation of the employer to negotiate a social plan only applies if, in a business usually employing at least 250 employees, the employer intends to dismiss at least 30 employees for economic reasons within a period of 30 days.

Employer's Decision and Individual Termination Notices

The duration of the employee consultation procedure is not prescribed by law. However, the employees must be given sufficient time to process the information provided by the employer and to make constructive proposals. In practice, for cases of average complexity, a consultation period of approximately 14 days is considered reasonable.

Upon completion of the consultation procedure, the employer must in writing notify the local labor office of its outcome and the employer's final decision regarding the terminations. The employees (or, as the case may be, the employee representative body) must be provided with a copy of the outcome letter.

Individual termination notices may be issued only once the outcome letter has been submitted to the labor office. In this case, the employees' employment relationships will terminate upon expiry of the contractual notice period (but in any case not before the expiry of a period of 30 days from the written notification to the labor office).

Risks and Recommendations

In case of a violation of the employer's statutory consultation obligations, the termination notices issued in the context of the mass dismissal may be challenged by affected employees as being abusive. In such case, the employer may be ordered by a judge to pay affected employees a penalty of up to 2 monthly salaries.

dditionally, the employees' notice periods are suspended for a duration of 30 days following the employer's submission of the outcome letter to the labor office. This means that, where the employee consultation has not been properly conducted, the consultation procedure must be repeated before the notice periods may expire.

Employers should be particularly careful if reduced working hours have been implemented prior to the mass dismissal. If only employees, who have refused their consent to reduced working hours, are being selected for dismissal, such a selection would be abusive. In addition, affected employees who have agreed to reduced working hours, might seek to claim damages from the employer. These employees might argue that they had only accepted the corresponding loss of salary (i.e. 20% not covered by reduced working hours benefits from the unemployment insurance) in the legitimate expectation that their jobs would be secured. In case of their subsequent dismissal, they might try to claim back their loss of salary from the employer.

The VISCHER employment team is happy to assist you with any questions you may have in connection with potential mass dismissals or site closures.

Authors: Marc Ph. Prinz, Florian Schaub

Topics: Mass DismissalEmployment LawEmployerCoronavirusSite Closure

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