Handling Mass Layoffs

Definition and Requirements

Legally, mass layoffs are only considered when certain minimum numbers are met. These numbers depend on the size of the workforce. In a company with more than 20 but fewer than 100 employees, this is 10 employees. In companies with 100 to 299 employees, at least 10%, and in companies with 300 or more employees, at least 30 people must be affected by a layoff. If you have fewer than 20 employees, the term "mass layoff" does not apply at all.

The law also defines mass layoffs as occurring when terminations are issued by the employer in a company within 30 days. The legislature deliberately chose such a long time frame to prevent entrepreneurs from attempting to circumvent the legal consequences of mass layoffs. This means that even if you do not issue termination notices to all employees on the same date but spread them over several weeks, it still constitutes a mass layoff.

Caution is also required if you continuously lay off a certain number of employees over an extended period. Once the impression arises that you may have chosen this approach deliberately to avoid the obligations of a mass layoff, you may still be required to comply with them.

The reasons for termination in the case of mass layoffs are exclusively of a purely operational nature and are not related to the employees. Common reasons include the company's economic difficulties necessitating restructuring or closing individual departments and the associated reduction in jobs.

Legal Basis

The basis of the above definition of mass layoffs is anchored in Swiss law under Art. 335d of the Code of Obligations (CO). All indefinite and fixed-term contracts terminated before the agreed end date are affected.

Please note that within our text, we focus exclusively on private law. There are partly divergent regulations for public law employment.

Exceptions

There are situations where you do not have to comply with the legal obligations of mass layoffs. These include the bankruptcy of your company or court decisions. For example, the closure of a business due to a violation of the Food Act falls under this. Also, an inheritance contract with asset transfer excludes you from the obligations of a mass layoff according to Art. 335e para. 2 CO.

Procedure for a Mass Layoff

Now let's take a closer look at the five legally required steps in the event of a mass layoff.

1. Information of Employee Representation

You have already spent many sleepless nights examining all possibilities. However, you currently see no other way out of the crisis? Then it is time to take the first step and inform the employee representation. Their consultation is legally required. It is important to involve the employee representation before making a fixed decision. At this stage, the conversation is not aimed at creating a social plan but at discussing and developing proposals. This way, you may be able to completely avoid or reduce the number of layoffs. A wage cut is just one possibility among many.

Smaller companies often do not have an employee representation. In this case, address your words directly to the workforce.

2. Information Meeting with the Workforce

If you have an employee representation, their obligation to inform takes precedence. After that, you must now inform your employees about the planned job cuts.

The communication must at least answer the following questions:

• What are the reasons for the planned mass layoff?
• How many employees are to be laid off?
• When will the terminations take place?

If necessary, an explanation of the total number of employees in a department/company is also required. Furthermore, employee information must always be provided in writing. Art. 335g para. 2 CO specifies exactly what must be included in the letter.

3. Consultation Period

After consultation, the parties must be given a certain period to allow them to exchange views, develop ideas, and submit proposals. The goal is to completely avoid terminations or reduce their number. Otherwise, you should at least accommodate the employees as far as possible. The law does not specify how long the consultation period must last. However, there is a guideline that can be followed. According to this, the Federal Court considers a period between 24 hours and 5 days too short, and one between 4 and 6 weeks too long.

4. Notification to the Employment Office

The employer is obliged to inform the cantonal employment office about the planned job cuts. This is done by sending a copy of the original letter to the workforce. Additionally, you must inform the employment office of the measures jointly agreed upon with the employee representation. Furthermore, it is also possible for the employee representation and the workforce to present their elaborated points.

The cantonal employment office thus represents the next party to examine the case and the prevailing problems. The office also has the task of finding possible solutions and helping the process to a reasonable outcome. However, the employment office does not have legal decision-making power. It cannot decide or reject mass layoffs.

5. Preparation of a Social Plan

A social plan combines all the measures mentioned above and must be drawn up in writing in any case. Professional collaboration of all parties involved is essential.

Effectiveness and Notice Periods

Starting from the day of informing the employment office, terminations within the scope of a mass layoff become effective after at least 30 days.

It is important to know that the 30-day notice period only applies to employees who do not have an employment contract or whose contract does not contain any termination rules. Otherwise, the notice period agreed upon in the contracts is always decisive. Furthermore, please note that pregnant or sick employees are still protected, and therefore, a waiting period applies.

Failure to Comply with the Obligation to Inform

If you fail to fulfill your obligation to inform, the terminations are valid, but you may face legal consequences. In this case, your termination is considered abusive in legal terms. High fines and penalties are the consequence. For example, in the absence of information to the employment office, administrative law imposes a fine of up to CHF 40,000. Additionally, the offense affects termination dates, and employees can claim compensation of up to 2 months' salary.

Conclusion

A mass layoff is a far-reaching decision with equally far-reaching consequences. It is essential to be legally protected. With a specialist lawyer for labor law, you are. GetYourLawyer helps you find a lawyer who suits you and your individual case. Send your online inquiry and receive suitable offers.