How to Make Contract Changes Correctly
When market conditions change, orders decline, and revenue drops, agencies are forced to cut costs. Since wages account for a large portion of operating costs, it makes sense to cut back on staff. However, certain rules must be observed, writes Irmtraud Bräunlich Keller, an employment law expert at the Beobachter Advisory Center.
First things first: Employers are not allowed to simply send home employees they cannot currently keep on the job and reduce their wages accordingly. This would only be permissible for individuals who are expressly hired on an on-call basis and who, in the past, were also employed only irregularly and as needed. For everyone else, the rule is: Contracts must be honored. Under the Swiss Code of Obligations, companies that can no longer employ someone—or can only employ them to a limited extent—are still obligated to pay the usual wages. Employees are not required to make up for the involuntary reduction in working hours. This applies until the employment relationship is properly terminated (Art. 324 CO).
Of course, you can adjust your employees’ contracts to reflect changes in economic conditions. This means you can implement pay cuts (A420310), reduce the workload of individual employees, or scale back overly generous expense policies, bonuses, or long-service gifts to a realistic level. You can also eliminate voluntary benefits entirely. However, this cannot be done overnight—unless the employees agree. If an amicable agreement is not possible, you can only amend the contracts by complying with the applicable notice period (known as a “notice of amendment”). To do so, it is sufficient to present the contract amendment to your employees for their signature, specifying that the changes will take effect only after the applicable notice periods have expired. For example, if the contract amendment is communicated in April, the new terms will take effect on August 1, assuming a three-month notice period. Another option is to expressly terminate the existing contracts while simultaneously offering employees a new contract with revised terms. This approach is recommended when not only individual provisions are being changed, but entirely new contract terms are to apply.
According to the Federal Supreme Court, termination for cause is permissible. In exceptional cases, however, such a termination may be deemed abusive if it results in a significant deterioration of working conditions for which there is no objective justification. The burden of proof, however, lies with the employee. It would clearly be abusive, however, to threaten an employee with termination if they do not agree to an immediate change to their contract.
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Labor Law: From the Contract to Termination
This handbook by an Observer labor law specialist provides clarity. What should be included in an employment contract? What should you do if your pay is cut? How does overtime work? How do I give proper notice of termination? How can I defend myself? Here you’ll find expert answers to your questions, landmark court rulings, and plenty of practical tips. 272 pages, CHF 36.–
11th, revised and updated edition, 2011.
ISBN 978 3 85569 440 2
Beobachter Publishing House
