Legal Nature of Mutual Termination in Switzerland#
Unlike unilateral termination, both parties contractually dissolve the employment relationship on negotiated terms. Employers frequently initiate agreements to circumvent mandatory statutory blackout periods under Art. 336c CO (illness or pregnancy).
The Unemployment Fund (RAV) Penalty Trap#
Signing without compelling necessity triggers severe penalties from the Swiss unemployment insurance fund (RAV). Voluntarily abandoning employment leads to up to 60 suspension penalty days (Einstelltage) without financial benefits.
Forfeiture of Statutory Blackout Protections#
By signing, employees waive mandatory statutory safeguards. Falling ill during the transition will not prolong the departure date, ending contractual compensation unconditionally on the agreed deadline.
Severance Payments and Full-and-Final Settlement Clauses#
A viable agreement demands genuine bilateral concessions: substantial financial compensation balancing potential unemployment penalties, paid garden leave (Freistellung), and unreservedly positive employment reference letters.
Immediate Due-Diligence Checklist#
Never sign documents under immediate meeting pressure. Insist on a review timeframe of at least 3 to 5 working days to consult a labor law attorney.
Five clauses that belong in the agreement#
A termination agreement is a settlement – and a settlement is only as good as its clauses. These five points should be fully drafted before you sign:
- End date and release from work. Does the employment relationship end on day X, and are you released from work until then? Without a release clause, the duty to work continues until the last day.
- Settlement of outstanding claims. Salary until departure, holidays, overtime, 13th-month salary, variable pay – one amount per item, or an explicit «no outstanding claims».
- Work reference. Record the content and the date of issue. A benevolent reference belongs in the agreement, not in an oral promise.
- Severance pay and due date. Amount, payment date, and whether it counts as AHV-liable salary or as compensation.
- Scope of the settlement clause. It should be limited to the claims known to both parties arising from the employment relationship – and not sweep in claims that had not yet arisen or become known at the time of signature.
In addition, check whether the agreement contains an obligation that reaches beyond the employment relationship: non-compete clause, client protection, statements towards third parties. Such clauses often have no place in a termination agreement – and still cost money.
Worked example: severance pay against suspension days#
The most frequent expensive mistake is severance pay that does not cover the disadvantage at the unemployment fund. Anyone who signs a termination agreement without clarifying the consequences with the RAV (regional job centre) risks suspension days: days on which unemployment insurance does not pay.
A simplified example: with a monthly salary of CHF 7 000 and a cancelled notice period of three months, one suspension day corresponds to around CHF 230 of daily allowance. With 30 suspension days you are therefore short around CHF 6 900 – and those days are not paid retroactively, even if a job is found later.
- Before signing: request an appointment at the unemployment fund and present the draft.
- Negotiate the severance pay: it should cover at least the expected suspension days, otherwise the settlement is an economic loss.
- Give factual reasons: if the termination is justified and documented on operational grounds, suspension days often fall away entirely.
Remember the order: first the feedback from the RAV, then the signature. Afterwards nothing in the agreement can be changed.