Severance Pay in Switzerland

Statutory Severance (Art. 339b CO)

Swiss law provides a statutory severance payment in one narrow scenario (Art. 339b CO): employee is 50 years or older AND has at least 20 years of service, AND the employment is terminated by the employer (or by agreement). Amount: between 2 and 8 months' salary depending on years of service. This applies only to the base salary, not to bonuses or allowances. Importantly, this entitlement does not arise if the employee resigns voluntarily.

Negotiated Termination Agreements

Most severance in Switzerland arises from mutual termination agreements (Aufhebungsvertrag / accord de résiliation), a negotiated exit. These can be used to avoid notice periods, release the employee immediately and provide a payment. There is no legal formula for the amount; it depends on leverage, negotiations and company policy. Typical range: 1 to 6 months' salary per year of service. Key: the agreement must be voluntary, economic pressure or health problems when signing can render it voidable.

Tax Treatment and ALV Implications

Severance pay is taxable as income. It is subject to a preferential tax rate (capital payment tax treatment in some cantons), separate from ordinary income. AHV contributions apply. Regarding ALV: a severance payment can reduce or suspend ALV benefit eligibility if it is structured as 'salary in lieu of notice' (it covers the notice period). Properly structured as 'compensation for lost employment', it may not affect ALV entitlement. A tax and employment lawyer should review any package above CHF 50,000.

Context on the Swiss job market helps frame any career decision in Switzerland. Our gross-to-net salary guide shows what Swiss gross salaries look like after AVS, LPP and tax deductions. The salary negotiation guide covers how to use market data in offer discussions and which arguments work with Swiss recruiters. Our guide to working in Switzerland as a foreigner covers entry conditions, permit categories and practical relocation steps. The work permit guide explains B, C, G and L permit categories and processing timelines. For cross-sector salary benchmarks, the Switzerland salary guide covers all major roles and cities.

---

Frequently Asked Questions

Am I legally entitled to severance pay when dismissed in Switzerland?

Only if you are 50+ years old with 20+ years of service with that employer (Art. 339b CO). In all other cases, severance is not legally required, it must be negotiated.

How much severance can I negotiate in Switzerland?

Depends on your leverage, years of service, position and company policy. Typical range: 1–3 months per year of service, subject to a cap. Executives and senior managers typically negotiate more.

Does a severance payment affect my unemployment benefit?

It depends on how it is structured. A payment equivalent to salary in lieu of notice extends the period before ALV starts (by the corresponding number of months). A 'compensation' payment specifically for loss of employment typically does not affect ALV entitlement.

What is the 13th month salary in Switzerland?

The 13th month salary in Switzerland refers to an additional monthly salary paid once a year, typically in December. It is included in annual salary benchmarks as standard: when a Swiss employer quotes CHF 120,000 per year, this normally means 13 monthly payments of approximately CHF 9,231 each, not 12 payments of CHF 10,000. The 13th month is governed by the employment contract or collective agreement (GAV), not by statute. It is subject to social contributions (AHV/ALV) and income tax. Always clarify with a prospective employer whether a quoted annual figure includes or excludes the 13th month.

How do Swiss notice periods work for employment contracts?

Under Swiss law (Code of Obligations, Art. 335c), notice periods during probation (default 1 month, up to 3 months by agreement) are 7 days. After probation, statutory notice periods are: 1 month during the first year, 2 months in years 2 to 9, and 3 months from year 10 onwards. Notice must be given in writing by end of calendar month (or end of the agreed notice period month). Contractual or GAV notice periods can be longer but cannot be shorter than statutory minimums. Protected periods exist (illness, accident, pregnancy) during which termination is suspended or prohibited.