Severance Pay in Switzerland
There is no general legal right to severance pay in Switzerland. Unlike many countries, dismissal does not automatically trigger a payment beyond the notice period. However, limited statutory severance exists for long-serving older workers, and negotiated termination agreements ('golden handshakes') are common in practice.
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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.
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.