News - Switzerland

Switzerland - November 2013

Swiss Employment Act not applicable to foreign employment relationships

In its leading decision of September 11, 2013 the Swiss Federal Supreme Court held that the Swiss Employment Act is neither directly nor indirectly applicable to foreign employment relationships.

Background

The employer, a Swiss resident company running a bakery in Kabul, Afghanistan, employed a German citizen as production manager. The employment agreement provided for an average of 54 working hours in a six-day working week but with 63 days off as compensatory leave. Furthermore, the employment agreement was expressed to be governed by Swiss law and the courts in Switzerland stated as having exclusive jurisdiction. The employer appealed to the Swiss Federal Supreme Court against the application of the Swiss Employment Act, in particular the provisions relating to reimbursement of overtime, night and Sunday work to the employment relationship.

Court Ruling

Until this ruling it had been uncertain whether the Employment Act is applicable to employees working outside Switzerland and so whether there could be a claim of mandatory compensation for overtime, night and Sunday work based on the Employment Act. The Swiss Code of Obligations (“CO”) states that whenever federal or cantonal provisions governing work are imposing obligations under public law either on the employer or the employee (the Employment Act forms part of Swiss public law), both parties have a claim under civil law to perform those obligations, provided that they are part of the employment contract. In the case at hand, this could lead to the indirect application of the Employment Act even to employees working abroad. The Swiss Federal Supreme Court, however, ruled that it could not be the purpose of the CO to extend the scope of application of the Employment Act to foreign employment agreements. Furthermore, the Swiss Federal Supreme Court concluded that generally work conditions abroad may not be compared to domestic work conditions.

Commentary

The case is a welcome clarification that the Employment Act is neither directly nor indirectly applicable to foreign employment relationships, even if the employer is a Swiss resident company.

Resources

Decision of the Swiss Federal Supreme Court of September 11, 2013 (4A_103/2013)

Swiss Code of Obligations

For further information or to discuss any of the issues raised, please contact Stefanie Monge or Nadja Flühler on +41 44 220 12 12 at Poledna Boss Kurer AGwww.pbklaw.ch.