According to Article 337 para. 1 CO, both the employer and the employee may terminate the contract immediately at any time for just cause. Article 337 para. 2 CO provides, in a non-exhaustive manner, that just causes include all circumstances that, according to the principles of good faith, make it unreasonable to expect the party who gave the notice to continue the employment relationship.
It is important to distinguish between terminations with immediate effect made with just cause and those made without just cause. If a termination with immediate effect is made without just cause, it is unjustified, and the employer must pay the employee what they would have earned if the employment had ended at the expiration of the notice period or at the end of a fixed-term contract (Article 337c para. 1 CO). Conversely, if the termination is made with just cause, Article 337b CO provides that the party at fault must compensate the full damage. However, it is possible that a termination with immediate effect may be justified even without a fault, such as in the case of a tightrope walker or crane operator suddenly experiencing vertigo.
Immediate termination is an exceptional measure and must be admitted very restrictively. The facts invoked in support of an immediate dismissal must cause the breakdown of trust and make it impossible to continue the employment relationship until the notice period. Generally, a breach of a contractual obligation is considered a just cause.
If the breach is very serious (absolute severity), the employer can terminate immediately without prior warning. For example, theft of money by a cashier is considered an absolute severity that allows for immediate dismissal without prior warning.
In cases of less serious breaches (relative severity), immediate termination is only possible if the breach has been repeated despite a warning. A warning with a threat of immediate dismissal must be issued before proceeding with immediate termination. Relative severity is not determined by the act itself but by its repetition. For instance, a worker who persistently fails to adhere to working hours despite a warning with a clear threat of immediate dismissal can be dismissed immediately.
Immediate termination always takes effect regardless of whether it is justified or not. The contract ends as soon as the employee receives the termination notice. Additionally, it is important to note that if a party wishes to terminate immediately, they must act immediately. The Federal Supreme Court states that action must be taken within 2-3 working days once the facts are established; otherwise, the dismissal may be deemed unjustified.
Let’s now look more closely at the effects of immediate termination.
When the termination is unjustified, the employee can claim negative damages (Article 337c para. 1 and 2 CO). These damages aim to place the unjustly dismissed worker in the position they would have been in if the notice period had been respected. This is a form of fictional reconstruction. The worker is entitled to the salary they would have earned if the employment had ended at the expiration of the notice period or at the end of a fixed-term contract. The amount of the indemnity must be offset by savings from the cessation of the employment, income from other work, and income that the worker intentionally waived (Article 337c para. 2 CO). The worker must do everything possible to mitigate the damage, but they are not required to accept any job. Furthermore, if a protection period occurs during the hypothetical notice period, the termination date is postponed. However, in all cases, the employer must only pay the salary for the duration of the notice period.
Additionally, the employee can also claim compensation of up to 6 months' salary (Article 337c para. 3 CO). The judge must determine the amount of compensation fairly, considering the severity of the fault and other circumstances of the specific case, such as the employee’s position, the nature and duration of the contractual relationship, and the nature and significance of the breaches.
In summary, unjustified immediate dismissal can cost an employer more than an ordinary dismissal. Since immediate dismissal always takes effect, the employment contract ends, meaning the employer will no longer benefit from the employee’s services.
When the termination is justified due to a just cause for immediate termination, the party at fault must fully compensate the damage. They must compensate for the damage resulting from the immediate termination of the contract (Article 337b para. 1 CO) as well as the damage related to the act that led to the immediate termination (Article 321e CO). For example, if an employer hires a biologist who consistently arrives late, is unclean, and damages equipment, and the parties have agreed on a 12-month notice period, the employer has no choice but to dismiss the employee immediately. Since the employer must urgently find a replacement who demands a higher salary, the employer incurs a loss. This is the damage resulting from the immediate termination (Article 337b CO). Additionally, if the employee intentionally damages equipment, they must also compensate for this damage. By damaging the equipment, the employee breaches their duty of loyalty and diligence, violating their employment contract and incurring contractual liability. This is the damage related to the act leading to the immediate termination (Article 321e CO).
Article 337d CO covers unjustified termination by the employee, including cases where the employee does not report for work without just cause or abruptly leaves their job without just cause.
In these cases, the employer is entitled to two things. Firstly, they can claim compensation equal to ¼ of the monthly salary. Secondly, they are also entitled to compensation for additional damages. Article 337d para. 2 CO provides that the judge can reduce the compensation if the employer suffers no prejudice or if the damage is less than the compensation stipulated in para. 1. It should be noted that the employer must take legal action within 30 days of the employee's failure to report for work or abandonment of the job.
Do you believe you are a victim of unjustified immediate dismissal? Our team of professionals will be pleased to welcome you to our offices located at rue du Valentin 1, 1004 Lausanne, to advise and assist you with your legal matters.
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