The termination of an employment relationship is rarely a purely legal matter. Particularly at senior management level, it also involves reputation, tact, and the question of how to structure a professional transition without leaving lasting damage. In this sensitive phase—before positions harden and disputes escalate—Swiss employment law offers considerable flexibility.

Two instruments are central in this context: termination with an offer of modified terms (Änderungskündigung) and mutual termination agreements. While the former is often perceived as a pressure tool, the latter enables a consensual, flexible, and often significantly more elegant solution.

Termination with Offer of Modified Terms: A Risk-Laden Instrument

From an employer’s perspective, termination with an offer of modified terms allows contractual conditions to be redefined unilaterally—by threatening termination if the employee does not agree. For employees, this typically presents a difficult choice: accept less favorable terms or face dismissal.

While legally permissible, this approach quickly approaches the boundaries of bad faith. Abusive scenarios are not uncommon, particularly where financial pressure is applied. For senior professionals, such terminations are therefore rarely the preferred route—they tend to signal conflict rather than alignment.

Mutual Termination Agreement: Structuring Instead of Escalating

In contrast, the mutual termination agreement reflects a modern separation culture. It is based on mutual consent and allows both parties to structure the end of the employment relationship in a tailored manner.

This approach is particularly suitable where trust has been weakened but the working relationship has not entirely broken down. It combines key advantages: planning certainty for the employer and a controlled, orderly transition for the employee.

In practice, the focus is not only on whether the employment ends, but on how it ends.

Release from Duties, Garden Leave, and Transition Phase

A key element is the period between negotiating and signing the agreement and the effective termination date. This phase offers significant flexibility.

This phase is often decisive in shaping whether a departure is perceived as disruptive or as a professional transition.

Severance: More Than a Payment

Severance is often a central issue. Beyond the amount, its legal characterization is critical and has tangible consequences.

The decisive factor is the nature of the payment: whether it constitutes compensation for loss of employment, settlement of claims, or a discretionary benefit. This distinction directly affects

Care is required in drafting. Poorly structured agreements may lead to suspension periods under unemployment insurance rules if they create the impression that the employee contributed to or accepted the risk of unemployment.

Unemployment Insurance and Suspension Periods

For many individuals—including senior executives—unemployment insurance remains a relevant consideration. Authorities do not automatically treat mutual termination agreements as neutral.

Risks arise in particular where

Careful structuring and clear justification of the agreement can help avoid or mitigate suspension periods, highlighting the value of early legal advice.

Pension Considerations

Occupational pension aspects are often underestimated. Depending on how the termination is structured, several questions may arise:

These issues can have significant financial implications, particularly for individuals in their mid-forties and above with substantial accumulated pension assets.

Outplacement and Reputation Management

For senior professionals, future career positioning is a key consideration. Many termination agreements therefore include elements such as

These “soft” factors are often as important as financial terms. They help ensure that the next career step is actively shaped rather than left to chance.

Conclusion: Timing Is Critical

The primary strength of a mutual termination agreement lies in its timing. It delivers the greatest value before a conflict escalates—not after. Once positions have hardened or legal proceedings are underway, the scope for constructive solutions is significantly reduced.

For qualified employees, this means that those who act early and understand their negotiating position can not only secure but actively shape their exit. For employers, it is a tool to minimize risk while demonstrating professionalism.

A well-structured termination agreement is therefore more than a contract—it is a strategic instrument for a smooth, discreet, and forward-looking transition.

Employment relationships in the public sector differ from private labour law in key respects. A recent decision by the Administrative Court of Zug clarifies the conditions under which a dismissal in a public sector employment relationship can be lawfully pronounced, in particular in the event of a breach of trust.

Special features of the employment relationship under public law

In contrast to private labour law, which generally provides for extensive freedom of dismissal, public employers may only terminate the employment relationship for objective reasons. Such reasons include, for example, operational reorganisation, poor performance or – as in the present case – a lasting breach of trust. The relevant personnel laws of the cantons and municipalities require that the termination appears to be an objectively justifiable measure and that the general principles of state action, in particular the principle of proportionality, are observed.

Facts of the case: Trade union commitment and conflict of loyalty

In this case, a teacher at the Menzingen cantonal school reactivated the internal teachers’ union after a change in school management and campaigned on behalf of colleagues who had lost their jobs as a result of personnel decisions. Despite repeated requests from the school management to accept personnel decisions and respect competences, the teacher turned to the superior authority as a trade unionist. The school management saw this as a sustained breach of the relationship of trust and terminated the employment relationship.

Legal assessment by the administrative court

The Administrative Court of Zug examined whether there were objective grounds for termination and whether the dismissal was proportionate. It came to the conclusion that even a serious loss of trust – even without disciplinary misconduct – can justify a dismissal if cooperation is objectively no longer possible. The court emphasised that in such exceptional cases, milder measures such as a transfer or warning are not mandatory if they cannot restore the damaged relationship of trust. The dismissal was classified as not abusive; there was no entitlement to severance pay as there were no corresponding applications.

Procedural law requirements

Public employers are obliged to respect the right to be heard and to conduct the proceedings correctly. In particular in the case of performance or behavioural problems, a written warning and a probationary period are generally required before dismissal. The principle of proportionality requires that the mildest appropriate measure is always chosen. This can only be deviated from in the event of particularly serious disruptions – such as an irreparable loss of trust.

Practical conclusion

The decision of the Administrative Court of Zug shows that dismissal in the public sector can be permissible even without disciplinary offences, provided that the relationship of trust has been permanently and objectively disturbed. Nevertheless, each case remains a case-by-case examination: as a rule, warnings, the right to be heard and the examination of less severe measures are mandatory. Public employers should therefore document dismissals carefully and strictly adhere to the procedural requirements in order to avoid legal disputes.

Frequently asked Questions on public sector employment Law

An employment relationship under public law exists if the employment relationship is expressly regulated by cantonal personnel law, such as the Personalgesetz (PG) of the Canton of Zug. This applies in particular to teachers, administrative staff and employees of public authorities.

Depending on the applicable personnel law, notice of termination must be given in the form of a ruling, and the person concerned must be given the right to be heard. The dismissal must be justified in writing and there is a 30-day deadline for lodging an appeal. The procedure must be transparent and comprehensible.

Yes, a profound breach of trust can justify dismissal – even without disciplinary misconduct – if no milder measure (e.g. transfer, warning) is reasonable or likely to succeed. This was expressly confirmed by the Administrative Court of Zug in its ruling on the dismissal of a teacher.

In addition to the loss of trust, the following reasons may justify ordinary dismissal (see also BGer 8C_995/2012):

  • Lack of willingness to co-operate
  • Sustained breakdown of the relationship of trust
  • Quantitatively or qualitatively inadequate work performance
  • Personal difficulties with superiors or subordinates that affect the working atmosphere
  • Repeated criticism of social skills, confirmed by various stakeholders (e.g. pupils, parents, colleagues)
  • Work performance that does not improve despite support
  • Minimalist attitude in the fulfilment of the work assignment

No. An entitlement to severance pay only exists in the event of abusive dismissal. If there is an objective reason and the procedure was followed correctly, there is no such claim.

If an employee is absent due to illness for an extended period of time, this can lead to uncertainty. It raises questions regarding a possible dismissal. When may a notice of termination be issued during the employee’s absence and in which cases not?

This article is intended to provide an overview of the protection against dismissal during illness.

What is meant by temporary protection against dismissal?

If the probationary period is completed and there is an ordinary employment relationship, protection against dismissal for a certain period of time applies in the event of illness of the employee in accordance with Art. 336c para. 1 lit. b CO.

The reason for the temporary ban on dismissal is that it is unreasonable to expect the employee to look for a new job during his or her illness, or that she would be unlikely to be hired by a new employer due to her illness-related absence. The purpose of the restriction on dismissal is to protect the employee from unemployment as a result of their illness.

As a prerequisite for the application of a suspension period, the employee must be ill through no fault of their own. The illness must be of a certain severity for the temporary protection against dismissal to apply. Protection against dismissal does not apply in the case of a simple summer flu, cold or similar. It is worth submitting a medical certificate to the employer as proof.

Each new illness that has no causal connection to the previous illness triggers a new blocking period. For example, if the employee was on sick leave due to a depressive episode, this triggers a blocking period. If the employee falls ill with Lyme disease in the same year due to a tick bite, this triggers a new blocking period. A causal connection and therefore no new blocking period is triggered in the case of relapses, recurrences or late effects.

Excursus: No temporary protection against dismissal in the event of job-related illness

However, if the illness has a direct connection to the workplace, this cannot justify protection against dismissal according to federal court case law. [1] The Federal Supreme Court justifies the lack of protection against dismissal by the fact that the employee is able to look for and take up another job precisely because of the job-related nature of the illness. Finally, it must be mentioned here that if an employee is completely unable to work due to the job-related illness, the protection against dismissal applies again.

What is the temporal effect of the restriction on dismissal?

Art. 336c para. 1 lit. b CO provides for different blocking periods for each year of service: 30 days in the first year of service, 90 days from the second to the fifth year of service and 180 days from the sixth year of service. If the absence due to illness lasts beyond the change of year of service and a longer blocking period is applied, then the longer blocking period applies. The days that have already elapsed are deducted from the longer blocking period.

The length of the blocking period is determined by the actual length of the absence due to illness. Accordingly, the protection against dismissal ends at the moment when the inability to work ceases. The lengths specified in Art. 336c para. 1 lit. b CO only represent a maximum length of the blocking period.

What is the effect of temporary protection against dismissal?

During the period of protection against dismissal, any dismissal issued by the employer is null and void. This means that it is as if no notice of termination had ever been given. In order to terminate the employment relationship, the employer must terminate the employment relationship again at the end of the month following expiry of the period of suspension. The employment relationship ends at the end of the notice period. However, if the employee terminates the employment relationship during the notice period, the termination is effective.

If the employer gives notice of termination before the employee falls ill and the employee falls ill during the notice period, the notice of termination remains effective. The notice period is interrupted in accordance with Art. 336c para. 2 CO and resumed after the end of the qualifying period.

Frequently asked questions about protection against dismissal during illness

How long does the blocking period last?

The length of the blocking period is determined by the actual length of the absence due to illness. Accordingly, the protection against dismissal ends the moment the inability to work ceases. The lengths specified in Art. 336c para. 1 lit. b CO only represent a maximum length of the blocking period. Accordingly, the blocking period ends in any case after.

    • 30 days in the first year of service

    • 90 days form the second to the fifth year of service and 

    • 180 days from the sixth year of service.

What happens if there are several cases of illness?

In the event of several independent cases of illness within one year, a new blocking period can be triggered for each case. However, relapses or sequelae of the same illness do not trigger a new qualifying period.

What happens if an illness occurs during the notice period?

If an employee falls ill during the notice period after receiving notice of termination, the notice period is interrupted for the duration of the incapacity to work (at most until the end of the blocking period) and continues to run after the end of the illness. A notice of termination issued by the employer during a valid blocking period is null and void and must be issued again after the blocking period has expired.

[1] BGer 1C_595/2023 Urteil vom 26.3.2024.