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Switzerland:Development of social plans. A step too far?

We have seen a great deal of concern expressed by trade unions across the EU about the failure to tackle the immediate and future ramifications of re-structuring arrangements and redundancy programmes. This has stimulated a great deal of discussion about social plans and their value in alleviating the exercises of social-economic dislocation following the reduction of workforce numbers. Switzerland has recently taken a significant step forward in rolling out such requirements.

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The beginning of 2014 marked a change going forwards in relation to Switzerland’s development of social plans. Up until this point, there had been no statutory requirement for companies to implement social plans in the event of collective dismissals.

Following the changes to Switzerland’s Code of Objectives, in the case of mass redundancies, employers with 250 employees or more are now under a duty to develop a social plan in consultation with employees if certain requirements are met.

 

 

The new rules apply to companies who intend to make at least 30 employees redundant within a 30 day period for reasons which are not attributable to the individuals. Employers cannot circumvent their duty to implement a social plan by extending the redundancies over more than 30 days. Any redundancies based on the “same operational decision”, which are carried out in stages, are subject to the same requirements. Companies in bankruptcy and liquidation are excluded from the new rules.

Until now, employers were only required to consult with employees before issuing them with a notice of termination. The law now requires employers to liaise with the trade union if a collective agreement is in place, in order to negotiate a social plan. Otherwise, employers must negotiate with the employees themselves or the representational employee organisation in place, if there is one. If the employer and organisation are unable to come to an agreement in relation to the structure of the social plan, it must be referred to an arbitral tribunal who will implement a social plan by way of a binding award.

A few details remain ambiguous and unhelpful in relation to Switzerland’s new ideas for “social plans”. The terms “employer” and “same operational decision” are not defined within the new rules and are therefore left open to interpretation. It is also unclear how, in the absence of a representational organisation of employees, which can act as a negotiating body, an employer is to negotiate with 250 or more individual employees. Further, in the event that negotiations in relation to social plans fail, the new rules prescribe the intervention of an arbitral tribunal. However, the advice stops there. There is no guidance on the procedure or awards, which might be initiated by the arbitral.

In the past, employers offered severance payments and other benefits such as early retirement provisions in order to mitigate the impact of redundancies. Therefore, are these new rules a step too far?

Employers in Switzerland should be cautious about the risks of intervention of an arbitral tribunal. There is a worry for employers that an arbitral may be tempted to prohibit employers from issuing notices of termination as a means of avoiding the redundancies. Therefore, employers should be open to negotiations, flexible with the representative bodies and avoid discussions with individual employees. It remains to be seen how the new procedures will work or the full extent of the arbitral tribunal. We will keep you updated on emerging developments.

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further