Employment law – Federal court's case law 2023 – Selected overview
Its purpose is to offer to Employment law practicians a synthetic summary of the recent federal case law trends and to provide them with guidance and assistance.
For the sake of clarity, the selected judgements rendered by the Federal Court in 2023 will be dealt with under four main topic headings, namely (I.) objection to the notice of termination and wrongful termination, (II.) overtime, holidays and salary, (III.) harassment and personality protection and (IV.) lawyers' fees.
I. OBJECTION TO THE NOTICE OF TERMINATION AND WRONGFUL TERMINATION
A. Objection to the notice of termination
The year 2023 saw a tightening of the conditions required from employees to object to the notice of termination.
JUDGEMENT OF MARCH 28TH, 2023 (4A_59/2023)
Under Art. 336b CO, a party seeking compensation for wrongful termination must object to the notice of termination, in writing, to the party giving such notice prior to the end of the notice period.
In Judgement 4A_59/2023, the Federal Court clarified the form and content of said objection.
The mere fact that the objection to the notice of termination made by employee – contesting the grounds for the termination but not the termination of the employment relationship itself – has been considered not sufficient.
Indeed, the Federal Court clarified that an employee who objects to the notice of termination and wishes to claim compensation for wrongful termination cannot simply write, in his/her letter, that he/she is "objecting to the notice of termination". He/she must contest the core principle of the termination (including the date on which the employment relationship should end according to the employer), as well as manifest his/her intention to resume the employment relationship, state that the termination is to be considered wrongful and reserve his/her right to claim compensation for wrongful termination.
JUDGEMENT OF MAY 11TH, 2023 (4A_412/2022)
In addition, in Judgement 4A_412/2022, the Federal Court laid down the requirement that the employee, in a legal action for wrongful termination, must allege and prove having correctly - and on time - objected to the notice of termination.
The Federal Court began by pointing out that the period for the employee to object to the dismissal is peremptory ("péremption", "Verwirkung"). Such peremptory period entails the total extinction of the right at the expiry of said period within which the employee shall have exercised or performed a necessary act. It must be applied ex officio by the judge (i.e. regardless of any argument raised by the parties). This being said, even when the judge intervenes ex officio, but within the framework of the principle of production of evidence ("maxime des débats"), this does not exempt the parties from submitting the necessary factual information and substantial evidence.
In this Judgement, the Federal Court addressed the question of who, between the plaintiff (i.e. the employee) or defendant (i.e. the employer), bears the burden of alleging and proving that the peremptory time period has been complied with. Said Court pointed out that the peremptory time periods might apply in various situations, so that it prevents to state a general principle. For example, the Federal Court outlined that a particular solution applies to the notice of defects that the buyer (Art. 201 al. 1 CO) or the customer (Art. 367 al. 1 CO) must file if he/she wishes to safeguard his/her warranty rights. In such case, it is up to the seller/contractor (and not the buyer/ customer) to allege that the notice has, for instance, not been filed in due course.
After having recalled that the dismissed employee is only entitled to compensation for wrongful termination if he/she has filed a valid objection and the parties have been unable to agree on the continuation of the employment relationship (Art. 336b para. 2 CO), the Federal Court concluded that the plaintiff shall allege and prove that he has lodged an objection within the peremptory time period, whether or not the defendant invokes that the peremptory time period has been already reached.
Indeed, it is up to the plaintiff to demonstrate that all conditions have been met, i.e. to allege and prove all factual circumstances from which the judge can infer the right to compensation for wrongful termination, such as that he/she has filed a valid objection.
B. Wrongful termination
The Federal Court had the opportunity to clarify the concept of wrongful termination (Art. 336 CO) in few Judgements rendered over 2023, in particular with respect to conflictual situations at the workplace.
JUDGEMENT OF JANUARY 18TH, 2023 (4A_307/2022)
As held in Judgement 4A_307/2022, it is considered wrongful for an employer to terminate the employment of a 62-year-old employee who had been working for the company for more than 39 years, demonstrating loyalty and irreproachable work, without having - beforehand - organized an interview or looked for alternative solutions.
According to the Federal Court, this total lack of consideration has rendered the termination abrupt. Hence, said termination has been considered to be wrongful.
JUDGEMENT OF FEBRUARY 14TH, 2023 (4A_39/2023)
In Judgement 4A_39/2023, the Federal Court confirmed the Cantonal Court's previous statement according to which the conflict at work between the appellant (i.e. employee) and his management had not reached an intensity that would have required specific measures to protect the employee, in particular in view of his age and seniority within the company.
In such Judgement, it has been held that the employee had not provided sufficient details of the events that would have occurred in the context of the alleged abuse, so that it prevented the Federal Court to make its proper assessment of the evidence.
Furthermore, the Federal Court also clarified that even where the reason for termination is false, non-existent, or incomplete, there is no legal presumption that the termination is wrongful. The wrongfulness must be proven by the employee alleging it.
In addition, an increased duty of protection – such as, for instance, to carry out a prior proportionality test and/or to take more flexible measures – is not required for a 40-year-old employee who had only been with the company for two and a half years.
JUDGEMENT OF NOVEMBER 7TH, 2023 (4A_396/2022)
Judgement 4A_396/2022 addressed the issue of an employee on sick leave (suffering from physical and mental exhaustion due to an open conflict with his direct superior, severe insomnia with nightmares, exacerbated anxiety, weight loss and chronic diarrhea) and whose contract had been ordinarily terminated after the expiry of the prescribed protection period of 180 days under Art. 336c para. 1 let. b CO.
In this context, the employee objected to the notice of termination, arguing that said termination was wrongful pursuant to Art. 336 para. 1 let. a and d CO, on the grounds that the employer had caused his illness in breach of his duty of protection of the employee’s personality rights (Art. 328 para. 2 CO).
The Federal Court did not share the appellant's view and considered that conflict situations are frequent at the workplace and most of the time do not reach the level of seriousness necessary to consider the termination to be wrongful.
It is only in very serious situations ("krasse Fälle") that termination on the grounds of persistent illness must be regarded as unfair as per art. 336 para. 1 let. a CO. Indeed, for a termination to be considered unfair on such grounds, it shall be unequivocally clear from the evidence that the employer directly caused the worker's illness, for example when he failed to take the protective measures such as those set out in art. 328 para. 2 CO, and that for this specific failure, caused the employee's illness.
In this Judgement, the Federal Court also recalled that if the situation does not reach this level of seriousness – as is often the case in occurrence of incapacity to work due to mental illness – the dismissal is not wrongful. Indeed, difficulties at work can frequently lead to depression or other psychological disorders, but this cannot automatically be considered as an illness directly caused by the employer.
Therefore, a conflict with a new line manager leading to an incapacity for work is generally not to be taken into consideration. Conflicts of this kind are frequent, and in most cases do not reach the level of severity required to justify an evidence of unfair dismissal. In such cases, the employer cannot be expected to take every conceivable measure to avoid such conflicts.
JUDGEMENT OF FEBRUARY 23RD, 2023 (4A_259/2022)
In Judgement 4A_259/2022, the Federal Court also considered the case of an employee, whose employment had been terminated by his employer based on false motive, namely that the employee would have, in particular, allegedly claimed to be able to manage the company without considering the legitimate interests and expectations of the board of directors and the majority shareholder.
Endorsing the previous Cantonal Court's analysis, the Federal Court outlined that, while the employee had been hired as the employer's general manager, after a long career in this field, and had arrived along with the team he had successfully been working with for his previous employer, he had suffered from the administrator's unconstructive and permanent omnipresence in the conduct of business, making it impossible for the employee to manage affairs serenely and lead his team accordingly. The employee had also been excluded from certain meetings, which appeared humiliating and infantilizing. The tensions induced by the administrator's behaviors had been perceived by all members of the team.
The Federal Court also held that the reasons invoked by the employer in the termination had not been real or made in good faith, outlining that the employee had not been given the time, framework, or serenity necessary to fulfil his objectives. The perpetual administrator's behaviors impeded the employee to carry out his work accordingly. Furthermore, considering that the latter had been excluded from meetings, the employer could not blame him for non-transparent communication.
The Federal Court also considered that the employer had violated the employee's personality rights (art. 328 CO) by not allowing him to perform the function for which he had been hired, by not taking the necessary measures to end this impossibility, and by not taking any truly constructive measures to stop the administrator's interference in the company's operational management and said company's functioning, in order to find a real solution to the existing interpersonal dispute.
Therefore and considering that the reasons given by the employer to support the termination were false, that said termination was abusive due to a violation of the employee's personality rights, and that the employer had not taken any action to improve the conflictual situation in the company before dismissing the employee, the Federal Court confirmed that the Cantonal Court had correctly applied Art. 336 CO by considering the termination to be wrongful.
Hence, the Federal Court admitted that a compensation of six months' salary – although particularly high – was not open to censure.
II. OVERTIME, HOLIDAYS AND SALARY
The Federal Court clarified the treatment of holiday pay, reiterated the importance of the distinction between overtime and additional work in terms of salary payment and ruled on the employer's obligations in case of company closure due to COVID.
JUDGEMENT OF MARCH 30TH, 2023 (4A_357/2022)
As per Art. 329d CO, in principle, holiday pay must be paid to the employee when the holiday is taken in kind.
In Judgement 4A_357/2022, the Federal Court held that in the event of irregular activity making the calculation of holiday pay complicated, holiday pay may exceptionally be included in the employee's salary in case these three following conditions are met: (i.) the employee's occupation is very irregular, (ii.) the part of the salary relating to holidays is specifically mentioned in the employment contract and, finally, (iii.) the holiday indemnity is mentioned on the employee's periodic pay slips.
Should these conditions not be met, the employee is entitled to payment of his/her holiday indemnity in addition to any holiday entitlement already included in the overall salary, even if he/she has been able to take his/her holiday in kind.
JUDGEMENT OF MARCH 10TH, 2023 (4A_304/2021)
In this Judgement, the Federal Court handled the case of an employee who had worked as a Works Supervisor, then as an Operations' Manager in the building sector, claiming - after having been terminated - the payment for overtime and additional work carried out over a period of 4 years.
In said Judgement, the Federal Court observed that it was unfair for an employee to claim payment for overtime (based on Art. 321c para. 3 CO) when, by his attitude during the employment relationship, he had led the employer to believe that he was foregoing such payment and accepting a lump-sum payment (through bonuses), resulting in the employer granting several considerable salaries increases (in this case, the employee's salary had been increased by 50% over five years).
On the other hand, the Federal Court underlined that such reasoning could not be applied to additional work, which must imperatively be remunerated at 125% if not compensated by leave of the same duration (Art. 13 LTr). Indeed, in view of the mandatory nature of Art. 13 LTr, the employee's forego of paid overtime cannot be construed as a forego of additional work pay.
The Federal Court also recognized that – in failing to indicate on the salary slips the portion relating to overtime work – the employer had not fulfilled its legal obligation to pay overtime work, including a wage supplement of 25%. The employee's silence following the various wage increases has no legal effect whatsoever on the employer's obligation. Hence, there are no special circumstances that would make it unreasonable, for the employee, to exercise his claim for compensation for overtime work at the end of the employment relationship.
JUDGEMENT OF AUGUST 30TH, 2023 (4A_53/2023)
Finally, in Judgement 4A_53/2023, the Federal Court ruled on the employer's obligation of salary payment in the event business' closure due to COVID.
In this respect, the Federal Court recalled the unanimous doctrine according to which business' closures by authorities did not fall within the employers' sphere of risk, and that said closure constituted an objective reason to refuse work being carried out and to withhold salary payment, especially since business closures affected numerous businesses and branches and not only this specific employer. In its reasoning, the Federal Court also held that the employer, as an enterprise, would have exposed itself to unreasonable legal consequences by continuing to operate notwithstanding the ban.
Hence, according to the Federal Court, the operating impediment imposed in the context of the COVID constitutes an objective reason for which the employer is not in "failure to accept performance" within the meaning of Art. 324 CO. Consequently, in the case at hand, the employer was not obliged to pay the salary.
III. HARASSMENT AND PROTECTION OF PERSONALITY
Harassment in the workplace, whether sexual or psychological, is playing an increasingly important role in Swiss courts' case law.
JUDGEMENT OF MARCH 15TH, 2023 (4A_283/2022)
In Judgement 4A_283/2022, the Federal Court clarified the mere concept of sexual harassment as well as the employer's obligations in terms of prevention.
The Federal Court held that the employee cannot be blamed for any delay in reporting a sexual harassment case, since it is not surprising that an employee would use some time to process and eventually decide to report the harassment he/she had been suffering from his employer.
In addition, the employer cannot benefit from the preuve libératoire ("safe harbour" principle) of Art. 5 para. 3 LEg if it turns out that the whistleblowing tools which had been put in place by the employer were not mastered, or even known by the staff , that information provided to the employees was only superficial and that line managers were clearly unaware of the internal procedure to be followed in the event a sexual harassment were to be reported. Such failings are to be considered as a significant lack of diligence by the employer.
Furthermore, the Federal Court held that the employer had not complied with its obligation of employee’s personality protection by forcing the latter to confront his/her abuser immediately, even though there was no obvious urgency for an immediate confrontation, especially considering the employee's emotional/health state (she was crying and had had to take a moment to compose herself).
Finally, as per the internal investigation that had been carried out by the employer, the Federal Court confirmed the Cantonal Court's previous statement in considering that the internal investigation's conclusions could be challenged since said investigation had lasted only 19 days, but also since hearings had been conducted by a single person and that no minutes of the hearings had been drawn up.
JUDGEMENT OF AUGUST 21ST, 2023 (8C_387/2022)
In Judgement 8C_387/2022, the Federal Court examined the employee's personality protection as well as the duty to provide information during a job interview (government employees law).
In this case, the employee had been terminated for failing to disclose information about her medical condition in the recruitment process, and for subsequently providing incorrect information.
The Federal Court recalled that all candidates must answer truthfully all questions related to the position and the work to be performed, as well as disclose any information that would make them appear unsuitable for the position. The link between the requested information and the position to be provided must be examined on a case-by-case basis, and there should be a balancing interest between (i.) the candidate's interests of protecting his/her personality, and (ii.) the employer's interest of knowing the candidate.
The Federal Court also pointed out that there is no general duty to inform any potential employer on personal health. As a reminder, according to doctrine and case law, the employee has the right to answer inaccurately when the employer asks questions on the employee's health if said question are not strictly linked to the ability to perform the job.
In this Judgement, the Federal Court held that the candidate's - less than transparent - explanations on her health's state had not prejudiced the employer's interests. Consequently, the trust relationship could not have been broken by the employee's behaviors, so that the discovery of the real employee's state of health did not constitute sufficient grounds for a termination.
Nevertheless, the Federal Court rejected the argument of wrongful termination since the employee's health problem could have possibly affected her work capacity and since her conduct had not been free of reproach.
IV. LAWYERS' FEES
An interesting clarification has been made by the Federal Court regarding lawyers' fees.
JUDGEMENT OF MAY 12TH, 2023 (4A_364/2022)
In Judgement 4A_364/2022, in the context of a labour court proceeding in the canton of Geneva, the Federal Court ruled that costs incurred in consulting a lawyer prior to the filing of a labour law proceeding may be compensated, provided that the consultation is necessary and appropriate and that the costs are not covered, or presumed to be covered, by the party costs.
Indeed, according to the Federal Court, costs incurred in negotiating and concluding a pre-trial settlement were to be compensated, since the employer did not ultimately adhere to the settlement, which necessitated a trial.
Moreover, the Federal Court held that, although the cantonal law in Geneva only provides court's costs above a certain threshold and prohibits the awarding of parties'costs (Art. 19 para. 3 let. c and 22 para. 2 LaCC cum Art. 116 para. 1 CPC), it cannot preclude a claim for compensation of damage caused by pre-trial lawyers' fees.
In addition, for such parties' costs to be compensated, the plaintiff shall validly allege and prove the existence of said costs and the fact that they were not incurred in view of preparing said trial.
V. CONCLUSION
In the light of the above, it appears that labour law procedures are far from being simplified for employees.
It has become extremely complex for an uninformed employee, without any legal advice, to comply with the requirements set out in recent Federal Court's case laws on wrongful termination. In addition, it appears that recent cases based on Art. 336 CO confirm the Federal Court's current trend on setting the required gravity ("krasse Fälle") threshold to recognizes the wrongfulness of a termination - very - high.
As far as the employer is concerned, it is necessary to verify that the working conditions of his/her employees comply with Swiss law, in particular in pay slips issuance for employees working overtime and/or performing additional work, or in defining whether holiday indemnity can or must be included in the salary.
Moreover, when conflicts arise in the workplace, the employer is obliged to take sufficient measures to ensure that his/her employees' personality is protected. Before taking any action, the employer – who must clarify the reported facts – shall not hesitate to initiate an internal investigation of proportionate scope.
However, for the investigation report/conclusions not to be challenged by the employee, and for the employer to ensure not to be held liable should an action be filed, it is crucial to conduct said investigation in accordance with very specific criteria and requirements.
Should you have any questions about the various topics covered in this selected Federal case law overview, do not hesitate to contact us. Our employment law teams in Geneva, Zurich and Lugano are at your disposal for any assistance you may require.
