Jurilo by Lawise.ai:
In Switzerland, there are two fundamental types of employment contracts: fixed-term and permanent employment contracts. Both contract types regulate the employment relationship between employer and employee, but differ in their duration, termination options, and legal effect. In this article, you will learn about the differences, the advantages and disadvantages of each contract type, and what legal aspects need to be considered.
WHAT IS A FIXED-TERM EMPLOYMENT CONTRACT?
A fixed-term employment contract is an employment relationship that is concluded from the outset for a specific duration. It ends automatically upon expiration of the agreed period, without requiring termination.
Legal basis:
Typical examples:
Project-based employment
Maternity cover
Seasonal positions
WHAT IS A PERMANENT EMPLOYMENT CONTRACT?
A permanent employment contract is concluded for an indefinite period. It can be terminated by either party in compliance with the statutory or contractually agreed notice periods.
Legal basis:
This contract type is the norm in Switzerland and offers more stability and protection against dismissal.
DIFFERENCES AT A GLANCE
Criterion
Fixed-term contract
Permanent contract
Duration
Fixed term
Indefinite
Termination
Generally not possible
At any time with notice period
Dismissal protection
No
Yes (e.g. illness)
Protection periods
None
Yes
Planning security
For employer
For employee
TERMINATION OPTIONS
Fixed-term contract
A fixed-term contract generally cannot be terminated ordinarily. Early termination is only possible if:
this has been expressly agreed in the contract
there is an important reason (Art. 337 CO)
After ten years, a fixed-term contract can be terminated with six months' notice at the end of a month (Art. 334 para. 3 CO).
Permanent contract
A permanent contract can be terminated at any time in compliance with the notice period:
1 month in the 1st year of service
2 months in the 2nd to 9th year of service
3 months from the 10th year of service
(each at the end of the month, according to Art. 335c CO)
ADVANTAGES AND DISADVANTAGES
Advantages of fixed-term contract
Clear time planning
Suitable for projects or substitutions
No termination effort upon expiry
Disadvantages of fixed-term contract
Less security for employee
No dismissal protection during illness or pregnancy
Risk of chain contracts (multiple extensions)
Advantages of permanent contract
Higher job security
Dismissal protection (e.g. during illness, accident)
Better chances for career development
Disadvantages of permanent contract
Termination must be actively declared
Longer notice periods
CONCLUSION
The choice between a fixed-term and permanent employment contract depends on the needs of both parties. While fixed-term contracts offer flexibility, permanent contracts provide more security and protection. It is important that the contract type is clearly regulated and documented in writing to avoid later disputes.
👉 Unsure about what is in a fixed-term vs permanent employment contract?
Jurilo provides information – structured, neutral and legally sound.
👉 See also: Termination during illness – Protection period under CO
👉 Related: Contract amendments for fixed-term employment contracts
👉 Basics: Employment contract Switzerland – Content & legal basics
FAQ ON FIXED-TERM VS. PERMANENT EMPLOYMENT CONTRACT
Does a fixed-term employment contract need to be in writing?
No, a fixed-term contract can also be concluded orally. However, a written contract is strongly recommended for evidentiary purposes.
Can a fixed-term contract be terminated early?
Only if this has been expressly agreed in the contract or if there is an important reason (e.g. breach of trust, serious breach of duty).
What happens if a fixed-term contract is continued after expiry?
If the employment relationship is tacitly continued after expiry of the term, it is considered to have been concluded for an indefinite period (Art. 334 para. 2 CO).
Is there a maximum duration for fixed-term contracts?
The law does not specify a fixed upper limit. However, after ten years, either party can terminate with six months' notice (Art. 334 para. 3 CO).
Does dismissal protection during illness also apply to fixed-term contracts?
No. The protection periods according to Art. 336c CO only apply to permanent contracts. A fixed-term contract ends on the agreed date even during illness.
Can a fixed-term contract be extended multiple times?
Yes, but with multiple extensions without objective reason, a court may classify the employment relationship as permanent (so-called chain contracts).
What is safer for the employee: fixed-term or permanent?
A permanent contract offers more security, dismissal protection and better chances for career development.
Do I need to give notice on a fixed-term contract if I want to leave early?
Yes, if no termination option has been agreed, early termination is only possible with the employer's consent or for an important reason.
Am I entitled to a reference letter with a fixed-term contract?
Yes. Even with fixed-term contracts, there is an entitlement to a qualified or simple reference letter (Art. 330a CO).
What happens to my holiday entitlement when the fixed-term contract ends?
Untaken holiday must be paid out if it could not be taken before the contract ends. Holiday entitlement also applies to fixed-term contracts.
