Mass dismissal, what to consider

It happens from time to time that a company must dismiss a majority of employees for economic reasons. In such cases, a distinction must be made between a “normal” dismissal for financial reasons and a mass dismissal.

Whether the circumstances qualify as a mass dismissal depends on the number of dismissals made within 30 days for economic, technical or organizational reasons. Depending on the company’s size, the number of dismissals required for a mass layoff may vary. In the case of a company with between 20 and 99 employees, a mass dismissal is deemed to have taken place if only ten people are dismissed. In a company with 100 to 299 employees, dismissals must be made against 10% of the employees. If a company employs more than 300 people, the threshold for a mass dismissal is 30 employees.

If a company intends to carry out a mass dismissal, then a special procedure must be followed. In this special procedure, the employee representatives or every single employee must be informed in writing and consulted before the dismissal has taken place. Employees must be given the opportunity to make suggestions as to how dismissals can be avoided, the number of dismissals can be reduced or how their consequences can be minimized. In addition, the cantonal employment office must be notified in advance with an information letter on the planned mass dismissal. Employers who usually employ 250 employees and consider dismissing 30 employees within 30 days for reasons unrelated to their person must draw up a social plan. Irrespective of whether the circumstances are qualified as a mass dismissal, according to the Employment Services Act (Arbeitsvermittlungsgesetzt; AVG) the employer is obliged to notify the employment office if he must close the company or if he dismisses at least 10 employees.

If the employer violates his duty to the employees about a planed mass layoff, the dismissal can be fought as wrongful by the affected employees. In this case, the judge can order the employer to pay a compensation of up to two months’ wages. If the employer fails to notify the employment office, the notice period may not start to run. Finally, a fine of up to CHF 40’000.00 can be levied if the employer fails to make his notification to the employment office according to the AVG.

Therefore, it is advisable to consult a legal adviser in the event of an intended dismissal of several employees in order to avoid sanctions.