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Landmark decision of the Swiss Federal Court in relation to the employer’s discretion with respect to bonus

  • Switzerland


    In the leading case FTD 139 III 155, the Swiss Federal Court (Court) made a landmark decision in relation to the employer’s discretion with respect to bonus: The Court ruled that the total amount of bonus in relation to the total amount of annual base salary is not a criterion for discretionary or non-discretionary bonus, if the annual salary reaches a level that easily ensures the economic existence of the employee and significantly exceeds the normal living costs.

    In its most recent decision (FDT 4A_653/2014), the Court confirmed and specified this jurisprudence, setting out that an annual salary amounting to at least five times the Swiss median salary in the private sector is an indication that bonus is discretionary and not a salary component. Presently, this applies to an annual salary of CHF 354'000 gross. Employees with an income over CHF 354'000 gross cannot rely on the same protection for their bonus entitlements as employees with lower salaries.

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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