Immediate Termination of an Apprenticeship Contract: What Training Companies Need to Know

• Employment Law
• SME

An apprenticeship is more than an ordinary employment relationship. Its purpose is to train a young person and prepare him or her for working life. The hurdles are correspondingly high when a training company wants to terminate an apprenticeship contract with immediate effect. Companies that underestimate these hurdles risk claims for damages and the early loss of their training authorization. In a recent decision, the Swiss Federal Supreme Court again addressed the requirements for immediate termination of an apprenticeship contract under Art. 346 Abs. 2 OR (the provision of the Swiss Code of Obligations, “OR”, that governs immediate termination of apprenticeship contracts). This article explains in plain terms when good cause exists, which formal requirements apply and what consequences follow from an unjustified immediate termination. It is aimed mainly at small and medium-sized enterprises that train apprentices, but it is also relevant for apprentices and their parents.

The apprenticeship contract: a special kind of employment contract

Swiss law regulates the apprenticeship contract as a contract type of its own (Art. 344 ff. OR, the provisions of the Code of Obligations governing apprenticeship contracts). It is a special form of the individual employment contract. The general rules of employment law therefore apply here as well, unless the special provisions on apprenticeship contracts provide otherwise.

The purpose of training is central. The training company undertakes to train the apprentice in a professionally sound manner. In return, the apprentice undertakes to work and to learn. This educational character shapes the entire relationship, and it also affects how the contract can be ended.

An apprenticeship contract is normally concluded for a fixed term covering the whole period of training. Once the probationary period has ended, ordinary termination at any chosen date is therefore generally not possible. Anyone who wants to end the apprenticeship early needs either the agreement of both parties or good cause for immediate termination.

Immediate termination only for good cause

Immediate termination of the apprenticeship contract is governed by Art. 346 Abs. 2 OR. Under this provision, the contract may be terminated with immediate effect for the same good causes that apply elsewhere in employment law (Art. 337 OR, the general provision on immediate termination of employment contracts for good cause). In addition, the statute lists grounds that are specific to apprenticeships.

Good cause in the employment-law sense exists where the party giving notice cannot reasonably be expected, in accordance with the principle of good faith, to continue the relationship. Only serious misconduct or grave circumstances qualify. Dissatisfaction or conflict alone does not.

For apprenticeship contracts, the statute also names special grounds for termination. These concern mainly the ability to provide training and the question whether sound training is still possible at all:

• the vocational trainer no longer has the professional skills or personal qualities needed for training;
• the apprentice lacks the physical or mental aptitude essential for the training, or is impaired in health or morally endangered;
• the training can no longer be continued for other reasons, or only under substantially changed conditions.

Why the hurdles are particularly high for apprenticeships

The Federal Supreme Court repeatedly emphasizes that a stricter standard applies to apprentices than to adult, trained employees. This follows from the purpose of training and from the young age of many apprentices.

Mistakes, inexperience and a certain amount of misbehavior are part of the learning process. A training company must show more patience. It may not treat every breach of duty as grounds for immediate termination. Training is meant precisely to let a young person mature and develop.

For this reason, case law generally requires that educational measures be exhausted before an immediate termination. A clear, documented warning is usually indispensable. Only then does the apprentice have a chance to correct his or her conduct. Without a prior warning, immediate termination is justified only in cases of particularly serious misconduct, such as criminal offenses like theft or violence.

A notification duty also applies. When an apprenticeship is terminated, the cantonal authority (the vocational training office) must be informed. The authority reviews the situation and may step in to mediate.

What the recent Federal Supreme Court decision clarifies

In a recent decision that is intended for official publication, the Federal Supreme Court again addressed immediate termination of an apprenticeship contract under Art. 346 Abs. 2 OR. The decision confirms the established line: heightened requirements apply to immediate termination of an apprenticeship contract, and the particular need for protection of the apprentice must be taken into account.

The core message for training companies is this: pointing to individual breaches of duty is not enough. The company must show that continuing the training was objectively no longer reasonable for it. It must also show that milder measures, in particular discussions, support and written warnings, either failed or were futile from the outset.

Note: The decision concerns a specific set of facts. Court rulings on immediate termination depend heavily on the individual case, and one decision does not allow a general prediction of how another case will turn out. The general principles, however, reach beyond the individual case.

Formal requirements and deadlines: what matters in practice

Besides the good cause itself, formal requirements often decide whether an immediate termination succeeds or fails. In our experience, this is where companies make most of their mistakes.

Timing is particularly delicate. Anyone who relies on good cause must act quickly. If the company waits too long, it signals that continuing the relationship was apparently reasonable after all, and it loses the right to terminate immediately.

• Prompt action: Immediate termination must follow directly after the company learns of the good cause. In practice, only a few working days of reflection time are accepted as a guideline.
• Written form and reasons: On request, the terminating party must give written reasons for the immediate termination (Art. 337 Abs. 1 OR, the paragraph of the Code of Obligations that allows immediate termination for good cause and entitles the other party to written reasons). A clear written notice is strongly advisable.
• Prior warning: Except in cases of particularly serious misconduct, a documented warning is required before the contract is terminated with immediate effect.
• Notification of the authority: The termination of the apprenticeship must be reported to the cantonal vocational training office.
• Documentation: Incidents, discussions and warnings should be recorded in writing so that the good cause can be proven in the event of a dispute.

Consequences of an unjustified immediate termination

If a training company terminates the contract with immediate effect without good cause, the termination is nevertheless effective, so the relationship does actually end. However, the company becomes liable for damages.

In this case, the apprentice is in principle entitled to compensation for what he or she would have earned had the contract been performed properly (see Art. 337c OR, the provision on the consequences of unjustified immediate dismissal). For a contract concluded for several years, this can amount to a considerable sum, because wages up to the regular end of the contract are taken into account. Amounts that the person earns elsewhere or intentionally fails to earn are deducted.

In addition, the court may award compensation that goes beyond the mere loss of wages. Apart from the financial consequences, the company faces consequences for its training authorization. The cantonal authority may withdraw the authorization if a company violates its training obligations.

The reverse also applies. If an apprentice terminates the contract immediately and without justification, the company may under certain circumstances claim damages. Given the protection of young people and the special circumstances, however, courts also assess such claims with restraint.

Treat immediate termination of an apprenticeship contract as a last resort, not as the first reaction to conflict. Seek dialogue early. Involve the parents and the vocational training office when problems arise, and issue warnings in writing and in a way that is easy to follow. Document every relevant incident. If you conclude that immediate termination is unavoidable, act quickly, give your reasons in writing and notify the authority. Because the requirements are high and the financial and authorization risks are considerable, it is worth consulting an employment law specialist before you terminate with immediate effect.