Employment update: increased average wages

SNB-Newsletter, August 2023

General
Recently, several major cities announced their decision to increase the monthly average compensation to be
paid to employees within the area of their relevant municipalities; as a result, employers may face increased
costs under severance packages, claims for wrongful termination or dismissal and social insurance
contributions.

In detail
The average monthly compensation (“MAC”) serves as benchmark to cap severance payments at a rate of
300% of the relevant local MAC. Such caps are, in particular, used when employers decide not to renew fixed-
term contracts or offer severance packages upon entering into negotiations for termination. Damages for
wrongful termination or dismissal are likewise bound to rise because such damages are generally capped at a
rate of 200% of employees’ relevant statutory severance pay.

Please read the full Newsletter here.