Contract template: Managing Director (Geschäftsführer)
A managing director contract in Switzerland must clarify decision-making authority, set a market-rate salary or fee structure (fixed or performance-linked), define a notice period aligned with company bylaws, and address non-compete and intellectual-property rights. The Obligationenrecht permits wide contractual freedom for management roles, but vague authority or missing termination terms breed disputes.
The managing director (Geschäftsführer) role sits at the boundary between employment law and corporate governance. Your contract must define both the employment relationship and the scope of business authority. Swiss law allows you significant flexibility, but silent clauses create disputes when the director leaves or underperforms.
This guide walks through the essential clauses: role and authority, compensation, Pensum, notice period, and restrictive covenants. Use it to spot gaps in your contract before signing. Have a lawyer review the final version—this is reference material, not legal advice.
Role, title, and decision-making authority
The Obligationenrecht assumes a managing director has broad authority to bind the company in ordinary business matters unless the company bylaws (Statuten) or employment contract restrict it. Be explicit about what your director can and cannot do: approve budgets, hire staff, sign contracts above a value threshold, or commit to capital expenditure.
Vague authority language—'responsible for day-to-day management'—invites disputes if the director makes a large commitment the owner later contests. Write specific limits: 'May sign contracts up to CHF 50,000; amounts above require written owner consent.' This protects both parties.
- State the official title and whether it is Geschäftsführer, Director, or another role under your company bylaws.
- List decisions the director can make independently (hiring up to a budget, negotiating supplier contracts within limits).
- Specify decisions requiring owner or board approval (capital investment, major client contracts, salary changes, take-on of debt).
- Reference the company bylaws and confirm the contract does not override them.
- Clarify reporting line: does the director report to the owner, a board, or both?
- Include a clause allowing the owner to amend decision limits in writing with 30 days' notice.
Compensation, Pensum, and benefits
Compensation must be written clearly: fixed monthly salary in CHF, Pensum (e.g. 100%), and frequency of payment (monthly by 25th). The Obligationenrecht does not set a minimum, so you and the director negotiate freely. Market rates for Geschäftsführer in SMEs range widely by canton and industry; the Swiss wage statistics (BfS) and recruitment surveys are rough guides.
Common pitfalls: omitting the 13th month salary if promised, vague 'performance bonus' without criteria, and unclear treatment of social insurance contributions. If the director is also a shareholder, separate employment compensation from distributions. Put bonus criteria in writing—'50% of net profit above CHF X, capped at CHF Y'—to avoid post-year disputes.
- Fix a gross monthly salary and state Pensum percentage (typically 100% for Geschäftsführer, but part-time is possible).
- Confirm whether a 13th month salary is included or whether bonus or profit-sharing applies.
- Define any performance bonus: the target, KPIs, and payout date. Without criteria, bonuses are discretionary.
- State who pays social insurance: almost always the employer covers the employer portion (AHV, ALV, IV, UVG, BVG).
- List benefits: car allowance, phone, home-office equipment, professional development budget. Be specific about limits.
- If the director is a shareholder, keep salary separate from dividend or profit distributions.
Notice period, termination, and restrictive covenants
The Obligationenrecht sets a default notice period of one month to the 15th or end of a calendar month for indefinite contracts. For a managing director, you may negotiate a longer period—often three months for both sides—to allow time for transition. Probation periods (up to three months) are common but optional. Write the exact notice period and probation terms in the contract.
Non-compete and confidentiality clauses are enforceable in Switzerland if they are reasonable in scope, duration, and geography. A blanket 'no competition for five years anywhere in Switzerland' will likely fail; courts prefer '18 months in the region of operation, limited to the director's actual market.' Intellectual property created during employment belongs to the company by default under Obligationenrecht Art. 364, but it is good practice to confirm this explicitly.
- Set notice period: probation (0–3 months) and ordinary termination (e.g. three months to 15th of a month for both sides).
- State the end date of any probation period or confirm no probation applies.
- Include a non-compete clause tied to actual business need: specify duration (typically 12–24 months), geography (e.g. 'territory of current operations'), and sector if relevant.
- Add a confidentiality clause covering trade secrets, client lists, and financial information. Duration may extend beyond employment.
- Confirm that IP created during employment belongs to the company (this is Swiss law default, but explicit is clearer).
- Reserve the right to issue an Arbeitszeugnis (employment reference) upon termination and define what it will confirm (role, period, performance level).
Frequently asked questions
- Can I put a non-compete in a managing director contract in Switzerland?
- Yes. Under Obligationenrecht Art. 340, restrictive covenants are enforceable if reasonable in duration, geography, and scope. Courts often accept 12–24 months within the company's real market area. Overly broad terms (five years, all of Switzerland) may be struck down. Have a lawyer review to confirm reasonableness.
- What happens if the contract is silent on termination notice?
- The Obligationenrecht default is one month notice to the 15th or end of a calendar month. For a managing director, this may be too short. Specify a longer period in writing. If you do not, either party may terminate with one month's notice, making transitions difficult.
- Do I have to include a 13th month salary for a managing director?
- No, the Obligationenrecht does not require it. However, if it is a local or industry standard in your canton, the director may expect it. State clearly in the contract whether a 13th month is included in the annual salary or paid separately. If bonus or profit-sharing applies instead, define the criteria.
General information for Swiss employers, not legal advice. Have a lawyer confirm anything with legal consequences.