Rules on Compensation. During garden leave, employees retain all contractual entitle- ments to remuneration, including pension entitlements. Hence, the base salary and variable salary must be paid. The calculation of variable salary during garden leave is quite often difficult, due to the lack of provisions in employment agreements or compensation programs. For instance, an employee may be entitled to on-target variable pay. However, if the employee was always over target in the past, he or she may be entitled to be paid on the basis of past performance. The only exception to the above rules is a fully discretionary bonus to which there is no entitlement during garden leave. Under Swiss employment law, it is disputed whether new income generated by an employee during garden leave results in a reduction of the compensation to be paid by the employer, particularly if the employee did not agree to the garden leave. Consequently, it is very important for the employer to set out the conditions applicable to the garden leave (including salary reduc- tion) when issuing the notification of garden leave. Without the agreement of the employee, it is not possible to make payments subject to compliance with a noncompetition or nonsolicitation covenant.
Rules on Compensation. As explained above, there is no statutory provision for garden leave, though such arrangement can be made in a contract and the parties can agree on the appropriate conditions, e.g., observing re- strictive covenants during that period of leave. Further, the terms of compensation may also be negotiated, e.g., only wages or also including benefits and provident fund contributions. 80-16
