Facts
The employee [B.] was employed for around 37 years without a written employment contract by [A. AG] (employer, appellant). Most recently he sat on the board of directors and was chairman of the management. He was also a minority shareholder of [C. AG] , which held all shares of the employer.
The employer terminated the employment relationship ordinarily on 25 August 2016; it ended on 31 May 2017. The employee, who was 60 years old at the time of termination, filed suit on 13 June 2018 with the Regional Court Oberland seeking compensation of six monthly salaries for abusive termination as well as further amounts.
On 10 June 2020 the Regional Court ordered the employer to pay CHF 141'197.25 net and dismissed the claim for the remainder. On 18 December 2020 the Higher Court of the Canton of Bern partially upheld the employer's appeal, confirmed an abusive termination pursuant to Art. 336 CO, but reduced the compensation to CHF 91'455.10 as well as CHF 6'006.25 for expenses/fringe benefits. The set-off defence raised by the employer (counterclaim of CHF 115'617.35 due to health insurance premiums of the employee paid over many years) was deemed by it not to have been sufficiently substantiated.
The employer filed a civil law appeal with the Federal Supreme Court and requested the complete dismissal of the claim, or alternatively remittal. The employee requested dismissal of the appeal. The application for suspensive effect was rejected by presidential order of 24 March 2021. The core questions were: (1) whether the termination is deemed abusive due to the manner in which the right of termination was exercised (lack of hearing, lack of search for alternative solutions, lack of warning), and (2) whether the set-off defence was sufficiently substantiated.
Considerations
The Federal Supreme Court bases its decision on the facts established by the lower court (Art. 105 para. 1 FSCA); supplementary complaints regarding the facts must satisfy the strict pleading requirements of Art. 106 para. 2 FSCA, which was not the case here. The question of whether a termination is abusive is a question of law that is reviewed freely. The starting point is freedom of termination (Art. 335 para. 1 CO), which is limited by the prohibition of abuse pursuant to Art. 336 CO; its catalogue is not exhaustive, but the grounds asserted must be comparably serious. The manner of termination may also be abusive, for example in cases of grossly contract-violating conduct or a false and covert game, but not in cases of merely improper conduct.
The lower court had derived from the employee's age and his long length of service an increased duty of care requiring prior information, a hearing and a search for alternative solutions (referring to BGE 132 III 115 and judgment 4A_384/2014). The Federal Supreme Court holds that the Code of Obligations recognises neither a duty to hear nor a duty to warn, and that under private law there is no general proportionality review. The case in BGE 132 III 115 was an exceptional extreme case, which is why age may not be considered in isolation; rather, an overall assessment of the individual case is required. The scope of the duty of care is also determined on a case-by-case basis for older employees.
In the present case, the employee was a member of the board of directors and chairman of the management with considerable decision-making powers and great responsibility, and thus not an ordinary employee. A duty to search for alternative solutions presupposes that continued employment is possible at all, which hardly applies to a chairman of the management; the employee did not assert this either. The employer's interest in freedom of termination is to be weighted heavily for such a managing director, as is the relatively high salary. Being a family member is not sufficient for increased duties. Therefore the lower court violated federal law when it qualified the termination as abusive due to the lack of a hearing and the lack of alternative solutions.
The employee's treatment of staff, which was cited as a ground for termination, also does not establish abusiveness. A lack of warning does not by itself render the termination of a managing director abusive; the employee's position meant that problems with staff could potentially affect the entire company. To deny abusiveness it is not required that the employer behaves flawlessly in every respect; the decisive question is…