Bally Switzerland: when the salary no longer arrives

The layoffs at Bally Switzerland are taking a socially sensitive turn: according to 20 Minutes, employees made redundant at the end of May have reportedly not received their salary for two months, even though their notice period should have guaranteed them remuneration until the end of August. The matter highlights a tension area that many SMEs prefer never to face: what happens when payroll can no longer be met, but the company is not yet bankrupt?

For managers, HR managers and fiduciaries, this case goes beyond the fate of a well-known brand. It serves as a reminder that in Switzerland, salary is not an ordinary invoice that can be deferred at the discretion of cash flow. Its non-payment triggers rights for employees, legal risks for the employer and administrative emergencies for accounting.

At Bally, the notice did not turn into pay

According to 20 Minutes, Bally's historic stores closed in May, leading to the dismissal of employees from the subsidiaries, notably in Lausanne and Geneva. The affected employees were reportedly given three months' notice, during which time the salary remains due even if the shops are no longer in operation.

The situation became complicated in mid-June. Again according to 20 Minutes, a Ticino court blocked the sale of the brand to the American group Regent LP. The media reports that the court suspected an operation likely to allow a resale at a low price, before a possible takeover of a bankrupt Bally, with a debt of around 100 million francs remaining with the creditors. The group was then placed under a moratorium to avoid immediate bankruptcy.

On the ground, the effect is brutal. A Lausanne employee quoted by 20 Minutes claims to have completed a second month without salary and can no longer afford rent, insurance and current bills. The same employee indicates that the employees were informed of the company's accounts being frozen and that unemployment insurance would not intervene as long as the legal situation related to the moratorium was not clarified.

This timeline is important to understand the issue. In the minds of many employees, a cessation of activity or a store closure already equates to an economic end of employment. Legally, the situation can be different: as long as the contract is running, and as long as the employer is not bankrupt, the agreed remuneration remains at the heart of the contractual obligation.

The moratorium does not erase the salary debt

The moratorium is a procedure intended to give breathing space to a struggling company, under judicial control, to seek a solution with creditors. For an SME manager, it should be seen as a phase of protection and possible reorganisation, not as an automatic erasure of commitments made to staff.

The general framework of Swiss labour law remains clear. The Code of Obligations provides that the employer must pay the agreed salary to the worker, according to Article 322 paragraph 1 CO, and that the salary is in principle paid at the end of each month, unless otherwise agreed, according to Article 323 paragraph 1 CO. These references, recalled in the legal file consulted, set a simple rule: the financial difficulty of the company does not, by itself, cancel the enforceability of the salary.

In the Bally case, the General Directorate of Employment and the Labour Market of the canton of Vaud, quoted by 20 Minutes, specified that since the company is not bankrupt, it is up to it to continue paying salaries. If it does not, employees must take the necessary steps to assert their rights. This is a crucial point: unemployment or insolvency mechanisms do not automatically replace the employer from the first delay.

For an SME, this distinction is decisive. An overdraft, a dispute with an investor, a freezing of accounts or a reorganisation procedure do not mechanically suspend payroll obligations. If salaries can no longer be honoured, the situation must be treated as a governance emergency: it is no longer just about cash flow, but about labour law, social risks and business continuity.

Formal notice and ORP: the tight path of employees

Faced with unpaid salaries, the first generally recommended step is to formally notify the employer in writing, giving them a reasonable deadline to pay. This step is not a trivial formality: it documents the payment default, dates the claim and prepares the file for further action if the dispute worsens.

According to the research file, repeated non-payment of salary can constitute a just cause allowing the employee to terminate the contract with immediate effect based on Article 337 CO. In the event of justified immediate termination, Article 337c paragraph 3 CO provides for compensation of up to six months' salary. However, the exact amount depends on the circumstances and cannot be presumed automatically.

In the Bally case, union secretary Gwenolé Scuiller, quoted by 20 Minutes, recommends that affected employees formally notify the company to pay. If the employer does not respond, they could terminate their contract with immediate effect for just cause. He also invites them to turn to their union or legal protection. The DGEM goes in the same direction by indicating that the employee can then register with the ORP and file a compensation claim with the competent unemployment fund.

The fund can then pay the corresponding benefits and subrogate itself in the employee's rights against the employer for the covered period, notably that of the notice period, according to the explanations of the DGEM reported by 20 Minutes. In other words, the institution that pays can take over the salary claim and act on behalf of the employee to recover the amounts due. For the company, this does not erase the debt: it mainly changes the interlocutor.

In the event of bankruptcy, another regime comes into play. Salary claims for the last six months benefit from a first-class privilege according to Article 219 paragraph 4 LP, as recalled by the research file. Unemployment insurance can also intervene in the form of insolvency compensation for unpaid salaries of the last four months preceding the bankruptcy, under conditions, according to arbeit.swiss. These rules are protective, but they require specific steps and conditions.

For SMEs, payroll must take precedence over ordinary arbitrations

The practical lesson is clear: when a company starts choosing between paying salaries, rents, suppliers or insurance, it has already entered a red zone. Payroll touches on the minimum vital of employees and internal trust. A delay can quickly lead to departures, stoppages, formal notices, procedures and a deterioration of the employer's reputation.

For an SME manager, the first reflex is to separate temporary liquidity difficulties from a deeper inability to continue the activity. A temporary cash flow tension can sometimes be managed by tight planning of receipts, a banking dialogue or negotiation with certain creditors. However, when the payroll can no longer be covered, management must document the situation, obtain specialised advice and avoid unrealistic promises.

Accounting plays a central role here. Gross salaries, social deductions, holidays, overtime, contractual bonuses or severance pay must be correctly identified. In the event of a procedure, poorly documented payroll complicates the employer's defence as well as the employee's protection. Payslips, contracts, amendments, time sheets and correspondence become essential documents.

The fiduciary must also draw attention to the charges related to salaries. An unpaid net salary is often only the visible part of the problem: social contributions, possible withholding taxes, insurance and holiday provisions must be examined. Without making a definitive legal diagnosis, it can help establish a reliable picture of debts to staff and prepare the necessary information for authorities, legal advice or company bodies.

Anticipate the salary crisis before it becomes public

In a small or medium-sized enterprise, the risk is rarely announced by a single spectacular event. It often signals itself through staggered supplier payments, insurance reminders, employee advance requests or increasingly tight deadlines between customer receipts and payroll deadlines. These signals must quickly reach management.

Prudent management involves preparing a payroll-oriented cash plan, not just a global banking follow-up. Salary deadlines must be visible, dated and compared to the receipts actually expected. When cost reduction measures are considered, the effects on employment contracts, notice periods and acquired rights must be checked before any announcement. An activity closure does not release the employer from its commitments without an adequate procedure.

Communication also matters. Silence or vague explanations often exacerbate mistrust. An employer in difficulty must avoid downplaying the situation and ensure that any information transmitted to employees is accurate, consistent with the company's legal status and validated if necessary by a specialist. In parallel, employees facing a salary delay should act in writing, keep evidence and seek advice quickly.

The Bally case thus reminds us of a reality sometimes forgotten in restructurings: salary is the lifeline of the employment contract. For Swiss SMEs, securing payroll is not only a legal obligation; it is a test of management, transparency and responsibility. When this line breaks, the question is no longer whether the fiduciary should be involved, but to what extent it was involved early enough.