Rivermate | Austria flag


Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Austria

Notice period

In Austria, the legal requirements for notice periods during employment termination are outlined by the Austrian Employment Termination Act (Arbeitsvertragsrechtsänderungsgesetz – AVRAG). The requirements vary depending on whether the termination is initiated by the employer or the employee.

Employer's Notice Periods

The notice period given by the employer is determined by the employee's length of service. The statutory minimum notice period is six weeks, and it increases incrementally based on the following benchmarks:

  • Up to 2 years: Six weeks
  • After 2 years: Two months
  • After 5 years: Three months
  • After 15 years: Four months
  • After 25 years: Five months

These are the minimums. The employer and employee can agree to a longer notice period in the employment contract, but it cannot exceed six months.

Employee's Notice Periods

An employee must provide a minimum of one month's notice to terminate their employment, with the end date falling on the last day of the calendar month. Similar to the employer's notice period, this can be extended through mutual agreement within the employment contract.

Exceptions and Additional Considerations

  • Collective Agreements: Collective agreements may supersede the statutory notice periods, so it's crucial to consult any applicable agreements for specific requirements.
  • Collective Redundancies: In cases of mass layoffs, the employer is required to notify the Austrian Employment Service 30 days in advance.

Severance pay

In Austria, severance pay is managed through a two-tiered system.

Old Severance Pay Scheme ("Abfertigung Alt")

The old system is applicable to employees whose employment started before January 1st, 2003. Although it has been largely superseded by the new severance scheme, it still applies in very specific circumstances. Employees become eligible for severance pay after three years of continuous service with the same employer. The amount increases incrementally with service duration, reaching a maximum of twelve months' gross salary after 25 years. Severance pay is only payable when the employer terminates the employment contract, excluding cases of serious misconduct by the employee.

New Severance Pay Scheme ("Abfertigung Neu")

The new scheme applies to employment contracts starting on or after January 1st, 2003 and is the dominant severance model in Austria. Employers are mandated to contribute a fixed 1.53% of an employee's gross salary each month to a designated Employee Provision Fund. This is separate from the employer's payroll and social security obligations. Employees have a right to access funds in their severance account after three years of contributions. Unlike the old scheme, the new scheme offers more flexibility. If the employer terminates the contract, the employee has the right to receive the accumulated pay. If the employee resigns, they can transfer the balance to a new employer's fund. Upon retirement, the employee has the option of receiving a lump sum or converting the balance into an annuity.

Important Considerations

Collective bargaining agreements may contain provisions that enhance severance arrangements beyond the legal minimums.

Termination process

In Austria, the termination of an employment contract can be initiated by either the employer or the employee. Austrian labor law provides specific procedures and guidelines to ensure a fair and lawful termination process.

Termination by the Employer

  • Ordinary Termination (Kündigung): The employer can terminate the employment by giving notice in writing or verbally. They are not required to provide a reason.
  • Summary Dismissal (Entlassung): The employer may summarily dismiss an employee for serious misconduct, such as theft, sexual harassment, or gross negligence. The dismissal must be communicated immediately to the employee, and a written justification must be provided.
  • Special Protection Against Dismissal: Employees with five or more years of tenure and in workplaces with five and more employees enjoy enhanced termination protections. If challenged, the employer must justify the dismissal based on grounds related to the employee's capabilities, conduct, or operational requirements.

Termination by the Employee

  • Resignation (Austritt): The employee may resign from their position by providing written or verbal notice. They must adhere to the required notice periods as outlined in their employment contract or collective agreement.

Additional Requirements

  • Terminations During Protected Periods: Terminating an employee who is pregnant, on parental leave, or undergoing military training may be restricted.
  • Works Council Involvement: In workplaces with a works council, the employer may be required to consult the council prior to issuing a dismissal notice.

Best Practices

Employers should always consult their employment contracts, any collective bargaining agreements, and relevant Austrian labor laws before initiating the termination process. Documenting the reasons for termination and maintaining clear records is crucial for potential legal disputes.

Rivermate | A 3d rendering of earth

Hire your employees globally with confidence

We're here to help you on your global hiring journey.