Terminating an employment relationship in Austria requires careful adherence to specific legal provisions outlined primarily in the Austrian Employment Contract Act (Angestelltengesetz) and the General Civil Code (Allgemeines Bürgerliches Gesetzbuch), as well as various collective agreements. These regulations govern how notice must be given, the potential entitlement to severance pay, and the valid grounds for ending employment, ensuring a degree of protection for employees.
Understanding these requirements is crucial for employers to ensure compliance and avoid potential legal challenges. The process involves specific notice periods depending on the length of service and the party initiating the termination, calculation of potential severance entitlements, and adherence to formal procedures, particularly regarding written communication and consultation where applicable.
Notice Period Requirements
The minimum notice periods for terminating an employment contract in Austria depend on the length of service and whether the termination is initiated by the employer or the employee. These periods are typically stipulated in the Angestelltengesetz, but collective agreements often provide more favorable terms for employees.
When the employer terminates the contract:
| Length of Service | Minimum Notice Period | Termination Date |
|---|---|---|
| Up to 2 years | 6 weeks | End of a calendar quarter (March 31, June 30, etc.) |
| From 2 to 5 years | 2 months | End of a calendar quarter |
| From 5 to 15 years | 3 months | End of a calendar quarter |
| From 15 to 25 years | 4 months | End of a calendar quarter |
| More than 25 years | 5 months | End of a calendar quarter |
Note that collective agreements or individual contracts can stipulate that termination can occur on the 15th or last day of a calendar month instead of only at the end of a quarter.
When the employee terminates the contract:
| Standard Rule | Minimum Notice Period | Termination Date |
|---|---|---|
| All cases | 1 month | End of a calendar month |
Collective agreements or individual contracts may specify different notice periods for employees, but they cannot be shorter than the statutory minimum unless explicitly allowed by law for specific circumstances (e.g., during a probationary period).
During a probationary period (typically the first month), the employment can generally be terminated by either party without notice and without stating a reason.
Severance Pay (Abfertigung Alt and Neu)
Austria has two systems for severance pay: the older "Abfertigung Alt" system and the newer "Abfertigung Neu" system. The applicable system depends on when the employment relationship began.
Abfertigung Alt: Applies to employment relationships that began before January 1, 2003, and have not transitioned to the "Neu" system. Entitlement typically arises after at least 3 years of service, provided the employee is not dismissed for cause or resigns without good cause. The amount is calculated based on the employee's last monthly salary and length of service:
| Length of Service | Severance Pay (Gross Monthly Salaries) |
|---|---|
| 3 years | 2 |
| 5 years | 3 |
| 10 years | 4 |
| 15 years | 6 |
| 20 years | 9 |
| 25 years | 12 |
Abfertigung Neu: Applies to employment relationships that began on or after January 1, 2003, or older relationships that voluntarily transitioned. Under this system, both employer and employee contribute 1.53% of the employee's gross monthly salary to a mandatory employee severance fund (Mitarbeitervorsorgekasse - MV Kasse) from the second month of employment.
Entitlement to withdraw the accumulated capital (including contributions and investment returns) from the MV Kasse arises after at least 3 years of contributions, provided the employment is terminated by:
- Employer dismissal (unless for cause).
- Employee resignation (after 3 years of contributions).
- Mutual agreement.
- Expiry of a fixed-term contract.
- Retirement.
- Death of the employee.
If an employee resigns before completing 3 years of contributions, the accumulated capital remains in the fund but can be withdrawn later if they meet the criteria in a subsequent employment. The amount is the total accumulated contributions plus investment gains.
Grounds for Termination
Employment contracts in Austria can be terminated through ordinary termination (with notice) or extraordinary termination (summary dismissal without notice).
Ordinary Termination (with notice):
- Initiated by either employer or employee.
- Requires adherence to statutory or contractual notice periods and termination dates.
- Generally, no specific "cause" is required for ordinary termination by the employer, but it can be challenged by the employee as "socially unjustified" under certain conditions (see Employee Protections).
Extraordinary Termination (summary dismissal without notice - Entlassung by employer, Austritt by employee):
- Requires a "just cause" (wichtiger Grund) that makes the continuation of the employment relationship unreasonable for the terminating party.
- Must be invoked immediately or very soon after the terminating party becomes aware of the grounds.
- Examples of just cause for employer dismissal:
- Serious breach of duty by the employee (e.g., theft, fraud, persistent refusal to work).
- Employee revealing business secrets.
- Employee being incapable of performing work for a prolonged period due to gross negligence or intent.
- Employee accepting bribes.
- Employee physically assaulting the employer or colleagues.
- Examples of just cause for employee resignation:
- Employer seriously breaching duties (e.g., non-payment of wages, physical assault by employer).
- Employer failing to protect the employee's health or safety.
- Employee being unable to continue work due to health reasons without fault.
Procedural Requirements for Lawful Termination
To ensure a termination is legally valid, employers must follow specific procedural steps:
- Written Form: Termination notice (whether ordinary or extraordinary) must be given in writing. Oral termination is generally invalid.
- Clear Statement: The written notice must clearly state the intention to terminate the employment relationship and specify the effective date (considering the notice period and termination date).
- Delivery: The notice must be effectively delivered to the employee. This can be done in person (with confirmation of receipt), via registered mail, or other verifiable methods.
- Works Council Consultation (if applicable): If a works council exists in the company, the employer must inform the works council before giving notice of ordinary termination. The works council has one week to comment. While the employer is not bound by the works council's opinion, failure to inform them makes the termination legally challengeable. For extraordinary dismissal, the works council must be informed immediately after the dismissal.
- Final Settlement: Upon termination, the employer must provide the employee with a final settlement statement detailing all payments due, including outstanding salary, pro-rata holiday pay, pro-rata special payments (13th/14th month salary), and potentially severance pay (Abfertigung Alt) or confirmation of contributions to the MV Kasse (Abfertigung Neu).
- Employment Certificate: The employer must issue an employment certificate (Dienstzeugnis) upon the employee's request.
Common procedural pitfalls include failing to provide written notice, miscalculating the notice period or termination date, failing to consult the works council, or not ensuring proper delivery of the notice.
Employee Protections Against Wrongful Dismissal
Austrian law provides significant protection against unfair or wrongful dismissal, particularly for ordinary terminations by the employer.
- Social Unjustification: An employee can challenge an ordinary dismissal in court if it is deemed "socially unjustified." This applies in companies with more than 5 employees and where the employee has been employed for at least six months (or shorter if specified by collective agreement). A dismissal is socially unjustified if it is based on reasons related to the employee's person (e.g., age, health, without sufficient operational reasons) or is detrimental to the employee without being justified by the company's operational needs. The court performs a social balancing test.
- Special Protection Groups: Certain groups of employees benefit from enhanced protection against dismissal, requiring specific legal grounds or approval from authorities:
- Pregnant employees and employees on maternity/paternity leave.
- Employees on parental leave.
- Works council members.
- Disabled employees (requiring approval from the Disability Employment Office).
- Employees undergoing military or civilian service.
- Discrimination: Termination based on discriminatory grounds (e.g., gender, ethnic origin, religion, sexual orientation, age, disability) is unlawful and can lead to significant compensation claims.
- Timing: Terminating an employee at an "inopportune time" (e.g., immediately after they have raised a valid complaint about working conditions) can also be challenged.
If a court finds a dismissal to be socially unjustified or otherwise unlawful, it can order the employer to reinstate the employee or pay significant compensation.
