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End of employment in Austria

Every employment relationship comes to an end. And, if you want to protect your business, it’s important to understand what that process looks like. In Austria, there are multiple different ways that an employment contract can be terminated, including termination by mutual agreement, unilateral termination, and summary dismissal. The rules are different in each specific situation.

In this section, we’ll take you through the various ways that an employment relationship can end in Austria. We’ll also discuss the notice periods that apply to both employees and employers, the post-termination restraints that it’s possible to impose on employees in Austria, and the rules surrounding employee rights after a transfer of undertakings.

Notice periods in Austria

In Austria, both employers and employees can end their employment contract at any time without giving a reason. However, they must give the correct amount of notice to the other party. While giving notice verbally is possible, written notice is recommended to avoid ambiguity or disputes. Until 2021, there were different notice periods in Austria for white and blue-collar workers. These have now been unified and the same notice periods apply to everyone.

Notice periods in Austria for employers and employees

When an employee terminates an employment contract in Austria, they must give one month’s notice. For employers, the statutory notice period depends on how long the employer has been engaged. The legal minimum notice periods for employers are as follows:

  • Up to two years of employment: Six weeks.
  • 2–5 years of employment: Two months.
  • 5–15 years of employment: Four months.
  • More than 25 years of employment: Five months.

The notice period can be increased to up to six months based on an agreement between the employee and the employer or the collective bargaining agreement that applies.

Severance pay in Austria

There are currently two systems of severance pay in Austria. Which one applies depends on whether the employee’s contract began before or after 1 January 2003. For those whose contract began after this date, employers must pay 1.53% of the employee’s salary into an external fund to cover severance pay.

The employee may then be able to claim severance pay from this fund if they are dismissed without cause, but they can’t claim anything from the employer themselves. Under the old system, employees can claim severance pay directly from the employer.

Probationary periods in Austria

It’s common practice for employers to include a probationary period in their contracts in Austria. During this period, either the employer or the employee can terminate the contract without giving notice. Probationary periods in Austria must not exceed one month (three months for apprenticeships).

Termination of employment in Austria

There are a few different ways that an employment contract can be terminated in Austria, with different rules applying to each situation. Read on for some of the most common ways of ending a contract.

Termination by mutual consent in Austria

Termination by mutual consent is when an employer and an employee agree between themselves to end an employment contract. No notice period is required in this case. Termination by mutual consent can happen verbally or in writing, though written termination is recommended.

Unilateral termination in Austria

Unilateral termination is when either the employee or the employer decides to terminate the contract. They do not have to give a reason for terminating the contract but must give the other party the correct amount of notice as defined by Austrian labour laws. The standard notice period for employees is one month, and the notice period for employers depends on how long the worker has been employed.

Summary dismissal in Austria

Summary dismissal is another form of termination of employment in Austria. Employers must have a valid reason for dismissing an employee, such as a persistent neglect of duties. Dismissal is effective immediately and no notice period is required. Employers can dismiss employees verbally, in writing, or implicitly.

Resignation in Austria

Employees can also resign from their posts without giving notice if they have a good reason. For example, this would be appropriate in the case of gross neglect of duty by the employer.

Termination of fixed-term contracts in Austria

Fixed-term contracts in Austria end automatically at the expiry of their term. There is no need for either party to give notice to end the contract. It is not usually possible to terminate employment early, except in certain limited circumstances.

Protections from dismissal in Austria

In general, employers in Austria don’t have to justify ordinary dismissals. However, in organisations with five or more employees, employees have ‘General Protection against Dismissals’. This means that an employee can challenge a dismissal if it has an adverse impact on their personal life, and the employer must provide a justification.

Certain groups of employees in Austria have additional ‘Special Protection against Dismissal’. These include:

  • Pregnant women and those who have recently given birth.
  • Parents who are on parental leave or have recently returned.
  • Works council members.
  • Employees formally classified as disabled.

An employee belonging to any of these groups may only be dismissed for certain specific reasons. Employers may need the consent of the authorities in order to proceed with such a dismissal.

Collective redundancies in Austria

There are special rules that apply to collective dismissals (redundancies) in Austria. What counts as a collective dismissal depends on the size of the organisation:

  • Employers with 21–99 employees: Five or more employees.
  • Employers with 100–600 employees: 5% or more of the workforce.
  • Employers with more than 600 employees: At least 30 workers.
  • All employers: Five or more employees aged 50 or over.

In order to carry out a collective dismissal, the employer must notify the Austrian Employment Service at least 30 days in advance. If they fail to do this, the dismissals are rendered void.

Post-termination restraints in Austria

Post-termination restraints are restrictions that employers can put on their former employees after the end of their employment. These are usually only allowed if they are designed to protect the legitimate interests of the business.

Types of post-termination restraints in Austria

Here are the main types of post-termination restraints that are possible in Austria:

  • Non-compete agreements: These prevent employees from working for or setting up businesses that compete with their former employer.
  • Customer non-solicit agreements: These prevent employees from soliciting or ‘poaching’ customers from their former employer.
  • Employee non-solicit agreements: These prevent employees from soliciting or ‘poaching’ employees from their former employer.

Restrictions on post-termination restraints in Austria

Non-competition clauses must be concluded in the employment contract and may not exceed one year after the employment relationship is over. They are also only allowed if the employee’s income is above a certain threshold. A non-competition clause may not cause undue hardship to the employee’s career.

Waivers in Austria

In some countries, it’s possible for employees to waive their statutory rights as part of a settlement agreement with their employer. This is typically not possible in Austria and any such waiver would be considered invalid by an Austrian court.

Transfer of undertakings in Austria

A transfer of undertakings is when one business entity is wholly or partially acquired by another company. In Austria, there are specific rules concerning what happens to the employees of the transferred entity when this happens.

What constitutes a transfer of undertakings in Austria?

In Austria, the rules concerning transfers of undertakings only apply to the change of ownership (Betriebsübergang) of a business or part of a business. This usually involves either:

  • The transfer of licences, patents, copyrights, logistics systems, or software.
  • The transfer of more than 10% of the employees of the business.

Employee rights after a transfer of undertakings in Austria

When employees are transferred to another company as part of a transfer of undertakings, the new employer must take over all rights and obligations of each individual employment contract. They must also take over the occupational pension scheme and any work agreements.

Any changes to employment contracts can only be made through mutual agreement between the employer and the employee. Decreasing the employee’s compensation is not permitted. A transfer of undertakings is also not a valid ground for dismissing an employee in Austria. If any dismissals occur within 6–9 months of the transfer, the employee may be able to make a claim for unfair dismissal (they would need some evidence that the dismissal was related to the transfer).

Consulting and information obligations

Employers in Austria have a duty to consult with and inform employees and or the works council (if applicable) before the transfer.

Avoid risk and missed opportunities with our end-to-end employment solutions

There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in Austria — or you could end up facing legal issues.

Our solutions ensure your business is protected from risk when a relationship with a worker comes to an end — whatever the reason. We can also help you to avoid missed opportunities by re-deploying talent where possible

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