Employment 2024 Comparisons

Labour law protects different types of workers. The different groups of workers are outlined below.

White-Collar and Blue-Collar Workers

A distinction is made between white-collar workers (“employees”) and blue-collar workers. The term “employee” is defined in the Employees Act (Angestelltengesetz). A person’s white-collar status is contingent upon the nature of their employer and the duties they undertake.

Employees are predominantly employed in the commercial sector or in the higher, non-commercial services sector or in the office sector.

The term blue-collar worker is not defined by law. However, based on case law, any worker not identified as a white-collar employee typically falls under the category of “worker”.

Different rules apply to blue- and white-collar workers, especially in the following areas:

• reasons for early termination of the employment relationship;
• in works constitution law (separate works councils for blue- and white-collar workers);
• the eligibility criteria for invalidity/occupational disability pensions; and
• separate collective agreements in many sectors.

Apprentices

Apprentices are persons who, on the basis of an apprenticeship contract, receive technical training in an apprenticeship company to learn an apprenticeship occupation included in the list of apprenticeship occupations and who work within the framework of this training. The Austrian Vocational Training Act (Berufsausbildungsgesetz) regulates, among other things, training, the rights and duties of apprentices and persons entitled to apprenticeship, apprenticeship income and entitlements in the event of work incapacity. Unless otherwise stipulated by this law, the provisions of general labour law (eg, leave entitlement) apply to apprentices.

Marginal Employees

A person is considered to be in marginal employment if he or she earns no more than a certain amount per month in regular employment (employment for one month or for an indefinite period). In 2024, the marginal earnings threshold is EUR518.44 per month. Employees in marginal employment are covered by accident insurance but not insured against unemployment.

The same labour law provisions apply to marginally employed employees as to all other employees. It may be that collective agreements contain special provisions.

The employment relationship is a continuing obligation between employer and employee. A contract of employment is regularly concluded for an indefinite period. A contract of employment may also be limited in time until the expiry of a certain date or until the occurrence of a certain event. The succession of several fixed-term employment contracts is inadmissible unless each fixed-term is justified by an objective reason.

Formal Requirements for Employment Contracts

The conclusion of an employment contract is not bound to any particular form. It can be in writing, verbally or implied. An exception exists only in certain cases.

The employer is obliged by law to issue a service note irrespective of the duration of the employment relationship. The service note must contain certain information specified in the law as follows:

• name and address of the employer;
• name and address of the employee;
• the start of the employment relationship;
• the end date of the employment relationship (in case of fixed-term employment);
• duration of the notice period and date of termination – reference to the termination procedure to be followed;
• usual place of employment – if necessary, reference to changing places of employment – registered office of the company;
• any classification in a general scheme;
• intended use/activity of the employee with the respective employer and brief description of the work to be performed,
• initial remuneration (basic remuneration and other remuneration) and due date of remuneration – remuneration for overtime if applicable and method of payment of remuneration;
• extent of annual leave;
• agreed normal daily or weekly working hours of the employee, unless the employment relationship is one to which the Caretaker Act applies, and, if applicable, information on the conditions for changing shift schedules;
• designation of any standards of collective legal organisation applicable to the employment contract (collective agreement, articles of association, minimum wage scale, fixed apprentice compensation, and works agreement) and reference to the room in the company where these are available for inspection;
• name and address of the employee’s social insurance institution and occupational pension fund;
• duration and conditions of an agreed probationary period; and
• if applicable, the entitlement to further training provided by the employer.

Either a service note must therefore be issued or an employment contract containing this information.

In principle, an employment contract only has to contain the statutory minimum content of a service note. In the context of concluding an employment contract, in practice, additional provisions (beyond the statutory minimum content) are usually made regarding the employment relationship (eg, fixed term, competition clause, and expiry provision).

General Working Hours Per Day/Week

The statutory normal working time is eight hours per day and 40 hours per week (excluding rest breaks). Many collective agreements provide for a reduced normal working week (eg, 38.5 hours per week). If the normal daily or weekly working hours are exceeded, the employee in principle works overtime.

An extension of normal working hours is possible within the framework of various flexible working time models. Models of flexible working time are, for example, the calculation of working time or flexible working time. In the case of a four-day week, the normal daily working time may be extended to ten hours. The details of flexible working time models can be found in various collective agreements.

Extra Work

In collective agreements that standardise a normal working week of less than 40 hours, the period between the normal working time according to the collective agreement and the statutory normal working time is referred to as extra work (Mehrarbeit). The collective agreements determine whether this time is remunerated with a supplement or without.

Overtime

Overtime (Überstunden) is generally defined as working hours that exceed the normal daily or weekly working hours. They are permitted in the case of increased work demand – however, the employee has a right of refusal.

Pursuant to the Working Time Act (Arbeitszeitgesetz), employees working overtime are entitled to:

• a supplement of 50%; or
• compensation in the form of compensatory time (one overtime hour corresponds to 1.5 hours of compensatory time).

The employer and the employee can agree on how overtime is to be compensated (money, time off in lieu or a combination of both).

The maximum daily working time is 12 hours per day and the maximum weekly working time is 60 hours – but permanently no more than 48 hours per week on a 17-week average. The applicable collective agreement may allow for an extension of the calculation period.

Part-Time Employees

For part-time employees, extra work comprises hours that go beyond their agreed-upon weekly schedule but have not reached the threshold of overtime. The law stipulates that for these additional hours, part-time employees are entitled to a 25% surcharge on their regular hourly wage.

Extra hours are not subject to extra pay:

• if they are compensated by time off in the ratio of 1:1 within the calendar quarter or another fixed period of three months in which they have accrued; or
• in the case of flexitime, the agreed working time is not exceeded on average within the flexitime period.

If collective agreements with shorter normal weekly working hours provide for no or lower bonuses for the extra work (eg, in the case of a collectively agreed normal weekly working time of 38.5 hours and bonus-free extra work of a further 1.5 hours), this overtime regulation shall also apply to part-time employees.

If several surcharges, eg, the statutory or collective agreement surcharge, are provided for the additional time worked, only the highest surcharge shall be paid. There is not a cumulative addition of these surcharges.

In connection with the organisation and remuneration of working time, the provisions of the applicable collective agreement must always be observed. Collective agreements may contain special provisions.

Minimum Wage Requirements

There is no statutory minimum wage in Austria. Whether there is an entitlement to a certain minimum wage depends primarily on whether a collective agreement is applicable in the respective company. The applicability of the collective agreement results from the employer’s affiliation to a contracting association.

If a collective agreement applies in the enterprise, each employee shall be classified according to the scheme of the applicable collective agreement, taking into account previous periods of service. The classification is usually based on the job characteristics, the content of the work and the actual predominant activity.

Where no collective agreement is in force, an administrative body responsible for authorising associations to conclude collective agreements (Bundeseinigungsamt) may set a minimum wage under certain conditions. As there is a collective agreement in most sectors, there is only a minimum wage agreement for a few occupational groups (eg, domestic help and caretakers).

Statutory Increases in Minimum Wages

Typically, the minimum remuneration outlined in collective agreements undergoes yearly increases. These increases are negotiated between the trade unions as employee representatives and the respective employer representatives (Austrian Economic Chambers or Liberal Professions Associations). If there is no collective agreement, there is no compulsory entitlement to a wage or salary increase. The employee and the employer must agree on this individually. However, wages or salaries should not be set at an unjustifiably low level that could be considered unethical or exploitative.

Entitlement to Special Payments

Salaries are usually paid monthly 12 times a year. However, there is also the possibility of receiving special payments such as a 13th and 14th salary (Holiday and Christmas bonuses). The entitlement, amount and due date of these special payments are regulated in the respective collective agreement or individual employment contract. With a few exceptions, the law does not provide for these payments. The respective collective agreement may also provide for other payments, such as anniversary bonuses or additional payments to compensate for specific conditions of a job role, such as working in dirty environments, facing potential dangers, or enduring particularly challenging conditions. Otherwise, bonuses, etc, can be contractually agreed between the employer and employee.

According to the Paid Annual Leave Act (Urlaubsgesetz), employees are entitled to five weeks of paid leave (30 working days for a six-day working week or 25 working days for a five-day working week) for each working year (leave year). If the employee is regularly employed for only five or fewer days of the week, the leave entitlement shall be converted into the corresponding working days. From the 26th year of service with the same employer, the amount of leave increases to six weeks. Under certain conditions, certain periods of previous service may already be taken into account for the leave entitlement.

Leave entitlement generally expires after two years from the end of the leave year in which it arose.

Holiday Pay

During leave, an employee is entitled to continued payment of remuneration (holiday pay), even if no work is performed. Holiday pay includes the basic wage/base salary and other remuneration (eg, bonuses, commissions, allowances and overtime) on average.

Entitlement in the Event of Illness

If an employee cannot work for health reasons that were not their fault or caused through gross negligence, he/she is entitled to continued payment of remuneration for six weeks per working year. The entitlement to continued payment of remuneration increases to up to 12 weeks depending on the duration of the employment relationship. For each additional four weeks, the employee remains entitled to half pay. The other half is covered by social insurance. After the period of continued payment of remuneration, sickness benefits from social insurance are due.

Entitlement in the Event of an Occupational Accident

If an employee is prevented from performing his/her work due to an accident at work or occupational disease, he/she shall retain his/her entitlement to remuneration for up to eight weeks per working year. The entitlement to remuneration shall be increased to ten weeks if the employment relationship has lasted for 15 years without interruption.

Care Leave

An employee shall be entitled to continued payment of remuneration up to the maximum of his/her regular weekly working hours if, after commencement of employment, he/she is absent from work as a result of:

• nursing leave (care required for a close relative, who is ill – living in the same household is not required);
• nursing leave (care for a sick person with whom one is not related but who lives in the same household);
• care leave (care required for one’s child, if the responsible caregiver is unavailable); or
• accompanying leave (accompaniment of a child under ten years old by the parents during inpatient hospitalisation).

Legal Entitlement to Time Off to Accompany Children During Rehabilitation

Since 1 November 2023, employees are entitled to up to four weeks’ leave per year to accompany their child, who is not yet 14 years old, during rehabilitation. From the notification of the claim until the expiry of four weeks after the end of the rehabilitation leave, the employee is under special protection against termination and dismissal.

Employees are entitled to care leave benefits during this time.

Maternity Leave

Protection period for expecting mothers

As a general rule, expectant mothers are prohibited from working eight weeks before their child’s due date. This employment restriction typically continues for eight weeks following the birth. In the case of premature or multiple births, or caesarean section, the period is extended to twelve weeks. If the pre-birth non-working period is reduced, an equivalent extension is granted post-birth, but up to a maximum of 16 weeks. During this time, they receive a maternity allowance from the Austrian Social Insurance. The employer does not pay any remuneration during the protection period.

Parental Leave

Mothers or fathers are entitled to take parental leave up to the day before their child’s second birthday. This is in addition to the maternity leave. It is possible to apply for childcare allowance during maternity leave as mothers or fathers do not receive any remuneration from the employer during that period.

The full entitlement to parental leave of 24 months is only available if both parents take at least two months of parental leave. If only one parent takes parental leave, the duration is reduced to 22 months. There is an exception for single parents: they can still take parental leave until the child’s second birthday.

Employee Liability

Employees are only liable to a limited extent for damage they have caused at work. Their financial capacity is taken into account when determining the extent of their liability. For employees to be liable, damage must actually have occurred during the performance of the service. The damage must be the fault of the employee and there must be no grounds for exclusion of liability. The claim must not have lapsed or become time-barred. These provisions are regulated in the Employees’ Liability Act (Dienstnehmerhaftpflichtgesetz).

Agreement of Non-compete Clauses Between Employer and Employee

A non-compete clause is an agreement that restricts the employee’s employment in favour of the employer for the period after termination of the employment relationship. A non-compete clause can be agreed upon in employment contracts.

The precondition for the admissibility of a non-compete clause is that the employee:

• is of age at the time of the conclusion of the agreement; and
• is entitled to remuneration (excluding special payment components) of more than EUR4,040 gross (for the year 2024) for the last month of the employment relationship.

The restriction of gainful employment contained in the non-compete clause may only relate to the business sector of the relevant enterprise and may not exceed one year. At the same time, it must not deprive the employee of any possibility of gainful employment.

Violation of Non-compete Clauses

If an employee violates a valid non-compete clause, the employer has several options. The employer can:

• claim damages; or
• pursue legal action to ensure the employee ceases the competing activity.

Enforcement of Non-compete Clauses

The non-compete clause may generally only be invoked if:

• the employee terminated the contract without a valid reason;
• the employee resigned without a valid justification;
• the contract was amicably terminated;
• the fixed term ended; or
• the employer dismissed the employee due to the employee’s own actions.

The successful assertion of a claim for damages usually fails because the amount of the damage incurred cannot be quantified with the legally necessary clarity. For this reason, it is possible to agree on a contractual penalty. Such a contractual penalty can be claimed in the event of a breach of the non-compete clause without having to prove the occurrence of damage. However, it is subject to the judicial right of moderation and is only effective if it does not exceed six times the net monthly remuneration due for the last month of the employment relationship. The agreement of a contractual penalty excludes claims for injunctive relief or compensation for further damage.

In addition to the agreement of a general non-compete clause, non-solicitation clauses with reference to employees and with reference to customers may also be agreed between an employer and employee.

Employee Protection Clause

The term employee protection clause covers agreements according to which the employee may not work with the employer’s employees after termination of the employment relationship. Employee protection clauses are usually to be qualified as non-compete clauses and must not restrict the former employee too much.

Customer Protection Clause

An agreed customer protection clause aims to protect the employer’s customer base and to prevent the poaching of the existing customer base. Customer protection clauses are generally regarded as non-compete clauses by case law. The statutory provisions on non-compete clauses are therefore to be applied mutatis mutandis.

During the employment relationship, employee data is stored, processed and forwarded and further data is collected, eg, during employee checks. Data protection provisions in the context of labour law can be found in both the General Data Protection Regulation (GDPR) and the Austrian Data Protection Act (Datenschutzgesetz).

The employment of foreign nationals in Austria is guided by the Act Governing the Employment of Foreign Nationals (Ausländerbeschäftigungsgesetz).

Foreign workers can only be employed in Austria under certain conditions. In connection with the employment of workers, every person who does not have Austrian citizenship is considered a foreigner. The employment of foreign workers in Austria is only permissible if they are generally excluded from the scope of application of the Act Governing the Employment of Foreign Nationals or if they have official approval for their employment. The Act Governing the Employment of Foreign Nationals provides for a large number of exemptions for various groups of persons. Exempted are, for example, persons entitled to asylum, artists or certain executives.

Furthermore, there are – among others – the following possibilities for the official approval of the employment of a foreigner:

• Red-White-Red Card/Blue Card EU – qualified workers from third countries can settle permanently in Austria and work here with the Red-White-Red Card/Blue Card EU; and
• access to the labour market for pupils and students – pupils and students with an appropriate residence permit may also be gainfully employed if this does not interfere with their education as their primary purpose of residence.

The specific type of employment permit that a foreign national must obtain is determined based on their individual circumstances. In addition to the criteria of the Act Governing the Employment of Foreign Nationals, the requirements under immigration law for the residence of a foreign national in Austria must be observed.

Foreign workers require a combined work and residence permit allowing employment with a specific employer (eg, Red-White-Red Card), free employment market access (eg, Red-White-Red Card plus, Permanent Residence – EU) or an employment market authority authorisation (employment permit) in addition to their residence permit (eg, students) or visa (seasonal workers). This depends on the specific individual case.

In Austria, there are no legal regulations on mobile work, which includes the performance of work outside the company, but not necessarily from home. Legal regulations exist only with regard to working from home but not yet for mobile work in general. Some collective agreements provide for regulations on framework conditions for the arrangement of telework. These may only be applied if they are more favourable than the law.

Due to increasing digitalisation and the associated simplification of conditions for the expansion of telework, working from home has now taken on significant importance. Currently, there is a draft law set to come into effect on 1 January 2025, which aims to transform home office into telework. Home office is understood to mean the regular performance of work at the residence of the employees. This is to be distinguished from telework, which is performed not at the employees’ residence, but at other locations outside the company. In the past, the terms telework and home office were often used synonymously and inconsistently; there was no legal definition. Accordingly, the draft law also covers working outside one’s own four walls – for example, at relatives’ homes, in libraries, and in coffee shops. Unlike the previous regulation, the new regulation’s heading reads “Telework”, clarifying that the labour law provisions for home office now also apply to work performed outside of homes/houses. Telework is defined as employees regularly performing work – particularly using the necessary information and communication technologies – in their home or in a location of their choice that does not belong to the company (Section 40 Paragraph 4 of the Labor Constitution Act). Thus, in addition to the home at the primary or secondary residence of the employees and a relative’s home, telework locations may also include coworking spaces or other places chosen by the employees (such as internet cafes).

Basic Legal Regulations Regarding Home Offices

• Home office arrangements cannot be unilaterally imposed. Any agreement for working from home must be documented in writing.
• The same data protection provisions apply in the home office as in the office.
• All provisions of labour law (eg, working time regulations) must also be fully applied in the home office.
• The employer shall provide the necessary digital work equipment. If the employee nevertheless provides these work tools, the employer shall pay compensation for the reasonable and necessary costs. The costs may also be paid as a lump sum.
• If the employee uses non-digital tools in the home office, he/she generally should expect reimbursement for any associated costs from the employer.
• Most of the provisions of the Health and Safety at Work Act (ArbeitnehmerInnenschutzgesetz) also apply in the home office. These include, for example, regulations on workplace evaluation. If the employer provides technical work equipment (eg, laptops) and work tables and chairs for the home office, they must also ensure that these are ergonomically designed and meet contemporary standards. However, for privacy reasons, neither labour inspectors nor employers can visit employees’ homes to check compliance with employee protection without their consent.
• The Employees’ Liability Act (Dienstnehmerhaftpflichtgesetz) stipulates that, during home office work, any damages to the employer caused by an employee’s household members or pets are now also subject to the liability relief.
• Legally, a home office agreement can be terminated with a month’s notice, provided there is a just cause for termination.

Austrian Social Security Regulations for Cross-Border Home Office Work

In principle, the “normal” provisions of Regulation (EC) No 883/2004 apply in relation to other EU/EEA states. This means that if the employee works at home for at least 25% of the time, the employee’s country of residence is responsible for social insurance. The EU is currently working on a pan-European solution to facilitate cross-border telework.

In the absence of current legal regulations, the framework conditions for mobile work are to be agreed between the employee and the employer. However, the government is currently considering whether the regulations for home office should now also be extended to mobile working.

In Austria, “sabbatical” is not a legally defined term, but a term that has arisen in practice for different forms of professional leave. In Austria, a sabbatical is usually understood as a long-term leave agreed between the employee and the employer.

The following contractual bases are possible as legal bases for long-term leave in the form of a sabbatical.

Agreement on Unpaid Leave

In this context, it should be noted that compulsory insurance continues during unpaid leave of up to one month. This is subject to the condition that the employment relationship is not terminated during this period. If the unpaid leave is agreed for longer than one month or if the employment is not continued after the end of this month, the insured person shall be deregistered as of the day before the start of the unpaid leave.

Agreement on Educational Leave

Educational leave can be agreed between the employer and the employee from the seventh month of employment onwards for a period of at least two months up to one year without pay. For the period of educational leave, there is an entitlement to a further training allowance in the amount of the notional unemployment benefit from the Austrian Public Employment Service (AMS), provided that the employees taking educational leave meet the eligibility criteria under unemployment insurance law and prove that they are taking part in further training for a certain minimum number of hours per week.

Agreement on a Leave of Absence Without Pay

A leave of absence without pay may be agreed for a period of at least six months up to one year, for which a subsidy from funds of the unemployment insurance or the Austrian Public Employment Service is claimed.

Suspension Agreement

In this case, the employment relationship is terminated and at the same time a re-employment commitment is agreed between the employee and the employer.

These sabbatical variants are only possible by agreement between employer and employee. There is no legal entitlement with the possibility of unilaterally enforcing a sabbatical.

“Workation”

A new work phenomenon is the “workation” – a mix of work and holiday. This allows employees to work in other parts of the world. However, under Austrian law, there is no explicit legal basis for a workation. Therefore, the legal framework conditions must be carefully examined in each individual case and a contractual agreement on the framework conditions would be recommended.

Obligation to Give Reasons for Terminations

In the course of implementing the EU Transparency Directive by November 2023 and the end of March 2024, specific obligations regarding the justification of dismissals were introduced. In certain legally regulated cases, employees now have the right to receive a justification for dismissals. This is a novelty from an Austrian perspective, as until now, dismissals without justification were always possible. Non-compliance with the justification obligation not only leads to the legal invalidity of the dismissal. However, it is assumed that in the event of a dismissal challenge process, this could be detrimental to the company if the justification obligation is not met.

Right to Secondary Employment

On 28 March 2024, a right to secondary employment was introduced. The employee is entitled to enter into employment relationships with other employers. The employee must not be disadvantaged because of this. The employer may, in individual cases, require the employee to refrain from taking on another employment that is incompatible with working time regulations or detrimental to the performance in the existing employment relationship. Reduction of Normal Working Hours With Full Wage Compensation.

A discussion about a statutory reduction of working hours is currently ongoing in Austria. Some employers in Austria offer reduced working hours with full salary compensation. The idea behind this is that if employees work less but still receive their full remuneration, the employer becomes more attractive. However, there is currently no specific regulation in place regarding this matter for the future.

Dual Leadership

Shared leadership or topsharing is a partnership-based leadership concept with new forms of decision-making and the further development of the job-sharing model for top positions. In this model, two managers are supposed to hold a position together, lead a team on an equal footing and take responsibility together. In practice, this will probably mostly be implemented by agreeing on part-time employment relationships.

Hot-Desking

Hot-desking is an organisational workspace system in which employees no longer have their own, permanently assigned desk, but share desks with other employees. The decision of “where” and “how” work is performed typically falls under the employer’s directive power, allowing them to set these parameters unilaterally. However, if a works council exists, it might have a say in shaping the specifics of hot-desking. Introducing this system could trigger certain co-determination rights. While Austria currently lacks extensive case law on this topic, many Austrian companies have already adopted the hot-desking approach.

A trade union is an association representing the interests of dependent employees. The unions represent the political, economic and social interests of employees vis-à-vis employers, the state and political parties. The main tasks/rights of trade unions include:

• negotiating collective agreements;
• supra-company co-determination within the framework of the economic and social partnership; and
• providing legal advice to members.

Works Council

As an organ of the workforce, the works council is called upon to safeguard and promote the economic, social, health and cultural interests of the employees. The works council is the body representing the interests of the employees at the company level.

Tasks of the works council

The works council has numerous powers. These range from concluding company agreements, through involvement in terminations, redundancies and transfers, to participation in company supervisory board meetings. The powers of the works council include:

• monitoring and control rights (eg, ensuring compliance with the collective agreement, company agreements and employee protection regulations);
• information rights (eg, on the establishment and termination of employment relationships or on ongoing management matters);
• rights of intervention (eg, to improve working conditions or in-company training); and
• consultation rights (eg, at the request of the works council, the employer must hold joint consultations on a quarterly basis and provide information on important matters).

Establishment of the works council

The works council shall be established on the basis of a works council election. At least five non-family members with voting rights (irrespective of nationality) must be permanently employed in a company for a works council election to take place. All employees who have reached the age of 16 are entitled to vote.

It is up to the workforce, not the employer, to ensure the establishment of a works council by organising and conducting a works council election. Its term of office is five years.

If both the group of blue-collar workers and the group of white-collar workers each include at least five of these employees, separate works councils shall be established.

A collective bargaining agreement is an agreement that the trade union usually negotiates annually with the employers’ representatives for all employees in a certain sector. There are over 800 collective agreements in Austria. Every year, the trade unions negotiate over 450 collective agreements. A distinction must also be made between white-collar and blue-collar workers in collective agreements, and different collective agreements exist in this respect.

Collective agreements stipulate, among other things, minimum basic salaries and special payments (13th/14th salary) as well as regulations regarding working hours.

Under Austrian labour law, a distinction is made between termination and dismissal for just cause by the employer when terminating the employment relationship.

Termination of an Employee

An employer’s notice of termination is a declaration of intent by the employer addressed to the employee to terminate the employment relationship in compliance with the notice provisions (notice periods and dates). It is not necessary to state a reason for termination when giving notice. However, in certain cases (eg, care leave or part-time care leave), the employee can request a written justification for the termination from the employer within five calendar days of receiving the notice of termination. If they fail to do so, their right to a written justification expires. The employer has five days from receipt of the request to submit the required written justification. The day of receipt of the request for reasons is not counted towards the start of the deadline.

Under certain conditions, the employee may contest the termination before the competent Labour and Social Court, for example on grounds of social hardship or an unlawful motive for termination. In this case, the employer must substantiate and prove the factual justification of the termination (eg, underperformance) in the court proceedings.

Dismissal of an Employee for Just Cause

Dismissal is the immediate (“without notice”) termination of the employment relationship by the employer for certain important reasons.

The grounds for dismissal for white-collar workers are listed by way of example in the Employees Act (Angestelltengesetz), and for blue-collar workers in full in the Industrial Code 1859 (Gewerbeordnung). There are special grounds for dismissal for employees protected by law. Each dismissal hinges on the employee’s gross misconduct, rendering their continued employment untenable for the employer.

As soon as the employer is aware of the reason for dismissal, they must issue the dismissal without delay – ie, usually on the same day.

Mass Redundancies

If a company intends to terminate a significant number of its (older) employees within one month, it must inform the Austrian Public Employment Service (AMS) in writing at least 30 days before the first termination of an employment relationship (the so-called “early warning system”). If the requirements of this early warning system are not met, the terminations issued are invalid.

If the employer intends to terminate a relevant number of employment relationships within the meaning of the early warning system, this constitutes a so-called “change in operations”. At the request of the works council, the employer must consult with the works council on the form of the measure.

The employer must observe certain notice periods and dates when terminating the employment relationship.

Issuance of the Notice of Termination

The employer’s notice of termination is not subject to any special content or form requirements. Some “laws” and collective agreements expressly provide for a written notice, in which case the notice of termination only becomes effective upon delivery.

In the following cases of practical relevance, a specific preliminary procedure must be followed before the notice of termination is issued:

• terminations in companies with an elected works council (informing the works council and waiting for a certain period of time before giving notice of termination);
• terminations that are subject to the early warning system with the obligation to notify the Austrian Public Employment Service (ie, mass redundancies);
• terminations of particularly protected persons, eg, expectant mothers, employees on parental leave, works council members (prior consent of the Labour and Social Court is required); and
• terminations of disabled persons (prior consent of the competent disability committee is required).

Employer’s notices of termination issued without observing the preliminary procedure or without the necessary consent are legally invalid.

Notice Periods

The notice period begins on the day following the day on which the notice of termination is given. The notice period is the time between the notice being given and the end of the employment relationship.

The notice periods for white-collar workers are based on the provisions of the Employees Act (Angestelltengesetz) unless the collective agreement provides otherwise. The notice periods for blue-collar workers are generally based on the General Civil Code (Allgemeines bürgerliches Gesetzbuch) and the same regulations as above apply.

The notice period to be observed by the employer is extended according to the length of service of the employee. The employer’s statutory notice periods are as follows:

• in the 1st and 2nd year of service – six weeks;
• from the 3rd year of service – two months;
• from the 6th year of service – three months;
• from the 16th year of service – four months; and
• from the 26th year of service – five months

Notice periods for both employers and employees can be extended to up to six months by agreement.

Termination Date

The termination date is the last day of the employment relationship. The statutory termination date for white-collar workers is generally the end of the respective quarter (31 March, 30 June, 30 September and 31 December of each calendar year). It may be agreed in an individual employment contract that the employer may also terminate the employment of white-collar workers on the 15th or last day of a calendar month. However, such agreements are only valid if there are no restrictive special rules under collective agreements.

Claims of the Employee Upon Termination of the Employment Relationship

If the employment relationship is terminated by the employer, a final settlement must be drawn up. This shall in any case include:

• remuneration up to the end of the employment relationship;
• pro rata special payments according to the collective agreement or employment contract until the end of the employment relationship;
• compensation for unused leave; and
• severance pay (old severance pay).

Severance Pay

The old severance pay applies to all employment relationships that began before 1 January 2003, unless a transfer to the new severance pay has been agreed. Employees who have been with the company for an uninterrupted three years, and whose employment has not been terminated under conditions affecting severance benefits, are eligible for a specified severance amount, equivalent to several months’ salaries, upon ending their employment.

Since 1 January 2003 there has been a new company pension scheme, which applies to all employees in Austria who have started an employment relationship from that date onwards. Employers contribute by setting aside 1.53% of the gross monthly salary into a personal severance pay account for each employee. To qualify for this severance pay, an employee must generally have contributions spanning three years, considering all prior contribution durations, and their employment must not have been terminated under conditions affecting severance benefits. Upon termination, the employee is either entitled to payment of the severance amount or can dispose of the saved amount in another way.

The grounds for dismissal for white-collar workers are listed by way of example in the Employees Act (Angestelltengesetz), and for blue-collar workers in full in the Industrial Code 1859 (Gewerbeordnung). There are special grounds for dismissal for employees protected by law.

A blue-collar worker may, for example, be dismissed immediately if he or she:

• is found to be incapable of the agreed work;
• is guilty of theft, embezzlement or any other criminal offence which renders him or her unworthy of the employer’s trust; or
• betrays a trade or business secret.

An employee may, for example, be dismissed immediately if he or she:

• is guilty of an act which renders him or her unworthy of trust;
• is incapable of performing the services promised or appropriate under the circumstances; or
• fails to perform the service for a considerable period of time without a legitimate reason for not doing so.

Each dismissal hinges on the employee’s gross misconduct, rendering their continued employment untenable for the employer.

As soon as the employer is aware of the reason for dismissal, they must issue the dismissal without delay – ie, usually on the same day. The employment relationship ends on the day on which the dismissal was issued or served.

In the following cases of practical relevance, a specific preliminary procedure must be followed before the notice of termination is issued.

• Before dismissing certain persons (eg, those performing military or alternative service, expectant mothers and other protected employees or works council members or members of certain other functions), the consent of the competent Labour and Social Court must be obtained immediately after the reason for dismissal has become known.
• In companies with an elected works council, the owner of the company must immediately inform the works council of any dismissal.
• Any decision to dismiss an apprentice must be made in writing.

In the case of a mutually agreed termination, the employer and the employee agree to terminate the employment relationship at a certain point in time.

Neither specific deadlines nor dates need to be observed. Consent is voluntary for both sides.

In principle, there are no formal requirements for a dissolution by mutual consent. The dissolution by mutual consent can be made verbally or in writing. For reasons of proof, the mutual dissolution should be in writing – signed by both the employee and the employer.

There are protective regulations for certain groups of employees; for example, expectant mothers, those performing military or alternative service, and apprentices.

Employees who are subject to special protection against termination/dismissal can only be dismissed/terminated under more difficult conditions. The provisions for protection against termination/dismissal differ greatly for the individual protected groups of employees.

The following employees, among others, are under special protection:

• expectant mothers and mothers and fathers taking parental leave or part-time employment on the occasion of childbirth (parental part-time work);
• works councillors (substitute members of the works council, members of election committees and candidates under certain conditions);
• persons in positions of trust for persons with disabilities and their deputies;
• employees called up for military or alternative service; and
• disabled employees.

A dismissal is wrongful if there is no reason for the dismissal or the dismissal was given too late. In case of wrongful dismissal, the employee can file a complaint with the competent Labour and Social Court. This can result in the employee either receiving “termination compensation” for the period up until the employment relationship would have lawfully ended or even reinstatement to their position.

If an employee is terminated (termination in compliance with the notice periods and deadlines) by the employer, the employee may, under certain conditions, challenge the termination by bringing an action before the Labour and Social Court. The termination may be challenged if, among other things, it was motivated by inappropriate reasons or because it was socially unjustified if the employee had been employed for at least six months and the works council did not expressly agree to the termination. A termination is socially unjustified if it affects the employee’s essential interests.

If the court rules in favour of the employee in the termination proceedings, the employment relationship is restored retroactively with all rights and obligations. The employee is entitled to retroactive remuneration since the termination of the employment relationship.

Discrimination in the context of labour law occurs when employees are directly or indirectly discriminated against on the grounds of ethnicity, gender, religion or belief, age or sexual orientation.

Discrimination Claims

Establishment of the employment relationship

If prospective employers flout the principle of equality, leading to an applicant not being hired due to discrimination, the applicant can claim compensation.

Determination of remuneration

If an employee receives less pay than another employee for the same or equivalent work on the basis of a protected characteristic, he or she is entitled to payment of the difference and compensation for the personal injury suffered (non-material damages).

Voluntary social benefits that do not constitute remuneration

Employees are entitled to receive the corresponding social benefit – ie, an additional benefit from the employer connected with the employment relationship (or compensation for pecuniary loss) as well as non-material damages.

In-company education and training

Employees can sue for access to an in-company training measure which they were denied, for example on the grounds of gender, or have a claim for compensation for pecuniary loss and non-material damages.

Career advancement, especially promotions

If a company violates the principle of equal treatment and employees are unable to advance professionally as a result, they are entitled to compensation for pecuniary loss. There is also a claim for non-material damages.

Other working conditions

An employee may not be discriminated against in the provision of working conditions. The discriminated employee is entitled to the same working conditions or to compensation for financial loss. There is also a claim for non-material damages.

Sexual harassment

Employees have a right to compensation from the harasser, regardless of whether it is the employer, a colleague or a customer. In addition, there is a claim for damages against the company if it has not taken reasonable steps to remedy the harassment. In any case, the employee is entitled to reasonable compensation (at least EUR1,000) for the violation of his or her personal dignity.

The proceedings before the Labour and Social Court have some special features compared to the proceedings in “general” civil law cases, which are regulated in a separate law.

In response to the COVID-19 pandemic, provisions were temporarily introduced allowing civil case hearings, including evidence sessions, to be conducted via video without necessitating in-person attendance. While this regulation underwent multiple extensions, it eventually expired on 30 June 2023. A new amendment to the Civil Procedure Act (Zivilprozessordnung) has now enshrined the use of video conference during hearings in the law, albeit only in limited cases. Legislative guidelines suggest that video hearings should be an exception; notably, with regard to the taking of evidence by video, the existing possibilities are only cautiously expanded.

What effect this change in the law will have on labour court proceedings remains to be seen.

In Austria, the regional courts have jurisdiction in the first instance for legal disputes concerning claims under labour contracts or company constitution law. In Vienna, the Labour and Social Court of Vienna has jurisdiction.

The special feature of the composition of the court in labour and social court proceedings is that expert lay judges decide together with professional judges in all instances. The expert lay judges come from both the employers’ and the employees’ side. They are nominated by the statutory professional or interest groups for five years. Lay judges from the employers’ and employees’ sides are always equally represented in the proceedings.

In the first instance, there is no obligation to represent or advocate. If persons are unrepresented, the judge has a special duty to give instructions. A special feature of labour law proceedings is that officials and employees may also be represented by the interest groups in court in the first and second instance. As such, the employer may be represented by the Chamber of Commerce, and the employee by the Chamber of Labour.

There is no “class action” under Austrian labour law. However, under labour law it is possible for the works council (or the employer) to sue for a declaratory judgment on the existence or non-existence of rights or legal relationships affecting at least three employees of the establishment or enterprise. Such declaratory proceedings may, for example, concern questions of classification or claims to allowances. If a judgment is passed on the action for a declaratory judgment, it is only valid between the parties to the proceedings – ie, between the works council and the employer.

Agreements specifying a place of jurisdiction for future labour law disputes are only possible to a very limited extent. Only disputes that have already arisen can be brought before an arbitration court. Certain exceptions also exist for managing directors and members of the executive board of a corporation for future individual employment law disputes.

As a general rule, the losing party of a court case has to bear not only his/her own costs but also the costs of the other side. There are some exceptions to the general rule in labour law. Specifically, in disputes arising out of the works constitution, for the first two instances and in special declaratory proceedings, one’s own costs must always be borne, regardless of the outcome of the case (eg, in proceedings to challenge a termination). It is only when the case reaches the Supreme Court that costs can be reimbursed.