Dismissals and Termination of Employment in Austria

Austrian employment law distinguishes between white-collar and blue-collar workers and provides for different termination models for the two. Also, grounds for summary dismissal vary slightly between those two groups. Since 1 October 2021, the notice periods and deadlines for dismissal of blue-collar workers have been aligned with those for white-collar workers.

Generally, employers in Austria are not required to justify ordinary dismissals (Kündigungen). Nevertheless, they must observe prescribed notice periods and termination dates, which are defined by statutory law and collective bargaining agreements.

If an establishment employs five or more employees, however, those employees enjoy “General Protection against Dismissal”. An employee may challenge a dismissal if it has had a negative impact on the individual’s personal life. In these cases, the employer must justify the dismissal for reasons related to employee capabilities, conduct or operational requirements if challenged by the employee.

Certain groups of employees enjoy additional “Special Protection against Dismissal” and may only be dismissed for one of several specific reasons, often only with the prior consent of competent authorities. These include women who are pregnant or who have recently given birth, parents on parental leave, works council members and employees formally classified as disabled persons.

Discriminatory dismissals or dismissals contra bonos mores may also be challenged by employees.

Unless otherwise stipulated in a collective agreement or employment contract, dismissals do not require any particular form. However, giving notice in writing is recommended. If “Special Protection against Dismissal” applies, rules may differ.

Although Austrian law does provide statutory minimum notice periods and dates, employers are free to designate their own notice regimes based on collective agreements and employment contracts. In case of conflicting regulations, however, employees will always benefit from the most favourable rule, pursuant to the “favourability principle” (Günstigkeitsprinzip).

The following uniform termination dates and periods apply. Employees are entitled to receive at least six weeks’ notice and up to five months’ notice, depending on the length of their employment relationship. The notice period is six weeks up to the completed second year of employment. After the second year of employment, the notice period is increased to two months, after the fifth year of employment to three months, after the fifteenth year of employment to four months and after the twenty-fifth year of employment to five months. These terms may be modified in favour of the employee.

In addition, employees benefit from statutory termination dates, ensuring that employment relationships may only end at the end of any given annual quarter. It is possible to agree contractually that a termination is possible on the 15th or last day of any given month. Termination dates may also be regulated in a works council or a collective bargaining agreement.

An exception for the notice periods displayed may apply in industries where seasonal businesses predominate. Collective agreements may contain different provisions and set shorter notice periods for blue-collar workers.

During the notice period, the employment relationship remains in force and the employee continues to be obliged to work and the employer to pay remuneration. Even if the employee is put on garden leave, the remuneration has to be paid until the end of the notice period.

If a works council exists at an establishment, it must be informed of any proposed dismissals at least one week in advance. Within this timeframe, the works council may object, explicitly approve or refrain from commenting on the dismissal. The termination is void if the employer fails to comply with this requirement, either by failing to notify the works council or by failing to wait for its response within that week.

No involvement.        

Obligatory only for certain groups of employees (e.g. severely disabled persons, works council representatives, pregnant women, and employees on parental leave).

When collective dismissals (Massenkündigungen) are imminent, employers are required to notify the Austrian Employment Service 30 days in advance (early warning system, Frühwarnsystem) For the sake of this notification procedure, collective dismissals are defined as employment terminations affecting:

1. at least five workers in an establishment of 21 to 99 employees;
2. 5% or more of the workforce at an establishment of 100 to 600 employees;
3. at least 30 workers at an establishment of more than 600 employees; or
4. at least five workers aged 50 or over, regardless of company size.

The requirements of the notification procedure are met if the employer informs the competent agency in writing and waits one month before carrying out the intended dismissals. Any failure to observe these rules will render all pertinent dismissals void.

A summary dismissal (Entlassung) does not require observance of any particular notice periods but must be issued without undue delay. Summary dismissals are possible for good reasons only, as regulated by law. Disloyalty, untrustworthiness, or persistent refusal to carry out one’s contractually agreed duties are typical reasons for a summary dismissal. The reasons for summary dismissals are regulated by law, for blue-collar and white-collar workers separately, and with some differences.

Summary dismissals are effective even if they do not meet the above requirements. However, summary dismissal may then be treated as a regular dismissal, meaning that the respective protection against dismissal is applicable.

In companies with an elected works council, the employer must immediately notify the works council of any summary dismissal. If the works council requests consultation, the employer must consult with the works council on the summary dismissal within three working days.

Non-compliance by the terminating party with the prescribed or agreed-upon periods or dates of notice constitutes untimely notice. Although such untimely notice remains effective, it entitles the employee to dismissal compensation (Kündigungsentschädigung). Such compensation consists of the remuneration that the employee would have received had the dismissal been properly expressed (i.e. all due remuneration between the actual termination of employment and the date of termination prescribed by law, collective agreement, works agreement or employment contract). The dismissal compensation is also due in the event of a unjustified summary dismissal (without good reason).An employee is entitled to General Protection against Dismissal and may claim reinstatement in court. Reinstatement is granted if it is proven that the termination of the employment contract has adverse personal effects on the employee's life (e.g. little chance of finding employment of similar standing and income in a reasonable time) and the employer cannot adequately justify the termination.

Austrian law distinguishes between two severance pay models: one is applicable to all employment relationships established prior to 1 January 2003 (“old model”), and the other to employment agreements signed after that date (“new model”).

The old severance pay model requires the employer to pay a sum based on the length of service at the end of the employment relationship unless it is the employee who terminates the contract or if the employee is dismissed without notice for good cause (i.e. summary dismissal). If the employment relationship is terminated after three years of employment, the employee is entitled to severance pay of two months’ salary. After 25 years, the employee is entitled to twelve months salary.

The new severance pay scheme requires the employer to pay a sum of 1.53% of every monthly salary into an employee severance fund (Betriebliche Vorsorgekasse). At the end of any given employment, the employee may then either request disbursement of the collected amount or leave it in the fund for further investment. 

Non-competition clauses are only valid insofar as they last for no more than one year after the termination of employment, are restricted to the employer’s line of business and if the employee’s monthly income is above a certain threshold at the end of the employment relationship (e.g. for 2025 EUR 4.300 gross for contracts concluded after 29 December 2015). Also, tax law limits contractual penalties to six net monthly remunerations (without taking into account the 13th and 14th annual salary). If the parties agree to such a contractual penalty, the right to observe the non-competition clause or the compensation of any further damage is excluded.

A non-competition clause may not cause undue hardship to the employee’s career when weighed against the employer’s justified business interests.

Judges may limit the scope of a clause, or the contractual penalty to be paid when violating the law. Non-competition clauses are generally rendered void when the employer carries out the dismissals.

Not applicable 

A company may revoke the appointment of a managing director or terminate the service contract without cause, but must do so in compliance with applicable notice periods and termination dates.

A valid shareholder’s resolution is required to revoke an appointment as managing director and to terminate a service contract. A managing director needs only to be notified in writing if this was agreed upon in the service contract.

Revocation of appointment: this is possible without notice.

Termination of the service contract: Austrian law provides statutory minimum notice periods and dates, and collective agreements and their notice periods and termination dates rarely apply unless a more favourable contractual agreement exists. Managing directors generally have fixed-term contracts or long contractual notice periods.

No involvement.

No involvement.

Not required.

Not applicable.

A summary dismissal (‘Entlassung’) does not require observance of any particular notice periods, but must be issued without undue delay. Summary dismissals are possible for good reasons or serious breach of duty, as regulated by law. Typical reasons for summary dismissal include disloyalty, untrustworthiness, or persistent refusal to carry out one’s contractually agreed-upon duties.

If there is no valid shareholder resolution, the revocation of appointment as managing director will be invalid.

It is possible for the revocation to be valid and for the termination of the service contract to be invalid. If this is the case, the managing director is entitled to continued payment of salary and adequate employment.

Austrian law distinguishes between two severance pay schemes: one is applicable to all employment relationships established prior to 1 January 2003 (‘old model’), and the other to employment agreements signed after that date (‘new model’).

The old severance pay model requires the employer to pay a sum based on the employee’s length of service at the end of the employment relationship unless it is the employee who terminates the contract or if the employee is dismissed without notice for good cause (i.e. summary dismissal). If the employment relationship is terminated after three years employment, the employee is entitled to severance pay of two months salary. After 25 years, the employee is entitled to twelve months salary.

The new severance pay scheme requires the employer to pay a sum of 1.53% of every monthly salary into an employee severance fund (‘Betriebliche Vorsorgekasse’). At the end of any given employment, the employee can request disbursement of the collected amount, or leave the amount in the fund for further investment. 

Non-competition clauses are only valid insofar as they are concluded for the duration of no more than one year after the termination of employment. They are restricted to the employer’s line of business and to be valid the employee’s monthly income must be above a certain threshold at the end of the employment relationship (e.g. for 2025, EUR 4.300 gross for contracts concluded after the 29th December 2015). Also, contractual penalties are limited by law to an amount of six net monthly remunerations (without taking into account the 13th and 14th annual salary). If the parties agree to such a contractual penalty, the right to observe the non-competition clause or the compensation of any further damage is excluded.

A non-competition clause may not represent an undue hardship on the employee’s career when weighed against the employer’s justified business interests. Judges may limit the scope of a clause, or the contractual penalty to be paid when violating the law. Non-competition clauses are generally rendered void when employers are responsible for dismissals.

Not applicable.