Austria Employment Guide

Terminating Employment in Austria: A Practical Guide for International Employers

Navigating employment termination in Austria requires careful attention to complex legal frameworks and country-specific regulations. The separation process must be managed collaboratively between employers and key stakeholders, often involving transitional costs and specific procedural requirements depending on the termination circumstances.

Valid Grounds for Employment Termination

Austrian labor law distinguishes between indefinite and fixed-term contracts. While indefinite contracts generally allow termination without cause provided notice periods are observed, fixed-term agreements carry additional restrictions.

Legally compliant termination scenarios include:

• Voluntary resignation by the employee
• Mutual separation agreement
• Employer-initiated termination based on:
  • Probationary period performance
  • Termination without cause (with proper notice)
  • Breach of loyalty obligations
  • Inability to perform essential job functions
  • Unjustified failure to fulfill contractual duties
  • Refusal to follow reasonable employer directives
  • Aggressive or unethical behavior toward colleagues
  • Engaging in competing business activities
  • Extended absence due to imprisonment
• Natural contract expiration

Statutory Notice Period Requirements

Austrian law mandates progressively longer notice periods based on employment duration, ranging from six weeks to five months. This graduated approach recognizes employees' increasing job security expectations over time.

Severance Pay Framework

Austria operates a unique severance fund system where employers contribute 1.53% of monthly salaries. Upon termination, employees may withdraw accumulated amounts or retain them for future investment.

SailGlobal integrates severance accruals into all Austrian employment agreements to mitigate unexpected financial liabilities. Our global expertise in litigation risk management ensures calculations align with current legal standards and local best practices. Should employees resign or become ineligible for severance, unused amounts are fully reimbursed to clients.

Practical Considerations for International HR

Recent cases demonstrate the importance of documentation. For instance, a technology firm avoided wrongful termination claims by maintaining detailed records of performance issues. Another manufacturing company successfully navigated a collective dismissal by following strict consultation procedures with works councils.

Proactive compliance measures include regular policy reviews, manager training on termination procedures, and early legal consultation for complex cases. SailGlobal's integrated approach combines local legal expertise with global compliance frameworks, ensuring seamless termination management across jurisdictions.