Austria

Sources of regulation

Several statutes, taken together, make up the Austrian law on termination of employment at the initiative of the employer. The most important are the Civil Code (CC), sec. 1162, the Works Constitution Act (WCA) and the White-Collar Employees Act.

Individual employment relationships are not uniformly regulated by the same statute. The general rules laid down in the CC only apply when no special statutes apply. Thus, special occupational regulations concerning dismissal are, for instance, found under: sec. 72, Commerce Regulations (for industrial workers); sec. 17, Estate Employees Act; sec. 13, Domestic Employees Act; sec. 18, Janitors Act; secs. 2 and 4, Journalists Act; sec. 30, Theatrical Artists Act; sec. 27, and the Agricultural Employment Act.

While the WCA contains provisions concerning unfair dismissal generally, several laws provide protection from dismissal for specific categories of employees: the Job Security Act; the Disabled Persons Employment Act; the Maternity Protection Act; and the Paternal Leave Act.

Collective agreements and individual employment contracts may also provide special protection for the employee where the provisions are more favourable to the employee than those of the aforementioned legislation.

Scope of legislation

General rules governing labour contracts are contained in the CC but are subordinate and only apply in the absence of special statutes.

General protection against dismissal is laid down in secs. 105 et seq., WCA, and only applies to employees in establishments where five or more employees are regularly employed, which is the same limit for establishing a works council (sec. 40, WCA). For protection against “socially unjustified dismissal”, the employee must have been employed in the establishment for at least six months (sec. 105(3)(2), WCA).

Persons employed in the agricultural sector, the public sector, private households, journalists, and actors are not covered by the WCA, and hence not subject to general protection against dismissal . While the public sector is covered by special statutes providing a far more effective protection against unwarranted dismissal than in the private sector, persons employed in the agricultural sector as well as in private households are effectively excluded from general dismissal protection.

The following employees are also expressly exempt from the protection laid down in sec. 36(2), WCA:

• members of the authority responsible for the statutory representation of a corporate body;
• senior salaried employees with decisive influence in the management of the establishment;
• persons employed principally because of their upbringing, treatment, cure or resettlement, so long as they are not employed under a contract of employment;
• persons employed on instructions from an administrative or judicial authority ordering their detention in custody while awaiting trial, imprisonment or preventive detention;
• persons whose employment is mainly motivated by religious, charitable or social considerations, so long as they are not employed under a contract of employment; and
• persons employed for short periods for purposes of their education or training.

Contracts of employment

From a legal point of view, a contract of employment is based on the principle of freedom of contract under civil law. Freedom of contract means that it is up to the parties whether or not and with whom they conclude a contract and what the agreement consists of. Each contractual party is free to end a contract whenever he or she wishes to do so.

Employment contracts may take various forms. The contract may be for temporary work, for a fixed or unspecified term or duration. Fixed-term contracts cannot be terminated early, except for serious cause or in accordance with the contract. There is also provision for lifetime and permanent employment as well as employment under a trainee or apprenticeship relationship.[1]

Termination of employment

Other than at the initiative of the employer, contracts of employment may terminate:

• by mutual agreement;
• by termination with notice at the initiative of the employee;
• by resignation of the employee for serious reasons (without notice);
• on request, during a probationary period; and
• on the expiry of a fixed-term contract.

Termination of employment at the initiative of the employer

Austrian law incorporates a distinction between summary dismissal, which immediately terminates the employment contract, and an ordinary dismissal with notice, which ends the employment contract at the end of the period of notice.

Summary dismissal. A ground is required, but there is no remedy of reinstatement. Summary dismissal presupposes that the employer cannot objectively be expected to continue the employment relationship, not even for the period of notice. Sec. 1162 of the Civil Code generally provides that a labour contract can be dissolved for “important reasons” without notice. The labour laws further specify what constitutes such important reasons.

For instance, sec. 82, Commerce Regulations, contains an exhaustive listof valid grounds for summary dismissal of workers, which includes:

• deceit on the part of the employee when entering into the contract;
• incompetence to perform one’s work;
• drunkenness at work despite repeated warnings;
• betrayal of professional secrets and certain criminal acts;
• prejudicial work on the side (moonlighting); and
• persistent neglect of duties or leaving work without permission.

Sec. 27, White-Collar Employees Act, contains a non-exhaustive list of valid grounds for summary dismissal, which includes:

• untrustworthiness or disloyalty on the part of the employee;
• competing with the employer or accepting gifts (bribes);
• incapacity to work, or failure to carry out work; and
• physically assaulting or offending the honour of the employer or co-workers.

Ordinary dismissal. Generally, no ground is required for ordinary dismissals. There is no requirement to show cause or good reason in order to give notice. However, notice can be contested in court if it was given on the basis of certain employee activities (sec. 105(3)(1) of the WCA):

• the joining or belonging to trade union, or trade union activities;
• activities as a health and safety representative;
• expected call-up of the employee to the military service or alternative service for conscientious objectors;
• manifestly well-founded claims raised by the employee in respect to entitlements or benefits arising out of the employment contract which are contested by the employer.

Ordinary dismissal may also be contested in court if it is “socially unjustified”. According to sec. 105(3)(2), WCA, a dismissal is socially unjustified if it harms the fundamental interests of the employee.

In addition, a dismissal may be unethical and therefore null and void under sec. 879 of the CC, e.g. in case the notice is due to unlawful motives such as the employee’s race, colour, sex, marital status, sexual orientation, religion, political opinion, ideological conviction, national or social origin.

• Certain categories of employees enjoy special protection against dismissal. In these cases, notice given without prior authorization by court or a competent administrative authority is invalid. The specific grounds on the basis of which dismissal may be authorized by the court or competent administrative authority are set out in the legislation concerned. Such special protection applies to: members of and candidates for works councils, as well as members of works council election committees (sec. 120 to 122, WCA);
• pregnant women and women on maternity leave (sec. 10, Maternity Protection Act);
• parents on parental leave or exercising their right to part-time work (sec. 10, Maternity Protection Act; secs. 7 and 8f, Paternal Leave Act);
• disabled employees (sec. 8, Disabled Persons Employment Act); and
• employees performing military service or alternative service for conscientious objectors (secs. 12 et seq., Job Security Act).

Pursuant to sec. 45a of the Labour Market Support Act, there is a collective dismissal if the number of employees is to be reduced within four weeks:

• by at least five employees in undertakings of 20-99 employees;
• by at least 5 per cent of employees in an establishment with 100-600 employees;
• by at least 30 employees in an establishment with at least 600 employees; or
• by at least five employees older than 50 years.

Notice and prior procedural requirements

Notice can be given verbally, in writing or by conclusive behaviour (i.e. behaviour that on an objective assessment makes it clear to the employee that the employment relationship is to end). Notice is only valid if the other party duly receives it. It is not necessary to provide reasons for giving notice.

The period of notice to which an employer is bound is typically in proportion to the period of employment (seniority principle). However, the periods of notice differ for white-collar and blue-collar workers, and in addition there are also special periods of notice for particular occupations. Collective agreements also frequently establish notice periods which are more beneficial to employees than the applicable statutes.

White-collar workers are entitled to the following periods of notice (which must run to the end of a trimester unless the two parties agree to let the period of notice run to the 15th or last day of a particular month) (sec. 20(2), White-Collar Employees’ Act):

In the case of blue-collar workers, sec. 77, Commerce Regulations, specifies that in the absence of any other arrangement, notice shall be 14 days. This provision, however, is not enforceable and may be shortened by contract or collective agreement.

The CC stipulates a minimum 14-day notice unless the employee concerned is paid on a daily basis or by piece-rate, in which case only one day’s notice needs to be given. If the employee is paid on a weekly basis or has at least three months’ service, notice must be given on the first day of the working week so that termination takes effect on the last day of the working week (secs. 1159, 1159b, CC).

In view of the above, longer notice periods are laid down in many industry-level collective agreements and some company agreements.

In current court practice, any period of notice which is less than that stipulated or which is set for an earlier date than permissible is considered as termination of an employment relationship at an early date. It is therefore treated as “unfounded premature dismissal”. Consequently, the employee is entitled to wages for the remaining period of time, that is, until the date when a regular termination of the employment relationship, in accordance with the period of notice, is possible.

The employer must inform and consult with the works council which then has five working days to react to the proposal. It can respond in one of the following three ways: it can agree to the proposed dismissal; protest against it; or make no response. The way it responds influences the appeal procedure, but once the information and consultation requirements have been fulfilled the dismissal may go ahead (sec. 105, WCA). If the employer gives notice after notifying the works council, but before the end of the five-day period or before the works council has stated its response, the dismissal is invalid (sec. 105(2), WCA).

Summary dismissal should be declared immediately if a party has valid grounds. By delaying, the employer loses the right to terminate summarily. The employer is not required to inform and consult with the works council before dismissal but must do so within three working days of the dismissal.

The following employees may only be dismissed with prior authorization by the court:

• Works council members and candidates, as well as members of works council election committees (secs. 120 to 122, WCA),
• pregnant employees and employees on maternity leave (sec. 10, Maternity Protection Act);
• employees on parental leave or exercising their right to part-time work to care for a child (secs. 7 and 8f, Paternal Leave Act; sec. 10, Maternity Protection Act), and
• employees performing military service or alternative service for conscientious objectors (sec. 12, Job Security Act).

Persons with disabilities may be dismissed only with the prior consent of the invalidity board of the federal State concerned (sec. 8, Disabled Persons Employment Act).

Collective dismissals. The works council is to be consulted, as with individual dismissals (sec. 105, Works Constitution Act), and shall be informed as soon as possible of any collective dismissals or intended alterations to the establishment, and shall discuss such alterations with the employer (sec. 109(1), (2), WCA).

The works council may make proposals to prevent, eliminate or alleviate any consequences of the alteration that are to the workers’ disadvantage; in so doing, it shall also take into account the economic requirements of the establishment (sec. 109(3), WCA).

Provision for measures to prevent, eliminate or alleviate the consequences may be made by works agreements in establishments where at least 20 employees are permanently employed. Where agreement cannot be reached between the employer and the works council on the conclusion, amendment or revocation of any such works agreement and no arrangement for all settlements has been made by collective agreement or determination, a decision shall be taken by a disputes board if either of the parties so requests.

The local employment office has to be notified in writing of the employees concerned (e.g. age, gender, education, actual occupation), at least 30 calendar days before notice is given. If the employer gives notice without notifying the employment office, the notice given is null and void (sec. 45a, Labour Market Support Act).

Periods of notice are the same as in the case of individual dismissals.

Severance pay

The 2002 Act governing employee retirement and provision of severance pay introduced a new severance pay scheme, which applies to all private employment relationships established after 1 January 2003.

Under the new scheme the employer is required to contribute 1.53 per cent of the monthly wage to an employee income provision fund. Upon termination of the employment contract, the employee has an entitlement to severance pay from the fund. The amount of the entitlement is based on the employer’s contributions to the fund and the interest accrued. Payment in cash can only be requested if more than 36 monthly contributions were made in respect of the employee (by one or more employers) and if the contract is not terminated at the initiative of the employee or by summary dismissal. However, in any case, the accrued capital is carried over to the next employment relationship.

For labour contracts concluded before 1 January 2003, the previous system of severance pay remains applicable. Severance pay is due only if the employment relationship is terminated after a period of at least three years’ service in the organization. The amount of severance pay is paid according to length of service as listed below. However, collective/company agreements or individual contracts of employment may improve on these payments.

Extra payments may be accessed through additional entitlements derived from collective and/or company agreements, or through the works council’s successful negotiation of a social plan with the employer.

Employees are not entitled to severance pay if they terminate the employment contract  or in case of summary dismissal.

Avenues for redress

Jurisdiction over disputes concerning unfair dismissal lies with the system of labour courts (sec. 105(4), WCA; sec. 50(1), Labour and Social Courts Act).

If the works council states its acceptance of a dismissal, there is no appeal against a socially unjustified dismissal (sec. 105(6), WCA).

If the works council expressly protests against the intended dismissal, within one week of receiving notification, the right of appeal belongs primarily to the council (on the understanding that the employee concerned has asked the council to lodge an appeal) (sec. 105(4), WCA).

If the works council does not comply with a request for appeal, the employee who was given notice has the right to lodge an appeal within one week, i.e. up to the end of the period granted to the works council.

Once appeal proceedings have started, the council’s right to appeal passes automatically to the employee concerned if the council withdraws an appeal without the employee’s consent. In this case, the employee can continue the appeal proceedings within 14 days of being informed of the withdrawal.

If the works council does not state its position, the employee who has been given notice immediately gains the right to appeal within one week of receiving notice (sec. 107, WCA).

In the absence of a works council, the right of appeal goes automatically to the employee concerned, right from the start. The period for appealing is within one week of receiving notice. There is no obligation to continue with the employment relationship until the disputed dismissal is resolved (sec. 105(5), WCA).

Two principal avenues of appeal exist. Under sec. 105(3) of the WCA, unfair dismissal can be claimed on the grounds that it is:

• socially unjustified (applicable only in the case of employees with at least six months service); or
• in response to certain legitimate actions on the part of the employee (e.g. trade union activity/membership, candidature for or membership in a works council, holding office as a health and safety representative, etc.).

For appeals concerning dismissals resulting from legitimate actions on the part of the employee (see sec. 105(3), WCA), the employee must provide convincing proof to show that the dismissal was induced by those actions.

In cases where “socially unjustifiable” dismissal is claimed, the employer can refute it on the grounds that it is necessary for operational reasons; there is an obligation, however, to provide substantial proof (sec. 105(3), WCA).

Compensation for unfair dismissal is usually limited to reimbursement of actual loss of earnings between dismissal and ruling; in the case of unfair summary dismissal, pay for the notice period is required. If the court accepts the appeal, the dismissal is immediately declared invalid and, theoretically, the old working relationship resumes.

Further information

• ILO Natlex Austria

[1] R. Strasser: “Austria”, in R. Blanpain (ed.): International encyclopaedia for labour law and industrial relations (The Hague, Kluwer Law International, 1999), Vol. 2, p. 59.