Austrian termination law balances employer flexibility with employee protection. Understanding notice periods, the severance fund system, and protected employee categories is essential for compliant workforce management.
Notice periods in Austria
Employer notice periods
Austrian law requires employers to give notice based on length of service:
| Employment duration | Notice period |
|---|---|
| Up to 2 years | 6 weeks |
| 2-5 years | 2 months |
| 5-15 years | 3 months |
| 15-25 years | 4 months |
| Over 25 years | 5 months |
Notice timing
Notice periods run to either the 15th or end of each month. An employee receiving notice on January 20th with a 6-week period would terminate on March 15th.
Employee notice periods
Employees have shorter notice requirements:
| Category | Notice period |
|---|---|
| Standard (no agreement) | 1 month to end of month |
| White-collar employees | Often 1 month |
| Blue-collar workers | Often 2 weeks |
| During probation | No notice required |
Probation period
- Maximum duration: 1 month
- Either party can terminate immediately
- No reason required
- Some collective agreements extend to 3 months for executives
The Austrian severance system (Abfertigung neu)
Overview
Since 2003, Austria operates a severance fund system where employers contribute monthly to individual employee accounts:
| Aspect | Details |
|---|---|
| Contribution rate | 1.53% of gross salary |
| Start date | After 1 month of employment |
| Vesting period | 3 years |
| Account ownership | Employee |
Unlike traditional severance, these contributions are made continuously regardless of how employment ends. Employees keep their accumulated funds even if they resign.
When employees access funds
Employees can access their severance fund:
| Event | Access allowed |
|---|---|
| Employer termination | Yes, if vested |
| Mutual termination agreement | Yes, if vested |
| Employee resignation (after 3 years) | Can claim or leave invested |
| Retirement | Yes |
| Death | Paid to heirs |
Transfer between employers
Severance fund accounts are portable:
- Funds remain invested when changing jobs
- New employer contributes to same account
- Accumulates over entire career
Old severance system (Abfertigung alt)
Who is covered
Employees hired before January 1, 2003 may remain under the old system:
- No monthly contributions
- Severance paid as lump sum at termination
- Only if employer terminates (not if employee resigns)
Old system severance amounts
| Years of service | Severance |
|---|---|
| 3 years | 2 monthly salaries |
| 5 years | 3 monthly salaries |
| 10 years | 4 monthly salaries |
| 15 years | 6 monthly salaries |
| 20 years | 9 monthly salaries |
| 25+ years | 12 monthly salaries |
Transition employees
Some long-serving employees may have hybrid arrangements with both old severance entitlements and new fund contributions. Review individual situations carefully.
Protected employee categories
Enhanced termination protection
Certain employees have special protection:
| Category | Protection |
|---|---|
| Pregnant employees | Cannot terminate during pregnancy or 4 months after birth |
| Employees on parental leave | Protection during leave period |
| Works council members | Extraordinary protection, court approval needed |
| Disabled employees | Approval from disability authority required |
| Apprentices | Limited termination options |
Terminating protected employees
If termination is necessary:
- Consult employment lawyer
- Obtain required approvals
- Document objective reasons
- Follow specific procedures
Types of termination
Ordinary termination (ordentliche Kündigung)
Standard termination with notice:
- Written form required
- State termination date
- Comply with notice period
- Offer reference letter
Extraordinary termination (außerordentliche Kündigung)
Immediate termination for serious cause:
| Valid reasons | Invalid reasons |
|---|---|
| Theft, fraud | Poor performance (usually) |
| Gross negligence | Personality conflicts |
| Persistent refusal to work | Business downturn |
| Violence or threats | Single mistake |
Must be issued immediately upon discovering the cause.
Mutual termination (einvernehmliche Auflösung)
Agreed termination between parties:
- No notice period required
- Terms negotiated
- Often includes additional compensation
- Must be genuinely mutual
Unemployment implications
Employees who agree to mutual termination may face a 4-week unemployment benefit suspension. This affects negotiation dynamics.
Collective redundancies
When notification required
Mass layoffs trigger special obligations:
| Company size | Threshold |
|---|---|
| 20-100 employees | 5+ redundancies |
| 100-600 employees | 5% or more |
| 600+ employees | 30+ redundancies |
Notification process
- Inform works council (if exists)
- Notify regional employment service (AMS)
- Wait 30-day cooling-off period
- Negotiate social plan if required
- Proceed with individual terminations
Final pay requirements
Due at termination
| Component | Timing |
|---|---|
| Earned salary | With final paycheck |
| Prorated 13th month | Calculated to termination date |
| Prorated 14th month | Calculated to termination date |
| Unused vacation pay | Cash value of remaining days |
| Severance (old system only) | With final settlement |
Calculation example
Employee earning EUR 4,000 gross monthly, terminated July 15:
| Component | Calculation | Amount |
|---|---|---|
| Salary (15 days) | EUR 4,000 × 15/30 | EUR 2,000 |
| Prorated 13th month | EUR 4,000 × 6.5/12 | EUR 2,167 |
| Prorated 14th month | EUR 4,000 × 6.5/12 | EUR 2,167 |
| Unused vacation (10 days) | EUR 4,000 / 22 × 10 | EUR 1,818 |
| Final payment | EUR 8,152 |
Working with an EOR
An Employer of Record manages Austrian terminations:
What Virmondo EOR handles
- Notice period calculations
- Severance fund contributions
- Final pay calculations
- Protected employee procedures
- Documentation and compliance
Benefits
- Reduced termination risk
- Compliant processes
- Expert guidance
- Smooth transitions
Next steps
Need to manage employees in Austria with confidence? Virmondo EOR handles all employment lifecycle requirements.