START OF THE EMPLOYMENT RELATIONSHIP

Who can work in Austria?

Being able to work in Austria depends on nationality, the type of work and - for foreign nationals – on the kind of residence permit.

Citizens of EU member states (except Croatia), the EEA countries Iceland, Norway and Liechtenstein and also citizens of Switzerland are allowed to work in Austria without any further permit (e.g. work permit) being required.

What are the main sorts of labour contract that exist in Austria?

The main types of labour contracts are an employment agreement (Arbeitsvertrag, Dienstvertrag) and free service contract (freier Dienstvertrag). However, only employment agreements are covered by the entire scope of labour law ranging from special protection against termination, the application of collective bargaining agreements and works council agreements to questions of social security contributions and tax deductions from wages payable by the employer.

What are the main features of each of them?

Employment contract (Arbeitsvertrag, Dienstvertrag)

When a person (the employee) provides services to another person or entity (the employer) for a period of time, an employment contract is considered to be in existence. Under Austrian law an employment contract is properly established only if the employee is obliged to provide services in ‘personal dependence’, i.e. providing of the services in person, no possibility of substitution, proper integration into the employer’s organisation, compliance with (personal) instructions given by employer and employee is subject to supervision and disciplinary measures by employer.

If a contract exists, workers/employees are entitled not only to regular wages/salaries but also to special payments, paid annual leave, paid sick leave and other forms of (paid) special leave.

Free service contract (freier Dienstvertrag)

Under a “free service contract” (freier Dienstvertrag), a person undertakes to provide services for a certain period of time. However, the individual worker is not personally dependent. Typically the ‘free service contractor’ is not integrated into the employer’s organisation, can organise his own working time himself and uses his own resources. (Risak in Heidinger/Hubalek (ed.), Angloamerikanische Rechtssprache 22 (2013), p. 212)

What information should employees be given in Austria?

At the beginning of the employment, the employer has to provide the employee with a written record (short form employment contract – Dienstzettel) outlining the essential rights and obligations arising from the contract of employment as follows:

• name and address of the employer and the employee;
• date of start of employment;
• in the case of a fixed-term employment contract – the end of the employment;
• duration of period of notice of termination and termination date;
• place of work;
• wage/salary classification;
• field of activity;
• wage/salary and its due-date;
• special payments
• annual leave entitlement;
• general working hours;
• applicable collective bargaining agreement, works council agreements, etc;name of the staff provision fund (Mitarbeitervorsorgekasse).

DURING THE EMPLOYMENT RELATIONSHIP

What are the main employment rights in Austria?

Annual leave and holiday allowance: During their annual leave of 30 business days, which is prescribed by law, employees are entitled to remuneration. The Annual Leave Act (Urlaubsgesetz) provides that during his annual leave the employee is paid the same remuneration which s/he would have been entitled to  had s/he worked and not taken leave.

Special payments (vacation benefit and Christmas pay): Collective bargaining agreements in Austria grant 14 salaries per year, i.e. two payments in addition to the 12 regular monthly payments – one that is called ‘vacation benefit’ (Urlaubszuschuss), typically paid out around June, and so-called ‘Christmas pay’ (Weihnachtsremuneration), traditionally paid out before seasonal holidays in November or December.

Sick leave: By law, employees who become unable to work without intent or gross negligence are entitled to full regular remuneration for a specific period of time.

Other cases of paid special leave (maternity leave, parental leave etc) are also regulated by special laws.

What are the maximum permitted daily, weekly, monthly and annual working hours?

All aspects of working time regulations are set out in the Working Time Act (Arbeitszeitgesetz).

As a matter of general principle standard working hours are:

• up to 8 hours per day;  and

• up to 40 hours per week.

The maximum number of working hours (including overtime) must not exceed

• 10 hours per day; and

• 50 hours per week.

In addition, the average weekly working hours must not exceed 48 hours during a period of 17 weeks (if the collective agreement permits: 26 weeks, and if there are technical and work related organisational reasons: 52 weeks). (Risak in Heidinger/Hubalek (ed.), Angloamerikanische Rechtssprache 22 (2013), p. 215 f)

Are there any minimum number of hours required?

Generally there are no minimum working hours required by law.

Under the new provision of parental leave, there is a legally regulated right to reduce the working hours of new parents. It applies to parents living in the same household as their child or having legal custody of the child born after December 31st, 2015. During the period of parental leave, the normal working hours per week have to be reduced by at least 20%. However, the absolute required minimum are 12 hours per week.

What is the minimum holiday entitlement?

Mandatory provisions of the Annual Leave Act (Urlaubsgesetz) provide that employees are entitled to paid annual leave for each year of service, the length of which is prescribed by law. In every year of employment the employee is entitled to annual leave of 30 business days (after more than 25 years of service, this increases to 36 business days). This means that the employee has five or six weeks of annual leave per year, Saturday being counted as a ‘business day’”. (Risak in Heidinger/Hubalek (ed.), Angloamerikanische Rechtssprache 22 (2013), p. 213)

Can a contract be modified while still valid and in force? If so, under which circumstances?

The employment contract cannot be altered unilaterally. Amendments can be agreed upon only by mutual consent of employer and employee.

If the employer wishes to change the employment contract in the future, s/he may include a right of variation in the contract. For example, it is not unusual for the employer to move an employee from one place or position to another and s/he would therefore wish to include a contractual mobility clause. (Risak in Heidinger/Hubalek (ed.), Angloamerikanische Rechtssprache 22 (2013), p. 212)Moreover, the employer may terminate an existing employment relationship under the condition that the employee accepts a new agreement/contract with modified terms (Änderungskündigung).

Are any particular employment relationships subject to special protection?

Several groups of employees enjoy special protection against termination with or without notice. The exact scope of protection varies.

Persons enjoying special protection are in particular:

• apprentices;

• pregnant women and young mothers;

• mothers or fathers on parental leave;

• persons doing military service or community service in lieu of military service;

• members of the works council; and

• disabled persons.

The employment contracts of these employees may not be terminated without prior approval from the Employment Court (Arbeits- und Sozialgericht) or other institutions in charge of the specific matter. Even ordinary termination requires good cause, and immediate termination is restricted to a few select reasons. (Risak in Heidinger/Hubalek (ed.), Angloamerikanische Rechtssprache 22 (2013), p. 220)

Are there any obligations to consult with a works council and/or to undertake collective bargaining?

Austrian labour law and industrial relations are governed and strongly influenced by the so-called social partnership (Sozialpartnerschaft) between statutory representative bodies of special interest groups of employers and employees with mandatory membership and fees as well as regulatory autonomy. At company level there is also a statutory system of employee participation in the form of works councils (Betriebsrat), which are independent of union organisation.

Works council members have rights of co-determination regarding recruitment, termination and dismissal of employees. In reality, therefore, the works council will have to be heard before a termination is expressed. Failure to do so will lead to nullity of termination.

There is no statutory minimum wage/salary. However, these minimums are set by mandatory collective bargaining agreements which cover about 98% of all Austrian employees in the private sector. There is also no central wage norm set by the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund) but, in general, unions aim for a minimum increase in real earnings equivalent to the increase in economic growth.

Traditionally, the actions of unions, employers and the state have been strongly influenced by the social partnership. They are shaped by strong mutual ties between the unions, the main political parties and the government.

END OF THE EMPLOYMENT RELATIONSHIP

When and how can an employer terminate an employment relationship?

Generally, the employer can terminate an employment relationship with or without notice. The Austrian legal system differentiates between blue-collar workers and white-collar workers.

Termination with notice

1 White-collar workers

Termination with notice does not require a reason to be specified and is subject to statutory notice periods that depend on the length of employment.

According to the Act on White Collar Employees (Angestelltengesetz), the employer must respect the following notice periods for the termination of white-collar employees: 

Years of service	Notice period
0-2	6 weeks
2-15	2 months
15-25	4 months
More than 25	5 months

 

Employment for white-collar employees can cease only at the end of each calendar quarter (31 March, 30 June, 30 September, or 31 December). This rule can be changed by individual agreement or collective agreement so that employment can also end on the 15th or at the end of any month. (Risak in Heidinger/Hubalek (ed.), Angloamerikanische Rechtssprache 22 (2013), p. 217 f)

2 Blue-collar workers

Termination with notice does not require a reason to be specified. Notice periods are usually regulated by the applicable collective bargaining agreements and often based on the length of employment.

In companies where no collective bargaining agreement is applicable, the notice periods depend on the terms of the employment contract.  Otherwise, the Industrial Code (Gewerbeordnung) is applied which provides for a notice period of 14 days.

Termination without notice by employer (summary dismissal; Entlassung)

If the employer has important grounds which would make it unreasonable for him to continue the employment of any white-collar or blue-collar worker, s/he may terminate the employment relationship by summary dismissal (Entlassung). A good reason might be the breach of contract by the employee or if s/he is unable to perform the promised or appropriate (reasonable) services.

As a matter of general principle, grounds for dismissal must be asserted immediately. The works council has to be informed immediately of the summary dismissal. (Risak in Heidinger/Hubalek (ed.), Angloamerikanische Rechtssprache 22 (2013), p. 219)

When and how can an employee terminate an employment relationship?

Generally, the employee can terminate an employment relationship with or without notice. The Austrian legal system differentiates between blue-collar workers and white-collar workers.

Termination with notice

1 White-collar workers

Termination with notice does not usually require a reason to be specified. 

White-collar employees can terminate their employment at the end of every month – in such cases a notice period of one month has to be observed. It is possible to contractually extend the notice period up to six months, if the employer’s notice period is at least equally long.

2 Blue-collar workers

Termination with notice does not require a reason to be specified. Notice periods are typically regulated by the applicable collective bargaining agreements and often based on the length of employment.

In companies where no collective bargaining agreement is applicable, the notice periods depend on the terms of the employment contract. Otherwise, the Industrial Code (Gewerbeordnung) is applied which provides for a notice period of 14 days.

Termination without notice (constructive dismissal; Austritt)

Termination without notice by the employee (white- or blue-collar workers) can only be given on important grounds (e.g. the employer does not pay the salary properly or is in breach of other essential obligations of the employment contract) and terminates the employment relationship immediately.

What are the economic consequences in each case?

Termination with notice by employee

Under the old regime for employment contracts (“Abfertigung alt”; applicable to contracts signed before 31 December 2002) employees are not entitled to severance pay if they give notice, unless they are entitled to a disability or old-age pension.

Under the new system (“Abfertigung neu”) there is no economic differentiation between termination by employee with or without notice.

Termination without notice by employee

In the case of constructive dismissal, the employee is entitled to all such claims s/he would have been entitled to had the employment relationship been terminated by the employer. Claims for severance pay, annual leave indemnity payment and compensation for notice of termination must therefore be paid.

Termination without notice by employer 

Under the old regime for employment contracts (applicable to contracts signed until 31 December 2002) severance pay is not due if the employee is dismissed by the employer for reasons attributable to the employee.

If the summary dismissal is unjust on social grounds or based on unlawful grounds, the employee may contest it. An employee who has suffered loss due to premature termination of his employment must be put into the financial situation s/he would have been in if proper notice had been given to him. Compensation for notice payable to the employee therefore consists of remuneration that would have been paid had the proper notice (period) been observed. (Risak in Heidinger/Hubalek (ed.), Angloamerikanische Rechtssprache 22 (2013), p. 219)

If an employment contract is terminated before the employee has taken all of his annual leave, s/he is entitled to a pro rata annual leave indemnity payment.

Are there any situations in which an employment relationship would terminate automatically and without the need for action by either party? If so, what are they?

Fixed term contracts expire automatically at the end of the agreed upon term.

All employment contracts are terminated automatically by the death of the employee but not the death of the employer, unless the contract is for personal services provided directly and solely to the employer.