Ending an employment relationship in Austria requires more than a simple notice. Consider a scenario where a Vienna-based employee is let go for performance reasons, but the dismissal is issued without aligning with statutory notice periods or required consultation steps. A routine decision can quickly trigger legal exposure, particularly if the timing or process does not comply with Austrian labor law.
Under Austrian employment law, such a dismissal is considered non-compliant. Employers must observe strict notice periods, valid termination dates, and works council consultation obligations before a dismissal can take effect. If any of these elements are missed, the employee may claim the remuneration they would have earned through the correct termination date.
Understanding termination rules in Austria is critical, as procedures and deadlines are rigorously enforced. Every dismissal must follow a defined legal framework, and errors frequently lead to proceedings before the Labour and Social Court. This guide will help you navigate these requirements.
Termination laws in Austria
Austria does not follow an at-will employment system. Ordinary termination (Kündigung) does not require a stated reason, but the employer must observe the correct notice period, and the termination must take effect on a legally valid termination date. If either requirement is missed, the termination remains valid but gives rise to a compensation claim for the full missed period.
Summary dismissal (Entlassung) is a separate and more restrictive category, requiring serious cause and immediate action.
Miss any procedural requirement, and Austria’s Labour and Social Court (Arbeits- und Sozialgericht) will likely rule against you. The primary governing statutes are the Angestelltengesetz (AngG) for white-collar workers and the Allgemeines Bürgerliches Gesetzbuch (ABGB) for blue-collar workers. The Betriebsverfassungsgesetz (ArbVG) governs works council rights, and the BMSVG governs the mandatory BVK severance fund. Since October 2021, notice periods for both worker categories have been unified.
Summary dismissal and wrongful dismissal in Austria
Summary dismissal is permitted only for serious cause, meaning conduct so severe that continued employment through the next valid termination date is unreasonable. Grounds for white-collar workers include fraud, persistent neglect of duties, breach of confidentiality, and criminal conviction. Grounds for blue-collar workers are listed exhaustively under the Industrial Code 1859.
Austrian courts apply a strict timing rule. If the employer does not act on the grounds immediately, typically on the same day they become aware, the dismissal is unlawful regardless of how serious the underlying conduct was. If the employer cannot prove serious cause or acted too slowly, the dismissal is reclassified, leading to a wrongful dismissal in Austria, where the employee becomes entitled to compensation through the next valid ordinary termination date.
Probationary period in Austria
The probationary period in Austria must not exceed one month, or three months for apprenticeship contracts.
Termination during this period is more flexible but not without limits:
- Either party can terminate immediately without notice and without stating a reason
- Termination cannot be based on a discriminatory ground or protected status
- The employer’s 1.53% BVK contributions continue throughout the probationary period
How Multiplier handles termination and offboarding in Austria
Termination in Austria is procedural, date-sensitive, and highly scrutinized. Multiplier manages the entire process to ensure global compliance from start to finish.
When you submit a termination request:
- Legal review: Our in-country experts assess the case against Austrian employment law requirements before any employee communication
- Risk classification: We determine whether the termination qualifies as ordinary Kündigung, summary Entlassung, or mutual agreement
- Notice and date calculation: We confirm the correct statutory notice period and the valid termination date under the AngG, ABGB, and any applicable collective agreement
- Documentation: We prepare the termination notice in German and ensure all required legal language is included
- Works council coordination: We check whether works council notification is required and manage the one-week advance notification obligation
- Final settlement: We calculate and process BVK fund transfer, pro-rata 13th and 14th month salary, accrued leave, and all outstanding entitlements within statutory deadlines
No communication is sent to the employee until the compliance review is complete, minimizing legal risk at every step.
Types of termination
How you end an employment relationship in Austria matters; the rules, costs, and risks vary by type of termination.
Voluntary resignation
Employees who resign must typically give one month’s written notice, regardless of tenure, unless a collective agreement or individual contract specifies a different period.
The resignation should be in writing to avoid disputes over timing and wording. The notice period can be extended by agreement (up to six months), but the employer’s notice period cannot be shorter than the employee’s.
Employees are still entitled to accrued benefits, including:
- Outstanding salary
- Pro-rata 13th and 14th month salary (Urlaubs- and Weihnachtsgeld, where applicable)
- Accrued unused annual leave
They are not entitled to immediate disbursement from the BVK fund if they resign without cause. The accumulated contributions remain in the fund for future employment.
Involuntary termination without cause (Ordinary termination – Kündigung)
This is the most common type of termination in Austria. No specific reason is required, but strict procedural compliance is mandatory.
Employees in businesses with five or more employees and at least six months of service benefit from general protection against dismissal. They may challenge termination if it adversely affects them or is based on prohibited grounds.
Under Austrian rules, employees dismissed receive:
- Notice period (statutory or contractual)
- Salary and benefits through the valid termination date
- Accrued unused leave and other entitlements
For international employers, a key difference is the termination date rule: termination must generally fall at the end of a calendar quarter (31 March, 30 June, 30 September, 31 December), unless the contract allows termination on the 15th or last day of a month.
Involuntary termination with just cause (Summary dismissal – Entlassung)
A summary dismissal eliminates several employer obligations, including:
- Notice period
- Payment through a future termination date
The employee retains only:
- Outstanding salary up to the dismissal date
- Accrued entitlements (if any)
Because Austrian courts apply strict standards, employers must rely on strong and immediate documentation. Failed summary dismissal claims are typically reclassified as ordinary terminations, exposing the employer to full compensation through the correct termination date.
Mutual separation agreement (Auflösungsvereinbarung)
Mutual termination allows both parties to end the employment relationship at any time by written agreement.
Key features:
- Notice period requirements are bypassed
- Agreement must be genuinely voluntary
- BVK fund entitlement is preserved
- No court approval required (except for protected employees)
This option provides a lower-risk alternative where summary dismissal may not be defensible.
Mandatory notice periods
Statutory notice starts at six weeks for the first two years of service and increases with tenure, up to a maximum of five months for employees with more than 25 years of service as per employment laws.
Termination must generally fall on the last day of a calendar quarter, unless a different termination date is contractually agreed upon.
Payment instead of notice
Payment in lieu of notice (Kündigungsentschädigung) is a standard remedy in Austria.
If an employer does not observe the full notice period, the employee is entitled to compensation equal to the salary and benefits they would have received through the correct termination date.
Notice period rules by length of service in Austria
Use the table below to verify your obligations before issuing any termination communication:
Length of service | Employer notice period | Employee notice period | Payment in lieu permitted? | Notes |
Probation (up to 1 month) | None | None | N/A | Either party terminates immediately; BVK contributions continue |
Up to 2 years | 6 weeks | 1 month | Yes | Termination must fall on a valid termination date |
2 to 5 years | 2 months | 1 month | Yes | Collective agreements may extend employee notice up to 6 months |
5 to 15 years | 3 months | 1 month | Yes | Valid termination date requirement applies |
15 to 25 years | 4 months | 1 month | Yes | Valid termination date requirement applies |
25+ years | 5 months | 1 month | Yes | Maximum statutory employer notice period |
Minimum notice periods are governed by the Angestelltengesetz and the ABGB. Contractual notice periods may exceed these minimums but cannot fall below them.
Collective bargaining agreements (CBAs) in sectors such as retail, construction, and healthcare may impose longer employer notice obligations than the statutory minimum. Always verify the applicable CBA before initiating any termination.
Severance pay and redundancy
Under the BMSVG (Betriebliches Mitarbeiter- und Selbstständigenvorsorgegesetz), severance pay in Austria operates through a mandatory funded model for all employment contracts concluded from 1 January 2003 onwards. These obligations form a core part of employee benefits and compensation in Austria, and must be factored into every termination decision.
Eligibility
BVK fund disbursement is available when:
- The employee is terminated by the employer for any reason, including ordinary termination or mutual agreement
- The employee resigns for good cause attributable to the employer
BVK disbursement is not immediately available if the employee resigns without cause or is summarily dismissed for misconduct. The accumulated contributions remain in the fund for future employment and are not forfeited.
The BVK mechanism
From the first month of employment, the employer contributes 1.53% of the employee’s gross monthly salary to the BVK fund:
- The fund accumulates throughout the employment relationship regardless of how it ends
- On termination, the employee can request disbursement of the accumulated balance or leave it in the fund for continued investment
- For employees on pre-2003 contracts who have not opted into the BVK system, old-system severance applies: a direct employer payment calculated on years of service
Employers must budget for the 1.53% monthly contribution from day one of every new hire.
Taxation
Severance disbursements from the BVK fund benefit from favorable tax treatment:
- BVK fund disbursements are taxed at a flat 6% rate, significantly below ordinary income tax rates
- Old-system severance payments follow a different tax calculation based on years of service
Employers should confirm the tax treatment of each component with their payroll provider before payment.
Employee offboarding checklist for Austria
Austria requires careful procedural compliance at termination. Missing any of the following steps creates legal exposure. Work through this list sequentially:
Step 1: Document the termination in writing
Written notice is strongly recommended even though oral termination is technically valid in Austria. The notice must be given in sufficient time for the required period to run to the next valid termination date. For summary dismissal, the letter must clearly state the specific grounds. Poorly documented reasoning can undermine the employer’s position if challenged in the Labour and Social Court.
Step 2: Notify the works council (where applicable)
If a works council (Betriebsrat) is established, it must be informed at least one week before notice is issued. Failure to notify the works council renders the termination invalid. For mass redundancies meeting the AMS threshold, the AMS early warning notification must be filed at least 30 days before the first termination, and dismissals issued within that 30-day window are void.
Step 3: Conduct an exit interview (best practice)
Not legally required, but strongly recommended. Document any grievances raised by the employee; these records can support your position in Labour and Social Court proceedings.
Step 4: Retrieve company assets
Collect all equipment (laptops, phones, access cards) and obtain a signed acknowledgment of return. For remote employees, arrange tracked return logistics in advance.
Step 5: Revoke IT and system access
Disable access to email, internal systems, and client platforms on the last working day. Time this carefully for employees handling sensitive data or customer relationships.
Step 6: Prepare and deliver mandatory termination documents
Employees must receive:
- Salary statement (Lohnzettel) for the final pay period
- Certificate of employment (Dienstzeugnis) if requested, which must be neutral in wording
- Health insurance deregistration confirmation (Krankenversicherungsabmeldung)
- BVK fund transfer confirmation showing total contributions and transfer to the fund
Step 7: Deregister from health and social insurance
Deregister the employee from the health insurance fund (Österreichische Gesundheitskasse, OGK) on or before the last working day. Late deregistration can result in additional contribution liability for the employer.
Final pay and settlement
Timing is important under Austrian employment law. Missing payment deadlines or calculating entitlements incorrectly exposes the employer to compensation claims and court proceedings.
Timeline
All final pay and settlement amounts must be processed:
- Outstanding salary: on the regular payday covering the final period
- Pro-rata 13th and 14th month salary (where applicable under the CBA): included in the final settlement
Unused leave (mandatory payout)
Accrued annual leave must always be paid out at termination, including:
- Full statutory leave entitlement (minimum five weeks per year under Austrian law)
- Any additional leave entitlement under the applicable CBA
Unused leave cannot be forfeited under any termination scenario.
Permissible deductions
Employers may deduct:
- Salary advances already paid
- Legally mandated deductions (tax, social insurance, etc.)
- Documented material loss where contractually permitted
Any additional deductions require explicit contractual or legal authorization. Unauthorized deductions can lead to Labour and Social Court claims.
Why this matters
Austria’s Labour and Social Court actively enforces final pay requirements. Even minor delays in settlement or errors in the BVK transfer can trigger compensation claims and increase exposure in wrongful dismissal proceedings. See Multiplier’s guide to payroll in Austria for details on tax withholding and final settlement processing.
Wrongful dismissal protections
Austrian law provides enhanced protection to certain employee categories. These employees cannot be dismissed without cause during protected periods, regardless of business need. Violating these protections exposes employers to void dismissals and significant financial liability.
Protected categories under Austrian law
- Pregnant employees and those who have recently given birth: dismissal is void unless the employer was unaware of the pregnancy; the employee must notify within five working days of receiving the notice
- Parents on parental leave or parental part-time arrangements
- Works council members: dismissal requires prior court approval regardless of grounds
- Employees with a recognized disability of at least 50%: dismissal requires approval from the Sozialministeriumservice
- Employees on military or civil service leave
Discrimination protections
Austrian law and EU-derived equal treatment legislation prohibit discriminatory dismissals based on factors such as gender, age, disability, religion, nationality, or union activity.
If a dismissal is found to be discriminatory, courts may order:
- Reinstatement to the original role, or
- Compensation covering the full period the employment should have continued, plus damages
Consequences of wrongful dismissal
If an employer fails to comply with termination laws in Austria, the Labour and Social Court may order:
- Compensation for the full missed notice period through the correct termination date
- Reinstatement to the original role (for protected category violations)
- Back pay covering the period since dismissal
- Additional compensatory damages where discriminatory or retaliatory motivation is established
Austria’s Labour and Social Court actively enforces these protections, making procedural compliance critical before any termination decision is communicated to the employee.
How Multiplier handles termination in Austria
Austria’s employment law creates a procedurally demanding framework that catches foreign employers off guard, particularly those accustomed to at-will employment markets where a two-week notice and a final paycheck close the matter cleanly.
In Austria, the same action requires confirming the correct notice period, identifying the valid termination date, notifying the works council in advance, calculating the BVK fund transfer, and settling pro-rata 13th and 14th month salary obligations, all before the employee is formally offboarded.
Multiplier’s employer of record (EOR) service manages the entire termination process. Our Austria-based legal team reviews each termination request, confirms the legal basis and correct notice period, calculates every component of the final settlement, and prepares all required documentation in German.
We notify the works council where required, coordinate the AMS early warning notification if collective redundancy thresholds apply, and process the final settlement within statutory deadlines. If a Labour and Social Court dispute arises, our in-country team handles the response.
Companies using Multiplier avoid the most common Austria termination pitfalls: missing the valid termination date, failing to notify the works council in advance, miscalculating BVK contributions in the final transfer, and omitting mandatory salary components from the final settlement. The process is managed end-to-end; you make the business decision, and we handle the legal execution.
Navigate Austria’s complex termination laws with confidence. Book a demo with Multiplier today.
FAQs
Can an employer terminate an employee in Austria without giving a reason?
Yes, ordinary termination does not require a reason, but strict notice periods and valid termination dates must be followed to avoid compensation claims.
What makes a summary dismissal valid in Austria?
Summary dismissal requires serious misconduct and immediate action. Delays in acting on the cause can invalidate the dismissal, even if the misconduct is proven.
Do employees always receive severance pay in Austria?
Not directly from employers. Severance is funded through mandatory BVK contributions, which employees can claim depending on how the employment ends.
What happens if an employer misses the correct notice period in Austria?
The termination remains valid, but the employer must compensate the employee for the full missed notice period.
How does Multiplier ensure compliant terminations in Austria?
Multiplier manages notice periods, termination dates, documentation, and final settlements, reducing legal risk and ensuring full compliance with Austrian labor laws.
Can employees challenge termination decisions in Austria?
Yes, employees can challenge dismissals, especially if procedural errors, discrimination, or works council obligations are not properly handled.
How can Multiplier help with offboarding employees in Austria?
Multiplier handles legal review, works council coordination, payroll settlement, and documentation, ensuring a smooth and compliant offboarding process.
Why do companies use Multiplier for Austria employment compliance?
Companies rely on Multiplier to navigate complex Austrian laws, avoid costly errors, and manage terminations with local legal expertise end-to-end.
