Important and/or distinctive aspects of rights on termination in Austria.

Termination of an Employee

Under Austrian law, termination of an employee is possible under specific notice periods. An employee can terminate their employment by providing one month’s notice. An employer can terminate an employment relationship by providing six weeks to five month’s notice for white collar employees depending on their length of service.

However, many terminations are being settled by mutual agreement where the parties (the employer and the employee) are free to agree on the terms of the termination – an immediate end date can even be agreed.

Form of notice for termination?

Under Austrian Law, no specific form for a termination is required (some collective bargaining agreements do stipulate a written form), but written notice letters and written termination agreements (by mutual consent) are often in written form due to evidence reasons and for the purpose to mitigate the risk of possible claims.

Keeping Employees out of the Business

An employer often wants to keep an employee out of the business during a termination process; either because the employer does not want the employee to gain information of business/trade secrets, or to cut off the employee’s contact to colleagues, suppliers or customers. Placing an employee on garden leave is a way of achieving this. Additionally, seeking return of a company mobile phone or a company laptop may be advisable in order to distance the employee from the business. To enforce this provision, it should be contained in the employment contract; otherwise such acts could potentially lead to compensation obligations for the employer. This is likely to be more applicable to senior employees of a higher status.

Non-Compete Restrictions

Non-compete restrictions are very common in Austria, especially for key employees. Austria’s traditionally strong trade unions have, however, been fighting against such clauses for several years.

Under Austrian Law, a non-compete restriction must be limited in scope to the length of time and (if appropriate) the geographical extent of its application; the maximum duration is twelve months. In assessing the fairness of a non-compete restriction, Austrian courts would consider the relationship between the length, any specific geographic area, the type of activities of the employee and the potential value / harm to the business. Ultimately, any such restriction must not unreasonably restrict the employee’s professional career. Austrian courts have a statutory right to reduce the restriction, both in terms of length and geography.

At the beginning of 2016 an amended act was adopted and enforced (in response to the complaints of the trade union) which states that a non-compete clause is only valid and enforceable if the employee’s salary for the last month of employment reaches a specific amount (EUR 3,240 without 13th and 14th instalments for 2016).