Severance Pay in Austria: An Employer's Guide | INS Global

Severance Pay in Austria

Severance Pay in Austria

November 11, 2022


INS Global



INS Global



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Key Takeaways

  1. Workers whose employment began after January 1, 2003, are lawfully entitled to severance compensation.
  2. An employee may terminate their contract unilaterally with immediate effect.
  3. Severance payments are fully deductible as company expenses under tax legislation.

The system for severance pay in Austria recently experienced a major restructuring with the implementing of the Corporate Staff Provision Act (BMVG, Betriebliches Mitarbeitervorsorgegesetz). German-speaking media calls this “Abfertigung Neu,” which translates as “new severance pay system“.

In this article we go over the most important elements of severance pay in Austria and the rules for employee termination that employers need to know. By knowing your employer responsibilities in the countries you operate in, you can ensure compliance and boost employees’ sense of security.

With the right professional partner giving you advice and aid, this process can be simple and cost-effective.

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Employee Termination in Austria – What You Need to Know

An employer can terminate employment contracts in Austria for the following reasons:

1. Consensual Termination of the Employment Agreement

If the employee agrees, both parties may discontinue the worker’s services at a predetermined time either orally or in writing. Additionally, this agreement does not need to abide by any legal time restrictions or deadlines.

2. Premature Resignation on the Employee's Part

An employee may terminate their contract by themselves with immediate effect. They don’t need to justify this decision, and it can often result from multiple reasons such as taking early retirement or accepting a new job offer.

3. Dismissal by the Employer

If there are fair grounds for dismissal, an employer may dismiss an employee with immediate effect.

These grounds include but aren’t limited to situations such as a breach of confidence, embezzlement, lack of willingness to perform given tasks, or fraud. In addition, it also include instances of workers not meeting targets (preferably over a number of years with evidence).

So, under these circumstances an employee can easily file for unfair dismissal.

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