How do you terminate an employee in Austria in 2026?
Austria pays severance differently from almost every other European country. Since 2003, every employee accrues entitlement from their first pay cheque through the Abfertigung Neu fund, funded entirely by the employer at 1.53% of gross wages. That contribution runs whether you dismiss the employee or they resign, meaning there is no cliff-edge payout for the employer and no windfall for the dismissal route.
· Austria guide
Illustration · Vienna, Austria
Austria uses a banded notice system. Employer notice starts at 6 weeks for up to two years of service. It rises through 2 months, 3 months, 4 months, and 5 months for 25 or more years. Notice must end at the close of a calendar quarter under the Angestelltengesetz.
Austria has two severance systems. Abfertigung Neu covers all employees hired from 1 January 2003. The employer puts 1.53% of gross pay into a portable BV fund each month from day one. The employee keeps that fund no matter who ends the relationship. For employees on Abfertigung Alt (hired before 2003), a lump sum kicks in after 3 years of service if the employer dismisses them. It can reach up to 12 months of salary.
Unfair dismissal protection applies from day one. There is no qualifying period. Employees have 2 weeks after receiving notice to challenge it. Dismissing someone for being pregnant, on parental leave, a works-council member, or disabled is not allowed. Those dismissals need court or works-council approval first.
How much notice must you give an employee in Austria?
Notice is banded by how long the employee has worked for you. The bands under the Angestelltengesetz (AngG) s.20 are: 6 weeks for up to two years. 2 months for two to five years. 3 months for five to fifteen years. 4 months for fifteen to twenty-five years. 5 months for twenty-five or more years. These rules cover white-collar and blue-collar employees equally since 30 September 2021.
Notice must end at the close of a calendar quarter (31 March, 30 June, 30 September, 31 December). If the contract or a collective agreement allows it, month-end termination is also possible. Employees must give 30 days notice when they resign.
| Length of continuous service | Statutory minimum employer notice |
|---|---|
| Up to 2 years | 6 weeks |
| 2 to 5 years | 2 months |
| 5 to 15 years | 3 months |
| 15 to 25 years | 4 months |
| 25 years or more | 5 months |
Collective bargaining agreements (Kollektivvertraege) often extend these minima for specific sectors. Contract terms cannot go below the statutory bands; they can go above them. Senior and C-suite contracts routinely carry 4 months to 5 months regardless of tenure.
Quarter-end rule and its cost
The quarter-end convention is the hidden cost in Austrian notice. If you give notice on 1 April and the employee is in the up-to-two-year band, the effective termination date is 30 June (the end of the next quarter), not 7 June (six weeks later). Plan the notice date carefully: serving notice in the first week of a quarter effectively extends the paid period by nearly a quarter's salary more than the statutory weeks alone suggest.
During the statutory probation period of up to 1 month, either party may terminate with no notice (0 days required). Extended probation of up to 3 months applies to apprenticeships and certain specialist roles under the Berufsausbildungsgesetz.
What procedure must you follow before dismissing an employee in Austria?
Austria does not require a formal warning process before you dismiss someone. Most dismissals are by notice (Kuendigung) and you do not have to give a reason. A dismissal must not be socially unjustified, though. Employees can challenge one before the Labour and Social Court.
The challenge window is 2 weeks from when notice is given. Protection applies from day one. There is no qualifying period (Arbeitsverfassungsgesetz ss.105 to 107).
A dismissal is socially unjustified if it seriously prejudices the employee's interests without being justified by business necessity or the employee's conduct or capability. Courts weigh the employee's personal circumstances (age, length of service, family obligations) against the business reason. Where a works council (Betriebsrat) exists, the employer must notify it before serving notice; the works council has five days to comment and can formally object, which shifts the burden of proof in any court challenge.
Summary dismissal (fristlose Entlassung)
Summary dismissal without notice is available only for serious misconduct under the Angestelltengesetz, including wilful damage, persistent insubordination, or criminal activity against the employer. The employer must act promptly once aware of the grounds; delay in serving summary dismissal is construed as waiving the right. If the dismissal grounds are not sustained, the employee is treated as having been dismissed without cause and recovers notice-period earnings plus any Abfertigung Alt entitlement.
Protected categories requiring prior consent
Dismissal of employees in protected categories is void without prior approval from a court or the relevant authority. Protected categories include: pregnant employees and those on maternity leave or parental leave (Elternkarenz); works-council members; employees on military or civil service; employees with disabilities registered under the Behinderteneinstellungsgesetz. Dismissal of a registered disabled employee requires the prior consent of the Sozialministeriumservice.
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Check the tenure band
Identify how long the employee has been employed and confirm the statutory notice band from the Angestelltengesetz. Work out the quarter-end date the notice period must reach.
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Notify the works council
If a Betriebsrat exists, notify it before serving notice. The works council has five days to comment; failure to notify shifts the burden of proof in any subsequent court challenge.
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Serve written notice
Issue a written notice of termination (Kuendigung) stating the effective date. No stated reason is required for ordinary dismissal, but preserve documentation of the business reason internally.
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File AMS notification if collective
If the dismissal is part of a collective redundancy exceeding the statutory threshold, file the early-warning notification with the AMS at least the required number of days before the first dismissal takes effect.
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Settle final pay
Reconcile the Abrechnung at the last pay run: accrued holiday, outstanding salary, Abfertigung Alt entitlement where applicable, and confirmation of Abfertigung Neu BV fund status.
How does Austrian severance pay work?
Abfertigung Neu applies to everyone hired from 1 January 2003. The employer pays 1.53% of gross wages each month into a portable BV (Betriebliche Vorsorgekasse) fund. The employee keeps the fund when employment ends. It does not matter who ended it or why.
Abfertigung Alt applies to employees hired before 1 January 2003. If the employer dismisses them after 3 years of service, a lump-sum payment is due. It rises on a stepped scale up to a maximum of 12 months of salary at twenty-five years.
The practical divide matters for any acquisition or TUPE-equivalent transfer: employees pre-2003 carry Abfertigung Alt entitlements with them, which crystallise on employer-initiated termination. Employees post-2003 have a portable fund that is not an employer liability on termination.
Abfertigung Neu: the running cost
The 1.53% BV fund contribution runs from the first pay cheque and is paid to the employee's chosen BV fund provider. It does not accumulate on the employer's balance sheet; it leaves immediately each month. If the employee resigns voluntarily before a qualifying threshold, the fund is preserved for them (not paid out immediately but retained until retirement or a subsequent qualifying event). If the employer terminates, the employee can access the fund directly.
Abfertigung Alt: the stepped scale
For pre-2003 employees still on Abfertigung Alt, the statutory severance entitlement under Angestelltengesetz s.23 is: after 3 years of service, 2 months of salary; rising at each statutory step to a lifetime cap of 12 months of salary at twenty-five years. Abfertigung Alt does not apply on voluntary resignation (with limited exceptions for parental leave). It does apply on employer-initiated dismissal and on certain agreed mutual terminations where the Alt basis is preserved.
Every Austrian employer contributes 1.53% of gross wages per month into a portable BV fund from the employee's first pay cheque. The fund follows the employee, not the job. Source: USP.gv.at, New severance payment scheme
Collective redundancy and the AMS notification requirement
Before large-scale dismissals you must notify the Arbeitsmarktservice (AMS), Austria's public employment service. File the notification at least 30 days before the first dismissal takes effect. Dismissals carried out before that period is up are not valid.
The lowest trigger applies in firms with 21 to 99 employees: 5 or more redundancies within a 30 days-day window. Larger firms face higher thresholds.
Austria's early-warning system (Fruehwarnsystem) under the Arbeitsmarktfoerderungsgesetz (AMFG) exists to give the AMS advance notice so it can coordinate retraining and placement. The system is notification-based rather than approval-based, but dismissals carried out before the 30 days-day period expires are invalid.
AMS notification thresholds
Thresholds scale with firm size. In firms of 21 to 99 employees, 5 or more redundancies trigger the requirement. In firms of 100 to 600 employees the threshold is 5 percent of the workforce within a 30 days-day window. In firms over 600 employees, thirty or more redundancies in any 30 days-day period trigger notification. The AMS does not have a veto; it coordinates support services and may delay implementation by up to 30 days days to arrange retraining.
Works-council involvement
Where a Betriebsrat (works council) exists, it must be informed and consulted on any collective redundancy. The works council has the right to negotiate a Social Plan (Sozialplan) to set enhanced severance terms for affected employees, particularly in firms of twenty or more workers. A Social Plan agreed with the works council becomes binding on all affected employees and may exceed statutory Abfertigung entitlements significantly.
Mutual termination: the Aufhebungsvertrag route in Austria
Both parties can end the relationship at any point by mutual written agreement. This is called an Aufhebungsvertrag. There is no required process, no required payment, and no set form. The agreement must be in writing and genuinely voluntary.
Mutual termination is a common and clean exit in Austria. It avoids the quarter-end notice constraint. It also avoids any challenge on social justification grounds. The parties can agree their own terms, including enhanced severance, reference wording, and restriction clauses.
An Aufhebungsvertrag takes immediate effect at the date the parties agree. It does not require AMS notification unless it is part of a collective redundancy exceeding the statutory threshold. The key risks for the employer are around voluntariness: if the employee later argues they were pressured into signing, Austrian courts have the power to set the agreement aside. Adequate time to consider (typically several days), the right to seek legal advice, and clear written terms all reduce that risk.
Typical Aufhebungsvertrag terms in Austria include:
- Agreed termination date, which can precede what the notice schedule would otherwise require
- Compensation payment, structured to preserve the employee's AMS benefit entitlement where possible (a payment characterised as Abfertigung is treated differently from wages for AMS purposes)
- BV fund treatment, confirming whether Abfertigung Neu access is triggered
- Reference clause, agreed wording for future references
- Non-compete and confidentiality, subject to the statutory limits on post-termination restrictions under Austrian law
- Outstanding holiday pay, settled at the same time
Final pay settlement (Abrechnung) in Austria is settled at or shortly after the last day of employment, aligned with the next regular pay run. No statutory fixed day-count deadline is prescribed by Austrian law; the uncertainty entry in the compliance cache records this gap.
How Teamed runs Austria terminations
Teamed becomes your legal employer of record in Austria for from $599 per employee per month, with zero FX mark-up in any currency. Our Austria partner entity handles the termination process end to end.
We calculate the right notice band, reconcile Abfertigung Neu contributions, notify the works council where needed, and file AMS notifications for collective redundancies. All of this happens on one platform. Decisions on who to dismiss and why stay with you.
Real HR and legal experts handle your Austria hires, from the first offer letter and sector-CBA alignment through every monthly contribution filing. An actual person, not a pooled queue. There is no setup fee and no exit fee, and every employer cost passes through at cost, itemised on every invoice.
The split of responsibilities under EOR for Austria terminations:
| What Teamed handles | What the client decides |
|---|---|
| Notice period calculation and quarter-end date alignment | Whether to dismiss, on what grounds, and the timing |
| Monthly Abfertigung Neu BV fund contributions from day one | Whether to offer enhanced Aufhebungsvertrag terms |
| Works-council notification and Social Plan coordination where required | Performance standards and what constitutes serious misconduct |
| AMS advance notification for collective redundancies | Communication strategy with the affected team |
| Final pay Abrechnung: accrued leave, outstanding salary, Abfertigung Alt where applicable | Whether to contribute legal fees for the employee's independent advice |
| Aufhebungsvertrag drafting through our Austria employment-law partners | The commercial terms of any mutual termination payment |
Austria's Abfertigung Neu means the severance fund accrues monthly and never surprises the employer at dismissal, unlike many other European markets where severance is a cliff-edge liability. EOR in Austria carries that 1.53% BV fund contribution as a transparent running cost rather than a hidden balance-sheet reserve.
EOR payroll, contractor onboarding, and entity setup all live on one platform. An Austria contractor who converts to payroll keeps their record, and that same employee can graduate from EOR to your own Austrian entity without switching systems. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first Austria hire, until it isn't. Start from the Austria hiring overview; each guide takes one layer of Austrian employment law.
Key sources: USP.gv.at, Notice of termination, USP.gv.at, Abfertigung Neu, and Migration.gv.at, Ending employment.
Frequently asked questions
What notice must an employer give an employee in Austria?
Employer notice in Austria is banded by tenure under the Angestelltengesetz s.20: 6 weeks for up to two years of service, 2 months for two to five years, 3 months for five to fifteen years, 4 months for fifteen to twenty-five years, and 5 months for twenty-five or more years. Notice must take effect at the end of a calendar quarter unless the contract permits month-end termination.
How does Abfertigung Neu work and what does it cost the employer?
Under Abfertigung Neu (for all employees hired from 1 January 2003), the employer pays 1.53% of gross wages each month into a portable BV fund. The contribution runs from the first pay cheque and continues for the whole employment relationship. The employee keeps the fund when employment ends, regardless of who terminates or why. There is no cliff-edge liability at dismissal.
Who qualifies for Abfertigung Alt severance and how much is it?
Abfertigung Alt applies only to employees whose employment started before 1 January 2003. Employer-initiated dismissal after 3 years of continuous service triggers a statutory lump sum. The amount rises on a stepped scale reaching a maximum of 12 months of salary at twenty-five years of service. Abfertigung Alt does not apply on voluntary resignation in most cases.
Does Austria require a qualifying period before an employee can challenge unfair dismissal?
No. Austria's unfair dismissal protection applies from day one of employment under the Arbeitsverfassungsgesetz ss.105 to 107, with no qualifying service period. An employee has 2 weeks from service of notice to bring a social-justification challenge before the Labour and Social Court.
When must an employer notify the AMS for collective redundancies in Austria?
The AMS early-warning notification must be filed at least 30 days before the first dismissal takes effect. In firms of 21 to 99 employees, the trigger is 5 or more redundancies in a 30 days-day window. Larger firms face proportionally higher thresholds. Dismissals carried out before the notification period expires are invalid.
The quarter-end convention catches international employers by surprise every time. You can serve the correct number of weeks' notice and still find yourself paying an extra month's salary because notice landed on the wrong side of a quarter boundary. Build the calendar check in before you start the process, not after.
Austria charges 1.53% of gross wages into a severance fund every month from the first pay cheque. It never surprises you on the way out.
Most European markets save severance for the moment of dismissal. Austria spreads it across the whole relationship.
The quarter-end notice trap still catches people. The fund does not.
