Establishing compliant employment relationships in Austria requires a thorough understanding of local labor law, particularly concerning employment agreements. These contracts serve as the foundational document outlining the rights and obligations of both the employer and the employee, ensuring clarity and legal certainty throughout the employment lifecycle. Adhering to Austrian legal requirements when drafting and managing these agreements is crucial for minimizing legal risks and fostering a positive working environment.
Austrian employment law provides a framework that balances employer flexibility with strong employee protections. While parties have some freedom to define terms, certain provisions are mandatory and cannot be less favorable than those stipulated by law, collective bargaining agreements, or works council agreements. Properly drafted employment agreements are therefore essential for any company hiring in Austria.
Types of Employment Agreements
Austrian law primarily distinguishes between two main types of employment agreements based on their duration: indefinite and fixed-term contracts. The choice of contract type has significant implications for termination rights and procedures.
| Contract Type | Description | Key Characteristics |
|---|---|---|
| Indefinite | Employment relationship without a predetermined end date. | Standard type; termination requires notice periods or just cause; continues until terminated by either party. |
| Fixed-Term | Employment relationship with a specific end date or for a defined project. | Automatically ends on the agreed date or project completion; generally cannot be terminated early without just cause; repeated use for the same role can lead to reclassification as indefinite. |
Fixed-term contracts are generally intended for specific, temporary needs. Austrian law scrutinizes the use of successive fixed-term contracts (chain contracts) to prevent the circumvention of employee rights associated with indefinite employment.
Essential Clauses
Austrian employment agreements must contain certain mandatory provisions to be legally compliant. While additional clauses can be included, these core elements are fundamental.
- Identification of Parties: Full names and addresses of both the employer and the employee.
- Start Date: The date the employment relationship begins.
- Job Description: A clear outline of the employee's role, duties, and responsibilities.
- Workplace: The primary location where work is to be performed. If the employee is expected to work at various locations, this should be stated.
- Remuneration: Details of salary or wage, including base pay, any variable components (bonuses, allowances), payment frequency, and method.
- Working Hours: Specification of normal daily or weekly working hours. Reference to applicable collective bargaining agreements is common.
- Holiday Entitlement: The amount of annual leave the employee is entitled to.
- Notice Periods: The applicable notice periods for termination by either party. These are often determined by law or collective bargaining agreements based on seniority.
- Reference to Collective Bargaining Agreement: If applicable, the agreement governing the employment relationship must be referenced.
- Reference to Works Council Agreement: If applicable, any relevant agreements with the works council must be referenced.
Additional clauses often included cover topics like confidentiality, non-compete obligations, training costs, and intellectual property, provided they comply with legal limits.
Probationary Period
A probationary period (Probezeit) allows both the employer and the employee to assess the suitability of the employment relationship. In Austria, a probationary period can be agreed upon at the start of employment.
- Duration: The maximum duration for a probationary period is typically one month. For apprenticeships, it can be up to three months.
- Termination: During the probationary period, the employment relationship can be terminated by either party at any time without notice and without stating a reason.
- Agreement: A probationary period must be explicitly agreed upon in the employment contract or collective bargaining agreement; it is not automatic.
It is important to note that termination during probation is immediate and does not require adherence to standard notice periods.
Confidentiality and Non-Compete Clauses
Confidentiality and non-compete clauses are common in Austrian employment agreements but are subject to strict legal limitations to protect employee mobility and professional development.
- Confidentiality: Clauses protecting company confidential information and trade secrets during and after employment are generally enforceable, provided they are reasonable in scope and duration.
- Non-Compete (Post-Contractual): Agreements restricting an employee from working for a competitor or starting a competing business after the employment ends are only enforceable under specific conditions:
- They must be in writing.
- They can only apply to employees earning above a certain income threshold (currently above the monthly contribution ceiling for social security).
- They must be limited in scope (activity, geography) and duration (maximum one year after termination).
- They must not unduly restrict the employee's professional advancement.
- The employer may be required to pay compensation to the employee during the non-compete period if the restriction is significant.
Courts review non-compete clauses strictly, and overly broad or restrictive clauses may be deemed invalid.
Contract Modification and Termination Requirements
Modifying an existing employment agreement generally requires the mutual written consent of both the employer and the employee. Unilateral changes by the employer are typically only permissible if the contract or an applicable collective bargaining agreement explicitly allows for such changes under specific conditions, or if the change is minor and does not significantly alter the core terms of employment.
Termination of an indefinite employment agreement can occur through:
- Mutual Agreement: Both parties agree in writing to end the employment.
- Ordinary Termination: Termination by either party with adherence to statutory or contractual notice periods and termination dates. Notice periods for employers increase with the employee's seniority.
- Extraordinary Termination (Dismissal/Resignation with Immediate Effect): Termination for just cause (Entlassung by employer, Austritt by employee) without notice. Just cause is defined by law and includes serious breaches of contract or misconduct.
Fixed-term contracts typically end automatically on the agreed date. Early termination of a fixed-term contract is generally only possible for just cause unless the contract explicitly allows for ordinary termination with notice (which is less common). Strict procedures and legal grounds apply to extraordinary termination, and improper termination can lead to significant legal consequences and compensation claims.
