US vs Austria dismissal law: what replaces at-will employment in Vienna

American employment law starts from freedom to end the relationship. Unless a contract, a collective bargaining agreement or a specific statute says otherwise, the employer can let someone go on a Tuesday afternoon for almost any reason, or none, and the employee can walk out just as freely. Most of the legal risk sits in the exceptions: discrimination, retaliation and breach of an individual promise.

Austrian law starts from the opposite end. Once probation is over, ending an employment requires notice measured in weeks or months, timed to land on particular calendar dates. The employee also has a route to challenge the dismissal itself, not only the way it was carried out. Ending a job is still the employer’s decision, but the timetable and the review process are set by statute.

For a US company employing in Austria, the practical effect is that a termination becomes a planned event. Budget for the notice period as a cost, decide the end date before the conversation, and check whether any special protection applies. The rest of this article goes through each of those points, first from the American side and then from the Austrian one, and ends with a checklist your HR team can use before any notice is handed to an employee in Austria.

In most US states, at-will status means a manager can end employment in a single meeting. Final pay follows state rules, benefits end under the plan terms, and any severance is a matter of policy or negotiation, often offered in exchange for a release of claims. There is no general federal duty to give notice to an individual employee.

The limits come from elsewhere. Federal and state anti-discrimination statutes forbid dismissals based on protected characteristics. Retaliation for whistleblowing or for taking protected leave is unlawful. Written contracts, offer letters and handbooks can create promises a court will enforce. Large layoffs can trigger advance-notice duties under the federal WARN Act and some state equivalents.

What American law generally does not do is ask whether a dismissal was fair in a social sense. A US court reviews whether the reason was unlawful, not whether the employee deserved a second chance. That is the point at which the Austrian system departs most sharply.

US habits also shape the paperwork. American offer letters often state at-will status in bold, add a 90-day introductory period and say nothing about notice. Carried over to Austria, each of those lines is either ineffective or misleading, and the employee’s written terms must describe the termination procedure instead. Our article on the written terms Austrian law requires lists what those terms have to contain. Rewriting the template once, before the first Austrian hire, saves a difficult conversation later.

Austria’s closest thing to at-will is probation, and it lasts one month at most. Within that month, employer and employee alike may walk away at once, with no notice and no stated reason. A collective agreement may shorten the trial but never lengthen it, so a 90-day probation clause copied from a US template has no effect beyond the first month.

After probation, an employer’s notice under § 20 of the Salaried Employees Act depends on completed service:

• up to two years of service: six weeks;
• from the third year: two months;
• from the sixth year: three months;
• from the 16th year: four months;
• from the 26th year: five months.

There is a second constraint on timing. By default, employer notice can only expire on one of four dates a year, the last day of each calendar quarter; a contract may add the 15th and the last day of every month as further end dates. That clause is worth having. Without it, a notice given in early April for an employee in their first year cannot take effect until 30 June.

A worked case makes the difference concrete. Suppose a US manager decides on 10 April to end the employment of an Austrian engineer with three years’ service. The notice period is two months, which would run to 10 June. Without the clause, the employment ends on 30 June, the next quarter-end. With a clause permitting the 15th or month-end, it ends on 15 June. In the US the same decision could have taken effect on 10 April.

Since 1 October 2021 the same scale applies to manual workers. Employees who resign owe one month’s notice, expiring at a month-end; that can be extended to as much as six months by agreement, but the employer’s notice may then not be shorter than the employee’s.

Where a business has a works council (Betriebsrat), the employer must inform it before every dismissal. The council has one week to respond, and a dismissal given before that week is up is void. A void notice has to be given again, which usually pushes the end date back to the next permitted quarter-end or month-end.

Separately, the employee may challenge the dismissal in the labour court within two weeks of receiving it, under § 105 of the Labour Constitution Act. Two grounds are available. The first is a forbidden motive, one of the reasons the statute rules out entirely. The second, open only once the employee has six months’ service, is social unfairness, or Sozialwidrigkeit. The full text of § 105 is on the federal legal information system.

The social-unfairness ground has no direct US equivalent. An American court asks whether the reason was unlawful; an Austrian labour court can also look at the effect of losing the job on the employee and set it against the employer’s reasons. That is why careful employers in Austria write down performance problems and restructuring decisions as they happen, rather than reconstructing them once a claim has been filed.

Some groups enjoy special protection, where a dismissal is barred or needs the court’s prior consent. They include pregnant employees, parents on Karenz (parental leave) and fathers taking the Papamonat, members of the works council, and disabled employees with protected status.

The parental protections last beyond the leave itself. For parental leave and the fathers’ month, protection continues until four weeks after the leave ends. Parental leave can run until the child’s second birthday, so a hire who becomes a parent can be protected from dismissal for well over two years.

Maternity protection itself covers the eight weeks before the expected birth and the eight weeks after it, extended to twelve after a premature or multiple birth or a caesarean. A father must give at least three months’ notice of a planned fathers’ month, which means the employer will usually know about that protection well before it starts.

For a US manager, the useful habit is to ask the question before deciding, not after. The Austrian employer, whether your own company or an EOR, holds the leave records and should confirm the employee’s status before any notice goes out. Finding out about a protected status after the notice has been handed over usually means starting again.

A restructuring that affects several people at once triggers the Frühwarnsystem, the early-warning system run by the AMS, Austria’s public employment service. The employer must tell the AMS no less than 30 days ahead of any notice if, within a 30-day period, it plans to dismiss:

• five or more employees in a business with 21 to 99 staff;
• at least 5% of the workforce in a business with 100 to 600 staff;
• 30 or more employees in a business with over 600 staff;
• five or more employees aged 50 or over, whatever the size of the business.

Notices given before the AMS is informed, or during the 30-day period, are void. The rules are summarised on the AMS early-warning page. A US company planning a reduction in force across several countries should treat the Austrian timetable as the long pole: the 30 days come first, and the notice periods and quarter-end dates run after them.

The thresholds are lower than many US managers expect. For a business with 40 employees in Austria, five dismissals within 30 days are enough to trigger the duty, and for staff over 50 the count of five applies whatever the size of the company.

Austria has no statutory lump-sum severance for contracts that began after 2002. The employer has already paid 1.53% of pay every month into the employee’s severance fund under Abfertigung neu, and after three contribution years an employee dismissed by the employer can take that balance as cash. The employer’s own end-of-job cost is the salary through the notice period. Our explainer on social insurance and the severance fund shows how the pot builds up.

Two other points tend to surprise American employers. If it is the employer who gives notice, a non-compete clause can no longer be enforced (the exception being a dismissal the employee brought on through serious misconduct), so it cannot be relied on after a restructuring; the details are in our article on non-competes in Austria.

With Employer of Record Austria as the legal employer, whether and when to part ways remains your call. We, as the legal employer, give the notice in the correct form, calculate the end date and final pay, handle the deregistration and severance-fund reporting, and tell you in advance about any protected status we know of.

Before any notice is handed over, run through these points with whoever holds the Austrian employment:

• completed years of service, which set the notice period;
• the earliest lawful end date, given the quarter-end rule and any 15th or month-end clause;
• whether a works council exists and has had its full week;
• pregnancy, parental leave, a planned fathers’ month or works council membership;
• whether the AMS early-warning thresholds are reached;
• any non-compete or confidentiality terms you expect to rely on afterwards.

For the full Austrian rules beyond the US comparison, read our guide to dismissal rules in Austria, and for the wider picture see the guide for US companies hiring in Austria.