Employer Information: Longer Termination Periods for Austrian Workers from January 1st, 2021.

Due to the harmonization of the termination provisions for blue-collar and white-collar workers from January 1st, 2021, new notice dates and periods must be observed when employing workers. If a worker is dismissed from 2021 onwards (for example unchanged according to the regulations that apply until December 31st, 2020), this can result in a claim for dismissal compensation. Furthermore, from 2021 onwards, only quarterly termination dates are provided by law. A different, forward-looking service contract agreement on the 15th and last of each month is recommended. As always, special provisions deviating from the statutory provisions in industry-specific collective agreements or individual contractual provisions as well as special provisions in the case of employment due to a temporary need, insofar as these are legally permissible, must be observed.

We have summarized the most important changes and related recommendations for managing directors, board members and HR managers, based on our initial information in the LBG company newsletter from spring 2019.

The legal harmonization of workers and employees

It has long been a goal of legislature to adapt and harmonize the provisions for blue-collar and white-collar workers. In the course of legal equality, the “employee adjustment package” brought the legal status of these two groups of employees in the area of continued pay in the event of illness or accident as early as July 1st, 2018. As of January 1st, 2021, there will now be a further alignment between blue-collar and white-collar workers with regard to the termination provisions. So far, different regulations have applied to the two groups of employees, namely the provisions of the Salaried Employees Act for salaried employees and the provisions of the Trade Regulations 1959 and the General Civil Code (ABGB) for workers.

Which changes have to be considered?

On January 1st, 2021, the termination provisions of the ABGB (§§ 1159 - 1159c ABGB) and the GewO 1959 (§ 77 GewO 1859) cease to apply. Instead, the termination provisions for salaried employees (Section 20 AngG) will also be added to the ABGB (Section 1159 ABGB new) and will therefore also apply to workers in the future. Specifically, this means the following for dismissals by and by workers from January 1st, 2021:

Termination by the employer: In the absence of a more favorable agreement for the worker, the employer can terminate the employment relationship at the end of each calendar quarter (termination date) by giving notice in advance. The notice period is six weeks and increases to two months after the completed second year of service, to three months after the completed fifth year of service, to four months after the completed fifteenth year of service and to five months after the completed twenty-fifth year of service. This period of notice cannot be reduced to below the specified duration by agreement (prohibition of deterioration), but longer periods can be agreed. It can also be agreed that the notice period ends on the fifteenth or the last of the calendar month.
Termination by the worker: In the absence of an agreement that is more favorable to the worker (agreements to the detriment of the worker are not permitted), he can terminate the employment relationship with the last day of a calendar month (notice date) with a one-month notice period. This notice period can be extended up to six months by agreement, but the period to be observed by the employer must not be shorter than the notice period agreed with the worker.

LBG Tip: It is worth considering, depending on the operational requirements, of making use of the legally granted option of agreeing a termination option on the 15th and the end of the month, as it is already common practice with the employment contracts of employees. The new passage could already be formulated in advance as follows: "The period of notice is based on the legal regulations, whereby the employment relationship can be terminated on both sides from January 1st, 2021 on the 15th or the last of each calendar month."

For the delimitation of dismissals between December 31st, 2020 and January 1st, 2021, the statement of the termination and not the receipt of the termination (e.g. receipt of the written notice of termination to the worker by post) is relevant (Section 1503 (10) ABGB).

Exceptions to the new regulations

For sectors in which seasonal businesses predominate (e.g. tourism or construction), collective agreements can exceptionally stipulate different regulations. In this regard, exceptions to the new notice periods and dates for workers made in individual industry collective agreements must be taken into account.

If the employment relationship is only agreed for the time of a temporary need, it can be terminated by both parties at any time during the first month with a one-week notice period.

Handling of the new regulations in connection with existing collective and service contracts

Since additions to the statutory provisions in collective agreements or service contracts are common, the question arises of how to deal with these more individual, already existing agreements from January 1st, 2021.

Regulations that are advantageous for the worker: If the more individual regulations from the collective agreement or service contract for workers are better than the statutory termination provisions applicable from January 1, 2021st, the more individual regulations will continue to apply in the future.
Regulations that are disadvantageous for the worker: If the more individual regulations discriminate against workers from January 1st, 2021 (therefore do not meet the new legal requirements), the statutory termination provisions must be applied instead. An adjustment of collective or service contract termination provisions is not required by law, which is why there is basically no further need for action. Rather, it is sufficient to refer to the statutory provisions in the event of dismissals.

LBG tip: If the end of the (working) week was previously agreed as the termination date for the worker in a collective agreement or an employment contract, this option will no longer apply from January 1st, 2021, because it puts the worker worse off than is legally stipulated. If employers want to use more closely spaced termination dates in the future, they must - unless the applicable collective agreement is adjusted by the social partners anyway - agree on the possibility of termination with their employees on the 15th and the last day of the month (see above).

If you have any further questions about the new termination regulations for workers, our advisors at our 31 Austria-wide LBG locations will be happy to help you.

October 20th, 2020 I LBG I Author: Sascha Springer

Contact & Advice: This information naturally shows basic aspects of the topic - for completeness and correctness no guarantee can be given despite careful preparation. LBG will gladly advise you in your individual situation. Please contact one of our 31 Austria-wide locations (www.lbg.at) or welcome@lbg.at - we will gladly bring you together with one of our experts, who is very familiar with your request.

In the field of “personnel accounting, wage tax, social insurance and labor law” LBG is one of the most important consulting companies for employers in Austria with more than 100 qualified personnel calculators and certified labor and social security law experts. We are pleased to support you in questions regarding income tax, social security and labor law issues in connection with the employment of employees, temporary workers, seasonal workers, expatriates and contractors in day-to-day business, carry out ongoing personnel accounting for you, and prepare employee-related business evaluations for employers and take on diverse tasks in the area of human resources.

We advise a wide variety of industries, company sizes and legal forms; in the advisory field "wage tax, social security, labor law, personnel accounting" including a large number of companies between 1 - 50 employees and a number of well-known Austrian and Austrian-based international companies as well as public clients each with several 100 employees, whereby employers with up to 2.000 employees are also among our clients. In total, LBG carries out monthly personnel accounting for around 30.000 employees.