Back to Europe Rankings

AUSTRIA: An Introduction to Employment

View Firm profile

Overview of the Current Developments and Trends in Austrian Employment Law 

Current economic conditions affecting clients or the legal profession 

Inflation in Austria is at the highest level for 70 years (due to  increased energy costs which severely affect many - especially manufacturing - companies)  and the majority of employers report a lack of skilled workers. Job opportunities for skilled workers, as reported to the national unemployment office (AMS), are at an all-time high.

The level of activity, trends and developments in Employment Law 

Home Office practice and legal framework

The exceptional circumstances created by the COVID-19 pandemic have had lasting effects on Austrian employment practice. Temporary emergency measures with a fixed duration were used to help employers and employees get through the worst of the pandemic, but additional provisions have become a permanent part of the legal system due to the popularity of working from home where possible. Thus, office work has not returned to pre-pandemic levels. This has led to a greater focus on data protection as well as worker protection in the home office. The "hybrid work" model combining home office and office work brings with it some unique problems as neither the employer nor the work inspectorate are allowed to inspect an employee's home without the employee's consent, for privacy reasons. It is important to ensure that employees have been demonstrably instructed to comply with occupational health and safety standards as well as with specific data protection guidance, to avoid administrative fines imposed on the employer in case of non-compliance. In addition, Austrian law requires employers to either provide the digital equipment necessary for the home office or to reimburse employees for using their private equipment. The provision of other equipment may be ruled out, which makes framework agreements containing rights and duties for both parties  increasingly common and sees them also used to determine working time regulations and recording obligations in the case of hybrid work.

New legislation that will have essential effects on employers 

Whistleblowing legislation 

After a sizeable delay, Austria has finally passed the national transposition of the European Whistleblower Directive. Henceforth, companies with 50 or more employees are obligated to set up internal channels (ie a dedicated mail address or physical mailbox) to enable whistleblowers to report breaches and misconduct by their employer (in certain areas of law) to an internal channel. While companies with between 50 and 249 employees have to have set up said channels by 17 December 2023, companies with 250 or more employees only have until 25 August 2023 (ie a six-month grace period after the law came into effect).

Employees that have filed a justified whistleblowing report and their supporters (eg members of the works council) are granted special protection. They may not be subject to retaliatory actions (ie disciplinary actions, negative performance evaluations, bullying etc.), or else administrative penalties of up to EUR20.000 (or EUR 40.000 if repeated) could be imposed. In the case of dismissal having its root cause in the filing of a justified report the employee could sue for unfair dismissal. Anonymous reporting, if allowed by the employer must be granted the same protection as identified informants.

While the new Austrian law (HinweisgeberInnenschutzesetz) does not contain explicit sanctions for failing to establish internal reporting channels, the legislative parties assumed that it is in the interest of the respective organisation to make the internal system so attractive that whistleblowers primarily turn to them and do not go public via external reporting channels. However, as the whistleblowing law only covers specific groups of breaches, it may be necessary to conclude a works council agreement if the employer includes further topics.

Sustainability Directive and national legislation

Paying attention to "ESG" criteria will become a major focus for the majority of European (and thus also Austrian) companies, as they will be required to provide information on how climate and environmentally friendly their company is, how good the applicable labor and social protection is, and how the growing regulatory dynamic is implemented.

These reporting obligations are part of the EU's new Corporate Sustainability Reporting Directive (CSRD) which was passed in November 2022. The reporting standards are to be applied as binding and will be mandatory for "large" and listed companies  from 2024, while specifically tailored standards for SME's are going to be applicable from 2026 onwards. Company reports will be evaluated by rating agencies and result in an "ESG-rating" which will be a central basis for future decisions of stakeholders and potential investors. In addition to key financial figures, performance in the above-mentioned sustainability related areas (environment, social, compliance) are therefore expected to be crucial for the middle and long-term success of companies in the market. Hence, a substantial volume of Austrian companies are already preparing the required inventory and determining essential goals in order to begin reporting early. Hence, the timely examination of existing regulations, required possible (unilateral) adjustments etc is therefore recommended to stay ahead of the competition.

ECJ judgement on rest periods 

Contrary to the (former) prevailing opinion in Austria, in a recent decision (C-477/21) the ECJ has stated that the right to daily rest periods and the right to weekly rest periods of employees are two distinct and separate rights. As a consequence a rest period cannot be credited towards both the daily as well as the weekly rest period due to their different goals. Even though Austria has implemented the right to a weekly rest period of 36 hours (which is more than the combined minimum daily rest period (11 hours) and weekly rest period (24 hours)) the understanding of the ECJ ruling implies that a daily rest period has to be granted in addition to the weekly rest period.

In Austrian practice this would mean that any employee working on a Saturday until 6:00 p.m. – as is common in retail for example – had to be granted a daily rest period of 11 hours followed by the weekly rest period of 36 hours resulting in an uninterrupted rest period of 47 hours. Said employee might therefore only start working again on Monday at 5 p.m. Hence, as this might be a basis for lawsuits by workers that have been employed in violation of these principles in the past, this will probably also be a basis for amendments of the Austrian weekly rest periods regulations to avoid  accumulation of hours. 

Potential hurdles or difficulties faced by clients and how these can be overcome 

Social security hurdles for flexible international work

30 June 2023 marks the prospective end of the transitionary period of the "legislation applicable to telework" by the European Administrative Commission. This guidance was put into place to ease employers over the sharp rise of COVID-19 related home working and to prevent mandatory changes of the applicable social security system solely caused by employees suddenly working from home rather than on-site in a member state different from their home state, negatively impacting both employers and employees.

With the expiration of the transitionary measures, the previous legal rules for determining the applicable social system will come back into effect. This means that employees working 25% or more of their total working hours from their home state will fall under the respective social security system even if performing a majority of their work on-site in a different member state. Employers will have until the end of June to decide whether to avoid the issue by cutting down the allowed home office time to less than 25% (or one day per week) which could prove difficult since many employees have gotten a taste for working from home), or to figure out a legally compliant solution when dealing with a multitude of different social security systems and the rising demand by employees for flexible work locations (like with "workation").

Special rules in this regard are applicable between Austria and Germany, and with the Czech Republic even after 30 June 2023 based on bilateral framework agreements broadening the relevant 25% threshold, so that the individual situation and countries involved in such cross border work will have to be checked.