Employment Brief: Clarification of termination rules for foreign employers in Austria

A recent ruling by the Austrian Supreme Court (9 ObA 94/24z on 25.06.2025) brings much-needed clarity regarding the applicability of termination protection rules for foreign employers with employees working in Austria – a development that is particularly welcome in today’s increasingly cross-border work environments. The Court clarified that the general protection against termination under Section 105 paras 3–7 and Section 107 of the Arbeitsverfassungsgesetz (Labour Constitution Act) applies only if a business unit (Betrieb) exists in Austria.

The case concerned an employee who worked permanently from Austria but was organisationally and hierarchically integrated into the employer’s German business unit (Betrieb). Importantly, the employer had no business unit located in Austria. The employee challenged the termination, claiming unfair dismissal (Sozialwidrigkeit) and alleging prohibited motives (verpöntes Motiv).

The Austrian Supreme Court upheld the decisions of the lower courts and ruled that, although general termination protection follows the governing law of the employment contract (in this case Austrian law), the Austrian general protection against termination under Sections 105 paras 3–7 and 107 Arbeitsverfassungsgesetz (Labour Constitution Act) nevertheless requires the existence of a business unit located in Austria – even in cross-border situations.

As a result, it is now clear that the existence of a business unit (Betrieb) in Austria is a key substantive requirement for the Austrian general termination protection rules to apply.