Increasing flexibility through working from home and cross-border working in combination with the necessary (sales) activities of companies in countries where they do not have a permanent establishment make it easier for foreign companies to employ staff in Austria. But what is the legal situation in the event of dismissals by the foreign employer - does Austrian protection against dismissal automatically apply or can companies invoke other provisions? A recent judgement by the Austrian Supreme Court (OGH) now provides more clarity on this.
The specific case: Austrian domicile, German employer
A manager living in Austria worked as „Country Manager Austria“ for a German company that did not have a permanent establishment in Austria. He worked entirely from his home office at his secondary residence in Vienna, but was fully integrated into the organisational and hierarchical structures of the company in Germany.
Following the dismissal by the employer, the manager filed a complaint with the Labour and Social Court of Vienna and invoked the Austrian protection against dismissal - in particular the invalidity of the dismissal due to lack of motive and social unlawfulness.
The Supreme Court's decision: No general protection against dismissal without a domestic business
The Supreme Court confirmed the dismissal of the claim and held that
- Austrian labour law is generally applicable if the work is predominantly carried out in Austria - as in this case.
- Nevertheless, the general protection against dismissal under Austrian labour law does not apply if the employer does not have a business in Austria in which at least five employees are employed.
- The decisive factor here is the material existence of a domestic business. If there is no such establishment, the dismissal cannot be contested on the grounds of motive or social unlawfulness.
The Supreme Court based its decision on European law - in particular the Rome I Regulation, which regulates the application of the law in cross-border employment relationships.
What does this mean in practice?
The judgement clarifies: Even if Austrian labour law applies, there is no entitlement to general protection against dismissal if the foreign employer does not maintain a business with employees in Austria.
- For employees, this means that it is only possible to challenge a dismissal on the grounds of motive or social unlawfulness if the employer maintains operational structures with at least five employees in Austria.
- For employers - especially internationally active companies without a branch in Austria - the decision brings legal certainty with regard to the dismissal of home office employees working abroad.
The increasing internationalisation of the world of work also poses new challenges for labour law. This ruling by the Supreme Court clearly shows that the existence of a domestic business is a key requirement for protection against unfair dismissal - even if Austrian labour law applies.
For companies with employees working across borders, it is therefore advisable to carefully examine labour law, especially when drafting contracts and terminating employment relationships. We are happy to support you in structuring your employment relationships in a legally compliant manner - even in international constellations.
Status: 01.10.2025
Source: Kraft & Kronberger specialised publications
Photo: Anthony Beck
