Skip to main content

NEW Severance Pay Scheme

On termination of their employment relationship, Austrian employees have for decades been legally entitled to severance pay, subject to certain conditions.

The idea underpinning this statutory provision was, and still is, that in the event of loss of employment through no fault on the part of the employee, this severance pay will serve to provide a measure of interim financing to cover everyday expenditure.

How you can benefit from the NEW severance pay scheme

  • 100% capital guarantee on contributions paid in – It safeguards that your severance pay entitlement will in no case be lower than the sum of contributions paid by the employer.
  • Tax advantages – You profit from the capital gains tax free investment of your credit balance and, in the event of a single pay-out, from the favourable taxation rate of 6%.

Who is subject to the NEW severance pay scheme?

All employees who entered into a (new) employment relationship as of January 1, 2003 are subject to the new severance pay regulations and are automatically registered with the relevant provision fund:

  • Workers and salaried employees
  • Part-time and marginal workers
  • Apprentices
  • Vacation employees
  • Independent contractors
  • etc.

Employment relationships concluded while the OLD severance pay regulations were in force continue to be subject to those provisions.
If an employee – so far subject to the OLD severance pay scheme - changes jobs within a company, the new employment relationship will continue to be subject to the OLD severance pay scheme provisions.

Scope of the new severance pay scheme

The provisions of the Corporate Staff and Self-Employment Provision Act (BMSVG) are applicable to:

  • employment relationships governed by a private-law contract and entered into after January 1, 2003;
  • employment relationships governed by a private-law contract and entered into before January 1, 2003 (valid previous employment relationships) if both employer and employee have agreed in writing, on an individual level, to transition to a corporate staff and self-employment provision fund.

As of January 1, 2008, the provisions of the Corporate Staff and Self-Employment Provision Act have also been applicable to

  • quasi-freelance employment relationships pursuant to Section 4, Para 4, General Social Insurance Act (ASVG)
  • quasi-freelance employment relationships of marginal part-timers, as well as
  • quasi-freelance employment relationships of members of the board pursuant to Section 4, Para 1 Z 6, General Social Insurance Act (ASVG)

The provisions of the Corporate Staff and Self-Employment Provision Act are also applicable to apprentices and the marginally employed.

The following employment relationships are not subject to the Corporate Staff and Self-Employment Provision Act:

  • between employees and federal provinces, municipal councils and associations of municipal councils
  • between employees and the Federal Government, if subject to civil service law
  • between employees and foundations, institutions, funds or other entities subject to the Contractual Employment Act 1948
  • subject to a collective bargaining agreement pursuant to the Federal Forestry Act 1996
  • of agricultural and forestry workers pursuant to the Agricultural Labour Act 1984