Austrian Supreme Court on the conflict-of-law of the general provisions on protection against dismissal in Austria

The employer is obliged to pay wages retroactively without having received any work in return. On the other side, the employee rarely wants to return to work after trial. This constellation often leads to settlement agreements.

Today’s many opportunities to work remotely recently created a legal controversy: should the general provisions on protection against dismissal in cross-border constellations be linked according to individual labour law (Art. 8 of the Rome I Regulation) or to works constitution law (territoriality principle)? 

The result is of considerable importance due to differences on the level of protection against dismissal even between EU member states. 

A recent ruling (9 ObA 94/24z) by the Austrian Supreme Court issued on 25 June 2025, provides more clarity. 

The plaintiff performed his duties as “Country Manager Austria” in Vienna, while he was organisationally integrated into the defendant's establishment in Germany. The defendant had no establishment in Austria. The plaintiff was dismissed on 30 November 2023. He challenged the dismissal.

The defendant disputed the applicability of Austrian law, arguing that German law had been agreed upon and that even under Austrian law, the conditions for contesting the dismissal were not met, as the defendant lacked an establishment in Austria.

The Austrian Supreme Court dismissed the plaintiff's action clarifying the conflict of law controversy. 

The Court reflected that Art. 8 of the Rome I Regulation on “individual employment contracts” only covers issues of contractual obligations, whereas the principle of territoriality is decisive for works constitution law and thus, in principle, also for the provisions of the Austrian Labour Constitution.

However, the Court reasoned that the meaning of “individual employment contracts” must be interpreted autonomously under EU law and concluded that in terms of conflict of laws, general protection against dismissal under Austrian law follows the statute of the employment contract (Art. 8 of the Rome I Regulation), notwithstanding its strongly collective legal conception. 

The Austrian provisions on general protection against dismissal require the employee to be integrated into an establishment with at least five employees located in Austria. Being integrated in the German establishment is not sufficient to invoke the Austrian provisions on protection against dismissal.

This ruling can be seen as good news for foreign companies with employees in Austria, as long as they do not run an establishment with at least five employees located in Austria. 

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Dr Andreas Weinzierl is the managing partner of Tramposch & Partner. Andreas has a strong focus on international aspects of law, from advising in cross-border situations to litigation.