Collective Dismissal Protection Applies Only to Domestic Companies

Jul 18, 2025 Benn-Ibler Rechtsanwälte

A recent ruling by the Austrian Supreme Court (Oberster Gerichtshof, OGH) has provided clarification that, in cross-border job arrangements, collective dismissal protections require the presence of a business establishment in Austria.

Foreign employment

The plaintiff was employed by the defendant and carried out his duties on a permanent basis from his secondary residence in Austria. Nevertheless, the employee was both hierarchically and organizationally integrated into the defendant's operations in Germany. Notably, the defendant company did not maintain any business presence in Austria.

The plaintiff was terminated from employment and is challenging the dismissal on the basis of alleged improper motives pursuant to Section 105(3)(1)(i) of the Austrian Labor Constitution Act (Arbeitsverfassungsgesetz, hereinafter ArbVG), as well as claims of social unfairness under Section 105(3)(2) of the ArbVG. As the plaintiff conducted their work from a secondary residence in Vienna, Austrian law, including the provisions of the ArbVG, applies to the employment relationship in accordance with the Rome I Regulation.

The claim was dismissed by the court of first instance.

In accordance with Article 8(2) of the Rome I Regulation, Austrian labour law would generally be applicable. Nevertheless, the plaintiff did not qualify for protection against dismissal under Sections 105 et seq. of the ArbVG, as their employment was not with a domestic entity employing at least five individuals.

Cross-border labour law disputes require domestic presence

The OGH, too, denied the plaintiff's appeal, stating that collective protection against dismissal, as outlined in Sections 105(3) to (7) and 107 of the ArbVG is subject to the law that applies to the employment contract.

The OGH determined that the presence of a domestic business is a fundamental requirement for collective protection against dismissal to apply. The court further declined to extend this protection analogously in situations where an employment contract is governed by Austrian contract law, but the employee is integrated into a foreign enterprise. The responsibility for exercising collective protection against dismissal rests primarily with the works council.

OGH 9 ObA 94/24z (25 June 2025)