A works council may only be established in those companies in which at least five employees are permanently employed. It is a right, but not an obligation to establish a works council.
Existence of a works council
In companies where a works council ("Betriebsrat") has been set up a special procedure is to be followed: The employer must inform the works council before any ordinary dismissal ("Kündigung"). The works council may comment on the intended termination within one week. If this procedure is not followed, the termination is legally invalid. In case of a dismissal without notice ("Entlassung") the works council must be informed immediately thereafter.
If no works council has been established in a company (despite its sufficient size as set out above) or if the works council did not explicitly agree to the termination, the employee may contest the termination in court within two weeks of receipt.
Challenge in court: Socially unjustified?
In addition to provisions for the protection of special groups [employees on military or civilian service, pregnant women, employees on leave under the Maternity Protection Act (MSchG) or the Paternity Leave Act (VKG), employees with disabilities and employee representatives] a termination is socially unjustified if it affects the essential interests of the employee and the dismissed employee has already been employed for six months. This concept refers to specific considerations for terminations caused by incapacity, misconduct, or business reasons.
The essential interests of the employee are in particular affected if the employee has reached or exceeded a certain age at the termination (50). Both the situation on the labour market and whether it can be expected that the dismissed employee will have a chance to a reasonable and an equivalent job within a reasonable period must be considered.
Thereby the family income (earned income together with the partner) is to be taken into account, too. In light of the partner’s high income no significant deterioration of the economic situation of the employee is to be feared. The Austrian Supreme Court (OGH 8 ObA 71/22g) ruled that there was no material impairment of interests if the employee and his wife had an income of EUR 10,333.42 gross per month despite a loss of income of around 30% due to the termination of the employment contract, considering monthly family expenses of EUR 3,637.67.
Even if the dismissal is socially unjustified, it may nevertheless be legally valid if the employer proves that there are personal reasons of the employee (e.g. breach of duty, considerable underperformance, very long sick leave, unwillingness to cooperate) or operational requirements that prevent the employee's continued employment (e.g. rationalisation, reorganisation, decline in orders). In case of operational requirements, the employer must do everything to find another workplace before terminating the work contract.
A dismissal may also be legally invalid if it is based on age-discriminatory reasons.