Severance pay (labor law)
The severance payment is a term from labor law in Austria . It is a one-off payment upon termination of an employment relationship.
Current system
Since January 1, 2003, there has been a new model for severance payments for employees in Austria with the employee pension fund, the common term. The new law applies to all employment relationships that begin from this point in time and obliges the employer to pay 1.53% into an employee provision fund based on the employee's monthly salary.
The employer is free to choose the pension fund. Therefore, if the employee changes employer, they can transfer the entitlements they have earned up to that point to the new pension fund (rucksack principle).
If the contribution from the employee pension fund is paid out, the accrued entitlement is distributed at a preferential tax rate. The payment can be made not only after termination, but also after termination of the employment relationship for other reasons (e.g. expiry of the period or reaching the pension limit) and can therefore be viewed as a further pension pillar. When the employee retires, they can have the money paid out from their employee pension fund as a supplementary pension .
An exception to the usual payment method in the event of termination by the employer is the termination of the employment relationship due to reaching the age limit, because in this case the severance payment must also be paid. The severance payment is also due when leaving due to maternity protection after the birth of a child.
Old clearance model
After the First World War , a severance payment law was introduced, which provides for the entitlement to a fixed multiple of the average monthly salary depending on the length of employment - except in the case of employee resignation. Until June 30, 1979, this only applied to salaried employees and not to employees in the employment relationship . From July 1, 1979, the Workers' Severance Pay Act brought about equality. The amount varies for a duration of the employment relationship of three years from a monthly salary to twelve monthly salaries for a period of employment of 25 years with the same employer, whereby the aliquot parts of the special payments (13th and 14th salary) are also included in each case. For tax purposes, the payments were only taxable at a very low fixed tax rate.
However, this type of handling can sometimes cause financial difficulties for small businesses as well. For this reason, it is possible (but not mandatory) in all companies to set up so-called severance pay reserves . Parts had to be assessed as securities. The additions to these reserves were therefore carried out to reduce tax.
This right still applies to all employment relationships concluded up to December 31, 2002, provided the employee has not voluntarily switched to the new system. That is why today we speak of an employment relationship based on the old severance payment model .
The reason for the change was that the severance pay right led to inflexibility (an employee who changes employer would lose his entitlements) and in some industries the minimum service period of three years was rarely achieved, which was felt to be unfair.
See also
- in German law the severance payment
Web links
Individual evidence
- ↑ Maternity / paternity exit from the Chamber of Labor website, accessed on April 20, 2016
- ↑ Federal Law Gazette No. 107/1979
