Career
What is the "New" Severance Pay? Rights and Claims in Austria
- Severance pay
- Austria
- Labor Law
- Company Pension
- Career
The "New" Severance Pay provides employees with a company pension, which receives contributions from the employer from the second month of employment and is retained regardless of how the employment relationship ends.
Basics of the "new" severance
Since January 1, 2003, the "new severance" has been valid in Austria for new employment relationships. Since January 1, 2008, it also applies to independent contractors. The system includes an occupational pension plan, supported by monthly employer contributions.
Contribution obligation and management
From the second month after the start of an employment relationship, the employer is required to pay 1.53% of the employee's gross salary to the Austrian Health Insurance Fund (ÖGK). These contributions are forwarded to an Occupational Provision Fund (BVK), which manages the funds.
Rights and claims of employees
A key advantage of the system is the independence of entitlement retention from the type of employment termination. The entitlement remains even in cases of resignation or wrongful dismissal.
After three years of contributions, severance can be claimed under certain conditions, such as termination by the employer.
Tax aspects and transferability
In the case of a lump-sum severance payment, it is subject to an income tax of 6%. Additionally, the severance entitlement remains with an employer change and is transferred to the new employer's BVK.
Frequently Asked Questions
After at least three years of contributions, payout can be requested for certain types of employment termination.
Yes, the entitlement is transferred to the new employer's Occupational Provision Fund.
Severance is subject to an income tax of 6% when paid out as a lump sum.
Yes, the employer's contribution of 1.53% of the gross salary also includes special payments.
This post was AI-assisted and editorially reviewed.
Sources
This article provides an overview to the best of our knowledge (as of July 2026) and does not replace legal advice. Binding information on labor law and collective agreements is provided by the Chamber of Labor and the relevant union.
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