10/27/2014 Possibility of termination of fixed-term employment contracts

A fixed-term employment contract generally excludes the possibility of termination of a working contract. Usually, such a contract ends with time lapse and doesn’t require any further declarations (i.e. declaration of termination).
Under special conditions it is still possible to include a termination-clause in a fixed-term employment contract. These conditions are:

  • On the one hand, the duration of the fixed-term employment contract and the possibility to terminate have to be in an adequate relation.
  • On the other hand, the termination regulations have to be compliant with the legal and collective agreement regulations.

Agreeing on a possibility of termination in a fixed-term contract which has the duration of one year has been seen as adequate. Noteworthy: The shorter the duration of the fixed-term contract, the more likely it is that agreeing on the possibility of termination will be seen as unreasonable.

In a current case the Supreme Court had to decide, which consequences a generally permitted possibility of termination has, if it doesn’t meet the legal respectively the collective agreement regulations regarding termination (OGH 23.7.2014, 8 ObA 3/142). This decision stated that the violation of law regarding termination periods does not generally mean that termination is not possible. In fact in such a situation the same legal consequences arise, as if it would be a permanent contract. If the termination periods respectively termination dates are not met, than this employee is to be treated as if the termination would have happened according to the rules (termination compensation).
To sum it up, in a fixed-term employment it is possible to agree on a termination of contract, if it seems reasonable in relation to the duration of the contract. In such a case the legal and collective agreement’s regulations regarding termination need to be considered.

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