The news often comes as a surprise: the business is sold, a site is spun off or a new tenant takes over. Employees then ask themselves whether their employment contract ends, whether they have to sign a new one and what will happen to salary, vacation or severance pay. The most important basic rule is: a genuine transfer of undertaking is normally not a professional fresh start from scratch.
In Austria, the Act on the Amendment of Employment Contract Law (Arbeitsvertragsrechts-Anpassungsgesetz) protects existing employment relationships. Nevertheless, collective agreements, works agreements, the organisation or contact persons may change. Anyone who wants to secure their claims should therefore not rely solely on the assurance “Everything will stay the same”, but should examine the transfer in a structured way. This guide shows what Employees in a business transfershould know and document.
When does a business transfer actually take place?
A business transfer, in simplified terms, occurs when a company, establishment or part of an establishment is transferred to a new owner and the economic unit essentially retains its identity. Typical cases include sale, leasing, change of lessee, merger or the takeover of a business unit.
The current Arbeiterkammer information on change of ownershipmentions, for example, sale, lease and merger. The WKO on business transferspoints out that a transfer can exist even without a direct contract between the old and the new operator. What matters is the actual continuation, not the title of an agreement.
Not every change of owner or management is automatically a business transfer. If only company shares are sold while the employer remains the same legal entity, there can be no change of employer under employment law. The replacement of management alone also does not terminate employment relationships.
Five indicators for an initial check
- Who is the legal employer before and after the key date?
- Are premises, equipment, machinery or essential operating assets taken over?
- Do the activity, customer base, organization or business purpose remain recognizably in place?
- Is a significant part of the workforce being retained?
- Does the operation continue without a prolonged interruption?
No single criterion is always decisive on its own. Whether an economic entity retains its identity depends on the specific business. In a labor-intensive service business, the takeover of the workforce may carry more weight than in an asset-intensive production business.
The employment contract continues automatically
If a transfer of business exists, the acquirer generally steps into the existing employment relationships. The legal basis can be found in §§ 3 et seq. of the Employment Contract Adjustment Act in the RIS. The employment relationship is not terminated and re-established, but continues with the new employer.
This has important consequences:
- Previous length of service is retained.
- The contractual entitlement to pay generally transfers.
- Outstanding vacation entitlements are not lost.
- Time credits and already accrued entitlements must continue to be taken into account.
- Entitlements such as Abfertigung Alt do not become due solely because of the transfer.
- The employment relationship will not be finally settled on the day of transfer.
A new employment contract is not required for this. If one is presented to you anyway, you should compare it line by line as you would a new offer. Our guide to Reviewing the employment contract and the Dienstzettel zeigt, worauf bei Aufgaben, Arbeitsort, Arbeitszeit und Klauseln zu achten ist.
Don't sign a new contract out of routine
A change of employer must be documented. However, that does not mean that employees have to agree to worse conditions. Problematic are formulations such as "replaces all previous agreements", a new start date, a new probationary period, a waiver of claims, or a more broadly worded transfer clause.
Compare in particular:
- Start date and credited prior service periods,
- Job title, duties and responsibilities,
- Workplace, remote work and possible transfers,
- Weekly hours, scheduling of working hours and overtime,
- Base salary, extra pay, allowances, commissions and bonus rules,
- Collective agreement and classification,
- Vacation, time credits and special arrangements,
- Non‑compete, repayment or confidentiality clauses.
Do not sign on the same day if changes are included. Request a marked comparison and take the documents with you for review. An acknowledgment of receipt of information is not the same as consent to a new contract; pay attention to the exact heading and wording.
What happens to salary and extra pay
The new employer generally assumes the contractual rights and obligations. An overpayment agreed in an individual contract does not automatically become a voluntary benefit merely because the business was sold. Regular allowances or commissions can also be part of the contract or of an established company practice.
The AK states that the collectively agreed pay due for normal working hours must not be reduced by a change of collective agreement. Those who were paid under a collective agreement retain their contractual entitlement to pay; a reduction generally requires an effective agreement.
Before the cut-off date, secure the most recent payslips, commission statements, target agreements and bonus commitments. With our contribution to checking the payslipyou can systematically record base salary, allowances and deductions.
The collective agreement can still change
Continuing the employment contract does not mean that all collective rules remain unchanged. If the collective agreement membership changes with the new employer, a different collective agreement may apply in future. This can affect, for example, minimum salaries, special payments, working time models, premiums or termination rules.
Therefore, you should not only compare the total salary. Check:
- Which job classification or employment group will apply going forward?
- Will prior service be fully credited for the classification?
- Will the premiums for night, Sunday or public-holiday work change?
- How are special payments calculated?
- Do different standard working hours or termination dates apply?
Our guide to Checking the collective agreement and classification helps with the comparison. If a change of collective agreement or works agreement leads to significant deteriorations, a special right to terminate may exist. The assessment is difficult and the deadline according to the AK is short; get advice before giving notice yourself.
Works agreements and company benefits
Works agreements may, depending on the situation, continue to apply, be replaced by rules in the new company, or trigger other legal consequences. This concerns, for example, flexitime, home office, time tracking, social benefits, bonuses, or the use of IT systems.
Even more difficult are benefits that were never properly documented: meal subsidies, parking, additional days off, or regular bonuses. Therefore record not only the employment contract but also the benefits that have actually been provided. What matters afterwards is whether they are based on an individual contract, a works agreement, a collective agreement, or merely a voluntary promise.
Special rules apply to company pensions. The WKO overview on the AVRAG states that there is even a right to object for certain company pension commitments that were not assumed. It is precisely in these cases that expert advice should be obtained before making any declaration.
Document vacation, time balances and severance pay
Outstanding vacation is not automatically paid out as a result of the business transfer, because the employment relationship does not end. The same basic principle applies to existing time balances and other ongoing claims. In practice, disputes often arise not about the legal entitlement but about incomplete data at the time of the transfer.
Therefore, create a personal record before the cut-off date:
- Remaining vacation by vacation year,
- Plus and minus hours,
- outstanding additional or overtime hours,
- travel expenses not yet settled,
- commissions, bonuses or target achievements,
- claims arising from Abfertigung Alt or the company pension fund,
- ongoing parental leave, educational part-time or other agreements.
If anything is unclear, request written confirmation. Keep documents private and in accordance with data protection; do not take any trade secrets or customers' personal data with you.
A dismissal because of the transfer is not permitted
Employees must not be dismissed simply because the business is being transferred. However, this is not an absolute ban on dismissals in connection with every sale. A dismissal may be permitted for other, genuinely organizational, economic or personal reasons.
What matters is the true reason. Warning signs include:
- The termination is explicitly justified by the takeover.
- Employees are asked to resign shortly before the transfer and reapply.
- Only people with more expensive legacy contracts are being singled out.
- The new operator immediately fills the same positions.
- Pressure is exerted to obtain an amicable termination.
Anyone who receives a termination close to the transfer must act quickly. The AK advises communicating the wish to continue without unnecessary delay and, in case of dispute, to consider filing a declaratory action. In addition, very short deadlines may apply for challenging dismissals. The general AK information on employer dismissal nennt häufig zwei Wochen, in manchen Fällen sogar nur eine Woche. Kontaktieren Sie daher sofort Betriebsrat, Gewerkschaft oder Arbeiterkammer.
Which information employees must receive
If there is no works council, the affected employees must be informed in advance in writing about the planned date, the reason, the legal, economic and social consequences as well as the planned measures. According to the WKO, the information can also be provided by a suitable, easily accessible notice. If a works council exists, it must be informed.
A useful notice should provide concrete answers:
- Which legal entity will become the new employer?
- Which establishment or part of the establishment is affected?
- On which day will the transfer take place?
- Will the collective agreement, works agreements, or the organization of work change?
- What measures are planned for personnel, sites, or activities?
- Who answers questions about pay, leave, and benefits?
A purely marketing message about 'new opportunities' does not replace this information. Collect and submit open questions in writing, preferably through the works council.
The ten-point document check
- Keep the employment contract and all amendments.
- Check the current employment statement and the original start date.
- Keep the last six payslips.
- Document remaining vacation, time balances, and outstanding overtime.
- Collect bonus, commission and target agreements.
- Record the applicable collective agreement and classification.
- Record relevant works agreements and individual commitments.
- Clarify the company pension and the pension fund.
- Read the written information on the transfer and mark any questions.
- Compare each new document with the previous version before signing.
Three typical practical cases
Case 1: An inn gets a new tenant
The business continues at the same location with the same kitchen, furnishings, offerings and staff. This clearly indicates a transfer of the business. Employment relationships generally continue; employees do not have to accept new, worse contracts solely because of the change of tenant.
Case 2: The shares of a company are sold
The company remains the employer; only its ownership structure changes. From a labor-law perspective, there may in fact be no change of employer. New owners or a new management may later implement organizational measures, but the share purchase itself does not terminate employment contracts.
Case 3: A cafeteria is re-tendered
Another operator takes over the premises, equipment and the ongoing cafeteria operations. Even without a direct contract between the old and the new operator, a transfer of business may be present. If personnel are dismissed at the same time and newly sought for identical tasks, the situation should be examined immediately.
Special case: apprentices
Apprenticeship relationships can also transfer to the successor business. In addition, the new authorized trainer must meet the requirements for providing the training. Updated in June 2026, the WKO-Information zu Betriebsübergang und Lehrlingen explains when changes to apprenticeship contracts are possible and what role the apprenticeship office plays.
Apprentices and legal guardians should clarify in writing the training authorization, the new trainer, the place of training and the continuation of the occupational profile. In case of problems, the apprenticeship office, the Chamber of Labour or the trade union should be involved at an early stage.
Frequently asked questions about the transfer of a business
Do I have to sign a new contract with the new owner?
No, the existing employment contract is generally automatically transferred in the event of a business transfer. A document regarding the change of employer can be useful. If it contains further changes, you should have them reviewed before signing.
Can I simply object to the transfer?
There is no general unrestricted right to object in Austria. Exceptions may apply in special situations, for example certain company pension cases. Do not make any statement before the specific case has been examined.
Will I receive my severance pay?
Not simply because of the business transfer, since the employment relationship does not end. Claims and entitlements generally continue. Which rules apply for the old or new severance scheme depends on the respective employment relationship.
Can the salary be reduced immediately?
The contractual entitlement to remuneration generally carries over. A change of collective agreement can alter certain framework conditions but does not automatically allow the reduction of a salary agreed in an individual contract. Have any specific amendment agreement reviewed.
What should I do in the event of a dismissal?
Contact the works council, trade union, or Chamber of Labour immediately. Dismissals due to the transfer are unlawful, although other grounds for termination may be possible. Because deadlines can be very short, do not wait for the next payroll or for the actual transfer.
Conclusion: Ensure continuity, assess changes individually
A business transfer does not, in principle, end the employment. The employment contract, length of service and many entitlements continue with the new employer. The practical risks lie in poorly documented balances, a change of collective agreement, altered works agreements, or new documents that regulate more than the mere change of employer.
Your next step: Create a unilateral inventory before the transfer listing start date, role, workplace, hours, pay, classification, vacation, time balances, bonus and pension provision. Compare every later piece of information to it. In case of dismissal, deterioration or unclear pension arrangements, seek individual advice immediately.
