Contract by which one party (the employee) undertakes to perform work for an amount of time which may be specified or not for the other party (the employer), in a relationship of subordination (persönlicher Abhängigkeit) to the latter (see employee). The essential criterion of a contract of employment is therefore the obligation to perform the activity concerned in a position of subordination to the employer. The contract establishes an employment relationship (Arbeitsverhältnis), which is classed as a permanent contractual relationship and under which the most important obligations created are the employee's duty to work and duty of loyalty and the employer's duty to pay remuneration (although general contract law in Austria does not require the existence of a consideration) and duty of care, with corresponding rights for the other side in each case.

A contract of employment may be concluded either as a fixed-term contract (befristeter Arbeitsvertrag) or as a contract of unspecified duration (unbefristeter Arbeitsvertrag). In the former case, the end of the employment relationship is established contractually by reference either to a particular date or to a circumstance which will occur in the future and for which it is known that it will occur during an identifiable period. In the second case, no specified time is agreed for the termination of the contract. The employment relationship created by the contract will therefore not come to an end as a result of the passage of time but, as a rule, through the effect of one of the parties giving notice of intent to end this legal relationship, referred to as unilateral termination.

Unlike some other legal systems, Austrian labour law permits the initial conclusion of fixed-term employment contracts without any restrictions (although if the fixed term agreed is longer than five years the employee is free to terminate the contract once five years have elapsed). However, the repeated conclusion of such a contract with the same employee is lawful only if it can be justified on economic or social grounds, whose existence is given a very narrow interpretation by the courts. Failing such grounds, a chain of two or more directly consecutive fixed-term contracts (Kettenarbeitsverträge) is deemed to constitute a permanent contract of unspecified duration dating back to the start of the first contract concluded.

(It should be noted that, in Austrian law, the term Dienstvertrag is used synonymously with Arbeitsvertrag to mean a contract of employment or contract of service applying to an employee, as well as in its meaning in German law of a contract for services applying to a self-employed person.)

Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.