Regulation of the employment relationship in Austrian law takes account of the freedom of entrepreneurs to take specifically business-related decisions themselves. The entrepreneur already possesses such a right on the basis of the freedom to practise a trade or occupation (Erwerbsfreiheit) which is constitutionally guaranteed under Article 6 of the 1867 Basic Law (Staatsgrundgesetz). In particular, the presence of employee representatives on the supervisory board of joint-stock companies is not parity-based (see redundancies notification procedure), which means that the capital-owning side is able, ultimately, to take decisions against the will of the employee side. The right of the entrepreneur (owner of the enterprise) to make the final decision in business matters is, however, also guaranteed with respect to the employment relationship itself: the decision as to whether an establishment is to be closed down, transferred to a different owner, expanded or altered is purely a matter for the entrepreneur. Dismissals resulting from an entrepreneur's autonomous decision to close down an establishment are, as a general principle, deemed to be socially justified (although, in certain circumstances, the employee side has the right to impose the provision of a social plan (redundancy programme) to mitigate the disadvantageous effects for individual employees, to require the employer to find people alternative jobs within the establishment and also, in collaboration with the Employment Service and the employer, to develop strategies which exclude social hardship as far as possible (see redundancies notification procedure). It has to be presumed that in some cases these protective mechanisms could be enough to make entrepreneurs change their minds about their original business decisions. However, even the protection against rationalization provided for by labour law is basically just one more external condition, among many others, which employers must observe in implementing their entrepreneurial decisions. Whether these regulations are too restrictive or not restrictive enough is a major policy issue which lies beyond our scope here.

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.