Principle which in Austria represents an important criterion with respect to pay increases both in the public service and in the private sector (in the case of white-collar workers in manufacturing industry).
In the case of career public servants, the seniority principle is regulated by the Career Public Service Pay Act (Gehaltsgesetz), which essentially differentiates between pay categories (Besoldungsgruppen) deriving from the various branches of the public service in which they are employed (see pay of career public servants) and pay grades based on particular job demands and skill requirements. These pay grades are subdivided into pay bands (Gehaltsstufen) defined by length of service, and career public servants move up every two years into the next-higher band within their pay grade (Vorrückung, i.e. automatic increment). The seniority principle is similarly applied to pay in the case of contract public employees under the Contract Public Employees Act (Vertragsbedienstetengesetz).
In the private sector, the principle is established for white-collar workers in manufacturing industry by collective agreement. In this case, each pay grade (defined on the basis of job demands and skill requirements) is subdivided into several bands called Verwendungsgruppenjahre (years of service in grade), representing the individual employee's length of service with the employer concerned (Betriebszugehörigkeit) in that grade. The longer an individual has worked for the same employer, the higher he or she rises within the pay grade, with an automatic increment every two years (Biennalsprung). In 1997 this system of fixing salaries by collective agreement underwent a fundamental reform which weakened the importance of the seniority principle by increasing minimum starting salaries and levelling-out the effect of length of service on progressive salary increases. From the unions' point of view, the advantages of this reform lie in the protection against unemployment which it offers for older employees and the possibility of higher starting salaries which it offers for younger employees. From the employers' point of view, they lie in having a more directly performance-related salary structure.