Austrian legislation which excludes the payment of compensation where the employee himself terminates his contract of employment does not infringe the Community principle of freedom of movement for workers
The Austrian Law on Employees provides that employees are entitled to a compensation payment on termination of employment. However, there is no such entitlement if the employee gives notice, leaves prematurely for no important reason or bears responsibility for his premature dismissal.
By letter of 29 February 1996, Mr Graf terminated the contract of employment which he had had with Filzmoser since 3 August 1992, in order to move to Germany and take up new employment there from 1 May 1996. Filzmoser refused to pay Mr Graf the compensation on termination of employment equal to two months' salary which he was claiming from it under the Austrian legislation. Mr Graf brought proceedings against his former employer before the Landesgericht Wels for payment of the compensation. He contended in particular that the provision excluding entitlement to a compensation payment where the employee terminates the contract amounts to a perceptible restriction on freedom of movement for workers, within the meaning of the judgment of the Court of Justice in Bosman (Case C-415/93).
By judgment of 4 February 1996 the Landesgericht Wels dismissed Mr Graf's action.
Mr Graf brought an appeal before the Oberlandesgericht Linz, which decided to stay proceedings and to ask the Court of Justice: does the Community principle of freedom of movement for workers precludes national provisions which deny a worker entitlement to compensation on termination of employment if he terminates his contract of employment himself in order to take up employment in another Member State, when those provisions grant him entitlement to such compensation if the contract ends without the termination being at his own initiative or attributable to him?
The Court replied that Community law does not preclude such national provisions.
It stated that the provisions apply irrespective of the nationality of the worker concerned and deny compensation on termination of employment to all workers who end their contract of employment themselves in order to take up employment with a new employer, regardless of where the new employer is established. They therefore do not affect migrant workers to a greater extent than national workers and there is no risk of their placing the former in particular at a disadvantage.
The Court found finally that provisions of that kind are not such as to preclude or deter a worker from ending his contract of employment in order to take a job with another employer. The entitlement to compensation on termination of employment is not dependent on the worker's choosing whether or not to stay with his current employer but on a future and hypothetical event: the subsequent termination of his contract without such termination being at his own initiative or attributable to him. According to the Court, freedom of movement for workers is not hindered by legislation which grants such a compensation payment only where an uncertain and indirect possibility occurs and not where the employee terminates his contract of employment himself.
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