AMS Early Warning System: Deadlines and Risks in Workforce Reductions

What is the AMS early warning system?

The early warning system (“AMS-Frühwarnsystem”) under Section 45a of the Austrian Labour Market Promotion Act (Arbeitsmarktförderungsgesetz, AMFG) requires companies to notify the competent AMS office in advance of certain planned dismissals or other terminations initiated by the employer. This enables the AMS to support affected employees at an early stage in finding new employment or to offer training measures.

For companies, this means one thing above all: anyone planning a larger workforce reduction should incorporate the statutory requirements into the planning process at an early stage.

When is notification required?

The notification obligation applies if a specified number of employment relationships is to be terminated within a 30-day period. The following thresholds apply:

• Businesses with 21 to 99 employees: up from 5 affected employees
• Businesses with 100 to 600 employees: up from 5 employees per 100 employees (once 5% of the workforce is reached)
• Businesses with more than 600 employees: up from 30 employees
• Irrespective of the size of the business: from 5 employees who have already reached the age of 50 (except for seasonal businesses)

Particularly in medium-sized companies, it is often underestimated how quickly these thresholds can be reached. As few as five employer-initiated dismissals within one month may be sufficient to trigger the notification obligation.

Which terminations are included?

The rules are not limited to dismissals by the employer. Mutual termination agreements may also be relevant for the early warning system if they are initiated by the employer.

The following, however, are not taken into account:

• resignations by employees;
• mutual termination agreements concluded in the employee’s interest;
• terminations during a probationary period; 
• the expiry of fixed-term employment relationships; 
• the death of an employee; 
• justified summary dismissals; and 
• justified premature resignations by employees for cause.

In practice, the planned terminations should be reviewed carefully, as their legal classification may depend on the circumstances of the individual case.

The 30-day waiting period: The most common pitfall

The statutory waiting period is particularly important. Once the notification has been received by the AMS, employers must generally wait 30 days before issuing the dismissals.

This period is intended to give the AMS sufficient time to prepare support measures for the affected employees.

For companies, this means that workforce measures should be planned in good time. For example, a company wishing to implement dismissals by the end of the year must take the required lead times into account.

Reduction of the waiting period

The 30-day waiting period may be reduced if observing it would jeopardise the remaining jobs. In this case, the company may submit a written application for approval of the planned dismissals before the waiting period has expired. The application must state the reasons for the request. The AMS Regional Directorate (AMS-Landesdirektorium) decides on the application and notifies the company by formal decision. The AMS may reject the application even if reasons have been provided.

What information does the AMS require?

The notification must contain a range of information, including in particular:

• the reasons for the planned terminations; 
• the intended period; 
• the number of employees regularly employed; 
• the number of employees affected; 
• details of the affected employees’ age, qualifications and length of service; 
• the relevant selection criteria; 
• planned social support measures. 

The AMS provides a dedicated form that clearly summarises the required information. The notification must be submitted to the AMS office responsible for the company’s location.

What happens if the notification is incomplete?

If the notification does not contain all the necessary information, the AMS will request in writing that the missing information be provided within a reasonable period. If the information is submitted on time, the date of the original notification remains applicable. If the deadline is missed, the notification will be rejected. An appeal may then be lodged with the AMS Regional Office (AMS-Landesgeschäftsstelle) within 14 days.

Do not forget the works council

Where a works council exists, it must be informed and consulted in advance. Evidence of the works council’s involvement must be provided to the AMS. The works council’s signature on the written notification serves as proof. The works council also receives a copy of the notification submitted to the AMS.

If there is no works council, a copy of the notification must be provided at the same time to the employees likely to be affected.

What happens in the event of non-compliance?

It is particularly important to note that dismissals may only be issued after a proper notification has been submitted to the AMS and, as a rule, after the statutory waiting period has expired. Dismissals issued prematurely are generally invalid unless the AMS has approved a reduction of the waiting period in advance.

Furthermore, the number of dismissals actually issued must not exceed the number stated in the notification. If further employment relationships are to be terminated within 30 days, a new notification must be submitted and the 30-day waiting period must again be observed. 

In such a case, the employment relationships remain in force, which may result in unexpected costs and legal disputes.

For this reason, planned workforce reductions should be assessed carefully not only from an economic perspective, but also from an employment-law perspective. 

Our practical recommendation

As soon as several terminations are planned within a relatively short period, companies should check whether the thresholds under the AMS early warning system will be reached. Early legal and payroll support helps ensure that deadlines are met, risks are avoided and the measures are implemented in a legally compliant manner.

Companies that prepare workforce measures in good time and comply with the statutory requirements create clarity for everyone involved and avoid unnecessary legal risks. 

If you have any questions regarding the AMS early warning system or the employment-law implications of workforce reduction measures, we will be pleased to advise you.