The most important sources of labour law in Austria are the following:
Further sources of Austrian statutory labour law are: constitutional law, EU law and special laws for certain groups of employers (eg actors).
Most employers and employees are subject to a collective bargaining agreement. Collective bargaining agreements are negotiated by employers’ and employees’ organisations, and are binding on the individual employer and employee. Collective bargaining agreements have the same force as statutory law; however, they cannot alter statutory law to the detriment of the employee.
In the event that no collective bargaining agreement is in force for certain sectors/groups of employees, the Federal Mediation Authority may either issue a regulation extending the scope of a collective bargaining agreement to employees who technically do not fall under the agreement but are similarly situated, or may issue, upon application by an employee organisation, a specific regulation establishing minimum wages.
Plant agreements are a sort of additional collective bargaining agreement, which can be binding either on a particular plant or establishment of a company or for the entire company. A plant agreement is negotiated by the works council and the individual employer. A plant agreement may only regulate those matters reserved to plant agreements by statutory law or by a collective bargaining agreement. Within such limits the plant agreement has the legal force of statutory law, granting individual rights to employees. In some cases, statutory law may provide that a plant agreement can be enforced by the works council.
Individual employment contracts cannot change provisions of statutory law, collective bargaining agreements or plant agreements to the detriment of the employee. Statutory law provisions, which are compulsorily in favour of the employee, together with these agreements regulate the most important conditions of employment relationships.
Based on the Economic Chamber Act the Austrian Federal Economic Chamber is a democratic, self-governing body, funded by its members. Membership is compulsory, therefore almost all significant employers are members of the Economic Chamber.
Based on the Chamber of Employees Act membership of the local Chamber of Employees is compulsory for all employees except those working in public service or holding management positions in private business. Although the Chamber of Employees is entitled to take part in collective bargaining agreements, it does not take up this option. Instead it acts as a service organisation for employees and generally also for consumers.
The Austrian Trade Union Federation is a voluntary association and represents approximately 60 per cent of Austrian employees. The Austrian Trade Union Federation mainly negotiates collective bargaining agreements.
The authority competent for the administration of the labour market is the Austrian Labour Market Service, which used to be part of the former Ministry for Labour and Social Matters. The main activity of the Labour Market Service is the administration of job placements.
All disputes arising from and in connection with employment relationships and the works council fall under the jurisdiction of the Courts of Labour and Social Matters. A separate Court of Labour and Social Matters is established in Vienna. In the rest of Austria the regional superior courts also act as Courts of Labour and Social Matters. Judgments in labour law matters are rendered by a judge and two laymen nominated by the representative organisations of employers on the one hand and employees on the other hand.
The distinction between an employment relationship and a contract for services is mainly important for the question of social insurance. For a self-employed worker the employer does not have to pay social insurance contributions.
An employee under an employment contract is subject to the control of the employer and is dependent on the employer regarding workplace and working hours. Such an employee is typically integrated into the hierarchy of the company, has to work personally and regularly, and is also paid during sickness and holiday.
White-collar workers are employees in the service of trading establishments or other businesses who ‘primarily perform commercial or higher non-commercial functions or office work’. All other employees are qualified as blue-collar workers.
As a consequence of the distinction, different statutory laws (Act on White-Collar Workers/ General Civil Code; Trade Commerce and Industry Regulation Act 1859) as well as different collective bargaining agreements are applicable.
Furthermore, the distinction results in separate methods of administration of social insurance, separate works councils, membership in unions, and separate rules for compensation during illness and notice periods.
Members of the management board of a stock corporation are by law excluded from the regulations of labour and employment law, since Austrian company law provides that they are not subject to the obligation to comply with orders either from the shareholders’ meeting or from the supervisory board.
As managing directors of a limited liability company are subject to orders from the shareholders’ meeting, employment law may be applicable to their employment relationships. Shareholders holding a majority or a blocking minority of shares, however, will never be regarded as employees when serving as managing directors of the same company.
The employment contract is an agreement by which an employee undertakes to work for an employer, in his company, in return for salary or wages.
As in civil law, freedom of form is a basic element of employment contracts. Therefore, an employment contract may be established in written or oral form. Nevertheless, the employer has an obligation to hand out to the employee a written record of the main conditions of the employment relationship (see below).
If the contract does not provide otherwise, the employment relationship will be regarded as being of indefinite duration. Each party is then entitled to terminate the agreement by means of an ordinary termination under the statutory notice period.
It is also possible to conclude a contract of definite term, although such contracts may not bind the employee for a term of more than five years. However, where parties conclude contracts of definite term on at least two consecutive occasions without any compelling justification, the contract will be considered as a contract of indefinite term. This has come about because of employers’ attempts to circumvent the provisions protecting against termination by entering into several consecutive contracts of definite term.
Statutory law does not provide any restrictions on part-time work. The main difference between full-time work and part-time work arises in connection with overtime work. According to the Act on Working Hours, overtime premiums have to be paid only if the daily or weekly maximum of working hours according to the Act on Working Hours is exceeded.
Austrian labour law permits agreements on a trial period during which each of the parties (employee and employer) may terminate the employment relationship without special cause and with immediate effect. Such provisions are permissible only to the extent that the trial period does not exceed one month.
Even in the absence of express terms, statutory law, collective bargaining agreements and plant agreements guarantee minimum standards of employment conditions and have therefore to be considered in every employment relationship (see also above).
Company practice
If the company offers regular and unconditional voluntary benefits to its employees, such benefits become an integral part of each individual employment contract (by virtue of custom and practice).
Additional duties
Both parties to the employment contract have additional duties apart from their main duties under the contract. Examples of these implied duties are:
– no discrimination unless provided by law;
– obligation to issue an employment certificate upon the termination of employment.
Foreign employees may only be employed in Austria if the employer has obtained a work permit (Beschäftigungsbewilligung), a sending permit (Entsendebewilligung), a notification certificate (Anzeigebestätigung), or an EU-sending certificate (EU-Entsendebestätigung) for the respective employee. Employment of a foreign citizen is also permitted if the employee is in possession of a work authorisation (Arbeitser-laubnis) or a certificate of dispensation (Befreiungsschein).
In the case of a violation of these regulations, the local administrative authorities can levy a fine against the employer in an amount up to €10,000. Citizens of all European Economic Area States (EEA States) are, in general, not bound by these requirements.
Upon commencement of an employment relationship, a written record of employment conditions describing the main conditions of the employment relationship has to be handed out to the individual employee. The compulsory contents of this written record of employment conditions are:
Provisions on working hours in Austria are regulated in the Act on Working Hours. In addition, collective bargaining agreements frequently limit working hours and/or increase compensation for certain periods of working time, particularly for overtime and for work at nights and on weekends. The regulations of statutory law are not applicable on managerial employees with decisive management functions.
Normal work time is a daily maximum of eight hours and a weekly maximum of 40 hours.
However, as long as the weekly maximum is complied with, the daily normal work time may be exceeded to certain limits under certain circumstances (eg for the purpose of creating longer periods of free time). For employees in trade the maximum permitted weekly working hours may be extended to 44 hours if the normal weekly work time is, on average, complied with in a reference period of four weeks.
If daily working time exceeds six working hours, it has to be interrupted by a break of 30 minutes which may be substituted by two breaks of 15 minutes each. There are, furthermore, provisions regarding compulsory time off on weekends (36 hours starting on Saturday at 1 pm at the latest) or, where work during the weekend is permitted, for days off during the working week (36 consecutive hours).
Overtime is defined as a period of working hours exceeding either the daily or the weekly maximum of normal work time. Statutory law permits only five hours of overtime work per week plus up to 60 hours of overtime work per year. However, these limits are frequently exceeded in practice. The employee is entitled to an overtime premium of 50 per cent of his hourly salary per hour of overtime. The overtime premium payment may be substituted by compensatory time off, the terms of which have to be agreed upon between the employer and the employee.
Furthermore, there are regulations regarding overall working hour limits (overtime included). Usually these limits are 10 hours per day and 50 hours per week. A variety of exceptions are laid down in statutory provisions. In cases where overall working time limits are exceeded, a penalty may be imposed on the employer.
Salary
The question of regulation of wage determination is mainly left to collective bargaining agreements and to individual employment contracts. Collective bargaining agreements often provide premium wages for certain types of work (eg work at night, dangerous work, heavy work).
Mostly, the payment depends on the time spent on the job. Usually the compensation is paid monthly. For some blue-collar workers collective bargaining agreements provide for wages to be paid weekly. Overtime premiums may be paid by a lump sum, regardless of how many overtime hours the employee actually worked. This is possible as long as the total compensation exceeds the minimum provided by the applicable collective bargaining agreement.
Usually the monthly salary is paid 14 times per year. This derives from the practice of granting an additional salary for vacation time and Christmas. The payment of 14 monthly salaries per year is based on collective bargaining agreements.
In practice, employees who are not entitled to 14 salaries per year under the terms of a collective bargaining agreement also receive 14 salaries per year. Austrian income tax law provides a very low flat rate of taxation (only six per cent) for the 13th and 14th salary.
Employers and employees performing managerial functions often agree on incentive schemes. Payments based on such agreements are subject to the regular income tax.
Labour costs: social security and related costs
Under the Austrian scheme of social insurance both the employee and the employer are obliged to pay contributions to the employee’s social insurance. The employer has to deduct the employee’s contributions from the respective salary and then pay them directly to the relevant social security authority. At the same time, the employer has to pay the company’s contribution to the employee’s social insurance. The same system applies to unemployment insurance contributions. In addition, the employer has to pay several social insurance-related or other public contributions, premiums and charges (eg pension insurance, contribution to the severance pay fund etc).
Based on the Vacation Act, which applies to almost all employees in the private sector, every employee is entitled to paid vacation for each actual year of work (in addition to the statutory holidays). For a period of service of less than 25 working years, the employee is entitled to paid leave for 30 working days per year (ie five weeks if Saturday is considered as a ‘working day’). After more than 25 years, the annual vacation amounts to 36 working days (ie, six weeks).
The scheduling of vacation must be based on an agreement between employer and employee, taking into consideration both the company’s business interests and the employee’s private interests. Strictly and legally speaking, the annual vacation must either be used up all at once or divided into two parts. In practice this rule is frequently not complied with, since shorter periods of holidays (eg single days) are in the interests of both the employee and the employer.
During vacation the employee is entitled to full salary. Any agreement between the employer and the employee on a financial remuneration instead of making use of the vacation time is invalid. When the employment relationship ends, the employee is entitled to receive pay for accrued vacation; this is not the case, however, if the employee has terminated the employment relationship immediately without justified cause.
If the employee becomes sick during the vacation, this is considered as interrupting his vacation and the days of incapacity are not counted as vacation days. This provision does not apply in cases where the illness is caused intentionally or by gross negligence of the employee, or the employee fails to notify his sickness to the employer.
Under the Vacation Act the vacation entitlement becomes time-barred after expiry of two years following the end of the vacation year in which the entitlement accrued.
In cases of injury or sickness the employee is entitled to full compensation for a certain period of time unless the injury or sickness is caused intentionally or by gross negligence of the employee. The period of full compensation during illness depends on the years of service with the employer and on the cause of the inability to work. After a certain period (after six weeks minimum), the employee is entitled to half of the full compensation. After the periods of statutory sickness pay from the employer have elapsed, the employee is then entitled to sickness pay from the social insurance for a further period of time.
The employee has to notify the employer of his sickness immediately. If the employer so requests, the employee has to present a doctor’s confirmation of his inability to work.
During the period of sick pay the employee is obligated to take care of his health in order to recover his ability to work as soon as possible.
The employee is also entitled to full salary for a short period of time (a few days) if he is prevented from working for important personal reasons. The reasons may be family reasons (eg the death of a relative), unforeseeable circumstances (such as traffic jams or chaos because of a natural disaster) or various other causes.
Furthermore, the employee is entitled to full salary for up to one week per year while caring for a close relative living in the same household or for his child. If the relative is dependent on the care of the employee for a longer period of time, the employee has the right to use up vacation time without the consent of the employer.
In employment contracts there can be an agreement on non-competition after the termination of the employment relationship. Statutory law provides several restrictions on non-competition clauses. The clause is invalid if the employee was a minor when the clause was concluded. Furthermore, in the case of adults, the clause is only valid if it applies only to the business branch of the employer, does not exceed one year, and does not inequitably restrict the employee’s job opportunities.
For employment relationships started after 16 March 2006, statutory law provisions permit the conclusion of a non-competition clause only if the salary amounts to at least 17 times the assessment base laid down in the General Social Insurance Act (ie, approximately €2,000 gross per month).
The employer is not entitled to enforce a non-competition clause if he is responsible for the causes of immediate or ordinary termination by the employee, or if he has terminated employment without justified reason. In the latter case the employer can still claim the right to enforce the non-competition clause if he continues full payment of salary during the period of non-competition. If the employee is willing to continue receiving full payment of salary, he has to announce this no later than when he announces the termination of the employment relationship.
Often, compliance with non-competition clauses is secured by a penalty clause. Where a penalty clause has been concluded and there follows a breach of the non-competition clause, the employer is only entitled to enforce the payment of the penalty and cannot file for injunctive relief.
Under Austrian law employees are represented by the Federal Chamber of Employees and the Austrian Trade Union Federation (see above). Furthermore, there exists a representation on company level by the works council.
The works council represents the interests of the employees vis-á-vis the employer. The participation of the works council is of great variety, ranging from information and consultation rights up to full veto rights. The rights and duties of works councils and their members is stated in the Labour Relations Act.
Works councils may be established in companies with at least five employees. In companies employing more than five white-collar workers and more than five blue-collar workers, statutory law provides separate works councils for each group; however, the separate works councils may form a joint works committee. The number of members of a works council depends on the number of employees and can be anything up to 13 members where over 1,000 people are employed.
The most important activity carried out by the works council is to negotiate plant agreements (see above), followed by the exercise of several rights of information and consultation in various matters (see below).
Another representative institution for employees is the European Works Council, which is laid down in the Labour Relations Act and is more relevant for larger multinational companies. Regulations are binding only on companies employing at least 1,000 employees in the member states of the European Union, and employing at least 150 employees in each of at least two different member state companies that have their business headquarters in Austria.
Furthermore, the works council is entitled to nominate one-third of the members of the supervisory board (‘Drittelparität’).
The works council should be informed and consulted regarding the following matters:
Reorganisation
The employer has to consult with the works council before certain measures considered as ‘major changes’ can be undertaken. Such measures are, for example, closing or relocation of the company or parts of it, changes in the scope or object of the company, its legal structure, its organisation, or its ownership.
The works council is entitled to make proposals in order to protect the interests of the employees. In companies where more than 20 people are employed, the works council is entitled to claim the conclusion of a special type of plant agreement (‘Sozialplan’). The works council is only entitled to do so if the proposed changes will lead to considerable disadvantages for all or for a considerable number of the employees. In companies where more than 200 people are employed, the works council has a ‘veto’ against measures which could lead to a considerable negative effect for the employees. In companies where more than 400 people are employed, the works council has, under certain circumstances, the right to appeal to the National Economic Commission if the matter concerns the interests of national economy.
Collective dismissals
In cases of mass layoff the employer must notify the local office of the Labour Market Service in writing of the terminations that are to take place. The notification must contain detailed information regarding age, sex, professional qualification and responsibility of the employees whose termination is being proposed.
Transfer of undertakings
The legal consequences of a transfer of undertakings (eg by asset deal, merger, split) are laid down in the Employment Law Harmonisation Act. This Act provides that in the event of a transfer of a company, a business undertaking or part of a business operation, every employment relationship will automatically be transferred to the new employer and the same conditions will be maintained. Only individual pension entitlements can be changed. Of course, changes to the individual employment contract for the benefit of the employee are permitted. Under statutory law, collective bargaining agreements based on law and genuine plant agreements are not transferred to the new employer. If the transfer takes place as a result of bankruptcy, the automatic transfer of employment relationships based on the Employment Law Harmonisation Act will not be applicable.
In cases where there is a transfer of undertakings, the employer has to inform the works council about his plans early enough to make it possible for the works council to take part in the negotiations about the terms of the transfer. The violation of this provision will not lead to the transfer being treated as invalid; but in cases where a special plant agreement (‘Sozialplan’) has been enforced, the failure to inform the works council may be considered in the plant agreement. Before the transfer takes place, there is no requirement to inform individual employees.
When an undertaking is transferred, neither an employee nor the employer has the right to terminate the employment relationship. The employee is only entitled to object to the transfer of his employment relationship in the special case that the applicable collective bargaining agreement changes, resulting in the loss of special protection of termination, and the new employer refuses to grant the same protection. Then the employee will be entitled to terminate the employment relationship, which will entail the same legal consequences as if it had been terminated by the employer. Furthermore, the employee can disagree if the new employer refuses to uphold existing individual pension entitlements.
The transfer of an undertaking is ineligible as a reason for the termination of an employment relationship. Therefore the employer cannot avoid the statutory provisions by first terminating the employment contract of employees and then possibly re-hiring them (under less favourable conditions).
In cases of share deals, the provisions of the Employment Law Harmonisation Act are not applicable. A share deal does not affect employee’s rights, collective bargaining agreements, plant agreements or the works council structure.
According to the Equal Treatment Act, male and female employees may not be treated in a different way. The Equal Treatment Act also includes the obligation of the employer to protect employees from discrimination by third parties. The Act also prohibits indirect discrimination. This is the case if a concrete regulation (eg in individual employment contracts) does not in itself cause discrimination, but the practical application of the regulation leads to discrimination.
The Equal Treatment Act protects employees against sexual harassment by the employer or by other employees in cases where the employer refuses to implement adequate measures to protect an employee against sexual harassment by other employees.
Disabled persons are considered by law as persons whose inability to work is reduced by at least 50 per cent. Statutory law provides an obligation of every employer to hire one disabled person for every 25 employees. In cases of violation of this obligation, the employer has to pay a certain amount of compensation. According to statutory law, disabled persons have a special protection from ordinary termination. In companies employing at least five disabled persons, a spokesperson representing the interests of disabled employees vis-á-vis the employer can be appointed.
In addition to statutory provisions, the Austrian courts have established the legal principle that an employer may not without a justifiable cause treat an individual employee in a different way to other employees. This principle concerns working conditions, compensation and fringe benefits.
9.4 Maternity leave, parental leave
From eight weeks before the expected birth until eight weeks after the birth, a pregnant employee has to be released from work. During this 16 week leave the health insurance will usually compensate the employee for the full salary. After this period, the employee (father or mother of the child) has the right to unpaid maternity leave until the second birthday of the child. Parents are also entitled to work part-time until the seventh birthday of the child.
10. DISCIPLINE AND TERMINATION
10.1 Disciplinary measures
Disciplinary measures in cases of violation of the employment contract by the employee may only be taken if the disciplinary measures are provided by the applicable collective bargaining agreement or by a plant agreement. Before a disciplinary measure can be taken, either the works council or a disciplinary commission established by the works council has to give its consent.
Stipulations in the individual employment agreement on the possibility to take disciplinary measures, such as diminution of salary, are certainly only binding on the employment relationship with the individual employee.
10.2 Termination
Termination by agreement
The parties are free to terminate an employment relationship by mutual consent.
Expiry of a fixed-term contract
Fixed term contracts will end when the contract period has elapsed; there is no need to issue further statements.
Immediate dismissal
Both of the parties to the employment contract are by statutory law entitled to terminate the employment relationship immediately if, for one of them, the prolongation of the employment relationship is considered unacceptable under the existing circumstances.
The reasons for which the employee can terminate the employment relationship with immediate effect are the following:
This type of termination ends the employment relationship with immediate effect. If the employer violates the statutory provisions and the termination is not justified, nevertheless the employment relationship is still terminated. The employee is entitled to compensation for his loss of employment; that is, he is entitled to the contractual wage for the time which would have passed up to the termination of the employment relationship by expiry of the fixed contractual period or by due notice by the employer. The termination can be set aside if the (former) employee successfully contests the termination under the rules of protection against termination.
Ordinary termination
Employment contracts of indefinite term can be terminated by ordinary termination without any cause, but under a notice period which depends on the length of employment, on the classification as White-Collar Worker or Blue-Collar Worker and possibly on the individual employment agreement.
Under the Act on White-Collar Workers, the following notice periods for the termination of the employment relationship have to be considered by the employer:
Years of service Notice period 0-2 6 weeks 2-5 2 months 5-15 3 months 15-25 4 months more than 25 5 months
Employment can only be terminated with effect as of the end of a calendar quarter.
The date of termination can, however, be changed by the individual employment agreement with effect as of the 15th of the month or the last day of the month.
In companies employing at least five employees, the workforce is entitled to a general protection against ordinary termination. This protection includes the participation of the works council and is described above in section 8.2). In general, each employee can appeal against the termination before the labour court. The court may annul the termination on one of the following grounds:
In the case that the works council has objected to a termination but the termination is justified by economic reasons, the employee may still show that that the termination of another employee would have caused less hardship and that the other employee should have been terminated instead.
In cases where the works council has agreed to the termination, the employee is not entitled to contest the decision in court unless it was carried out on an ‘illegal basis’ (see above).
Several groups of employees enjoy special protection against terminations. For all these protected groups, the approval of the labour court or an administrative agency is compulsory for the termination.
The protected groups are:
Severance payment
There are two different systems provided by statutory law concerning severance payments.
Severance payment ‘old scheme’:
This scheme is applicable to employees whose employment relationships started before 1 January 2003. If the employment relationship lasted at least three years, the employee is entitled to severance pay. The amount of the severance pay depends on the length of service for the employer: Years of service Amount of severance (multiple of monthly compensation) 3-4 2 5-9 3 10-14 4 15-19 6 20-24 9 More than 25 12
The employee loses his right to severance pay in cases of termination of the employment by the employee, immediate termination by the employee without reasonable cause, or immediate termination by the employer if the reasons for the termination are attributable to the employee.
Severance payment ‘new scheme’:
The ‘new’ scheme applies to all employees whose employment relationship started after 31 December 2002, and to those who have agreed to a transfer from the ‘old’ to the ‘new’ scheme. The employer pays monthly an amount of 1.53 per cent of the employee’s compensation into special severance pay funds, which provide severance pay to employees in cases of termination of the employment relationship. Under this scheme the employer is not obligated to pay any severance pay to the employee. The employee is entitled to receive severance payments vis-á-vis the severance pay fund instead of from the employer.
Under this scheme all employees are entitled to severance payment at termination of employment, for whichever reason, and every employer has to contribute to the financing of the severance payment scheme. The first employment month is free of contribution in any case, even if no trial month has been agreed upon. If, however, a new employment relationship is entered into with the same employer within 12 months from the termination of the first employment relationship, then the obligation to contribute is considered to have started on the first day of the employment relationship.
11. COLLECTIVE DISMISSALS
11.1 Definition
The layoff of several employees is qualified as collective dismissal if:
11.2 Procedure
In cases of a collective dismissal the local office of the Labour Market Service has to be informed (see above). The notification at the local office of the Labour Market Service must take place at least 30 days before the first statement of termination is issued. Moreover, the works council must be informed of the notification as well as of its content.
11.3 Consequences of non-compliance
The purpose of the notification to the Labour Market Service is to give them the opportunity to take appropriate steps to assist the employees as soon as possible. Although no consent from the Labour Market Service is required, every termination of an employment relationship would be invalid if the notification process prescribed by statutory law was violated by the employer. During the 30 day period following notification, any termination needs the approval of the Labour Market Service.
12. FORTHCOMING LEGISLATION
The new government plans several measures regarding flexible working hours. The daily and weekly maximum working hours shall be increased up to 12 hours daily and 60 hours weekly.
Furthermore, statutory law may be changed so that a ‘four day work week’ (four times 10 hours) could be established in plant agreements or the individual employment agreement in companies where no works council exists.
Statutes and statutory instruments:
Law Information System of the Federal Chancellery (Rechtsinformationssystem des Bundeskanzleramtes): www.ris.bka.gv.at
General bodies:
Labour Law Service (Arbeitsmarktservice): www.ams.at
Austrian Federal Economic Chamber (Wirtschaftskammer Österreich): www.wko.at
Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund): www.oegb.at
