Practice Area Articles
Austria
February 05, 2024
By Paul Hastings Professional
Back to International Employment Law
KEY DEVELOPMENTS FOR 2024
Reduction in Employer contributions
All employers in Austria must pay contributions to the Family Burdens Equalization Fund (Familienlastausgleichsfonds – “FLAF”). The FLAF is a statutory central financing instrument that provides state family benefits and benefits-in-kind, as well as the reimbursement of child maintenance costs. These contributions will be reduced for all employers as of 1 January 2025. By taking appropriate action, employers may easily benefit from the reduced contributions in 2024. Currently, the contributions to the FLAF are set at 3.9% of all wages paid in a calendar month. As of 1 January 2025, the percentage will be reduced to 3.7%. The reduced contribution rate will apply in 2024 if explicitly set out in: (i) the applicable collective bargaining agreement; (ii) a works agreement authorised under the applicable collective bargaining agreement (if a works council exists); or (iii) an internal instruction for all employees or certain groups of employees. Practically, the reduced FLAF contributions can be determined unilaterally and informally by the employer, for example through an internal memorandum.
Changing entitlements to parental leave
Following the implementation of the EU Directive No. 2019/1158 on work-life balance for parents and carers, entitlement to parental leave has been harmonized with other EU countries and thereby effectively restricted as of 1 January 2024, compared with the standard previously applicable in Austria. In the past, the entitlement to parental leave lasted until the child was 24 months old. The parents were free to allocate this period between them at their own discretion. Accordingly, only one parent (typically the mother) could take advantage of the entire 24-month period. However, under the new legislation, non-single parents need to split the entitlement to parental leave between them. They are now only entitled to the full period of 24 months if each parent consumes at least two months of parental leave. If only one parent takes parental leave, the entitlement ends when the child is 22 months (thus two months earlier than under the old regime). Only single parents are exempt from the splitting requirement and continue enjoying the entitlement to 24 months of parental leave on an individual basis. If an individual parent wishes to take parental leave beyond the child´s age of 22 months, she/he must confirm to the employer in writing that she/he is a single parent. In the absence of such a written confirmation, the employer is entitled to terminate the parental leave after the 22nd month. The (voluntary) granting of an additional 23rd and 24th month of parental leave will be considered a contractually agreed parental leave, not a statutory entitlement, and certain tax benefits may not apply.
Employee entitlement to carer's leave
As a result of the implementation of the EU Directive No. 2019/1158 on work-life balance for parents and carers, an employee’s entitlement to care leave now extends to the provision of care to: (i) all household members, including persons not related to the caregiver (e.g., roommates); and (ii) close relatives even if they do not share a household with the caregiver (e.g., parents having a separate domicile).In addition, protection against dismissal for cause was extended to persons on caregiver leave. In the event of a termination, the dismissed employee can request from the employer a written statement on a valid justification (unrelated to an employee’s exercise of the right to carer's leave). Although an employer’s failure to provide a written statement on a valid justification does not affect the validity of the termination, it may negatively prejudice the employer’s position in a subsequent legal dispute.
KEY DEVELOPMENTS FOR 2023
Whistleblowing
New regulations on “whistleblowing” in the workplace are expected to be implemented in Austria in accordance with the EU Whistleblower Directive by the introduction of the new Whistleblower Protection Act (Hinweisgeberschutzgesetz-HSchG). The purpose of the proposed new legislation is to promote compliance with regulatory provisions by encouraging so-called “whistleblowers” to report violations. So far, only a draft of the new legislation exists. As Austria is already late in implementing the EU Directive, the new legislation is expected to enter into force soon.
Employers employing more than 50 employees will be required to set up an internal reporting system for the protection of the identity of whistleblowers. In some industries such reporting system is mandatory regardless of the number of employees (e.g. financial services). Employees will have the opportunity to report instances of non-compliance with regularity obligations within a company on an anonymous basis. In some cases, the identity of the whistleblower may be disclosed; however, the whistleblower has to be informed accordingly.
Retaliatory measures in connection with whistleblowers (e.g. dismissals, demotions) are null and void. The employee does not need to establish a link to the whistleblowing, but only has to show the possibility that a connection may exist. The employee is also entitled to compensation for any damage suffered as well as for any personal impairment. In the event of a violation of the law, administrative fines of up to 20,000 Euros may be imposed.
We recommend introducing an internal anonymous reporting system. Apart from the soon to be enacted legal obligations, such systems are helpful to become aware of maladministration at an early stage and also to avoid potential claims for damages or administrative penalties as a result of unnoticed maladministration.
Cost of living
The cost of living in Austria, as in many other countries, has increased significantly in 2022. As a compensatory measure many employers have granted so-called cost-of-living premiums to their employees. In order to respond to this trend and to promote such voluntary benefits, the legislator has implemented legal incentives.
Preferential tax treatment for cost-of-living premiums will be granted in the form of a tax allowance. No taxes have to be paid for these premiums, including all types of taxes (payroll tax, municipal tax, etc.) and social security contributions.
The basic allowance is 2,000 Euros per employee. The threshold is increased by another 1,000 Euros if a so-called wage-forming provision (lohngestaltende Vorschrift) exists. Such provisions may be concluded by a collective bargaining agreement (Kollekivvertrag) or by an agreement with the works council (Betriebsvereinbarung). For certain industries wage-forming provisions have been included directly in the law.
The prerequisite for the tax exemption is that the premium is granted in addition to the regular remuneration. The payment terms do not matter. Thus, the premium can be granted in the form of a one-time payment or in several increments. The tax exemption only applies for the years 2022 and 2023. Prior to the granting of a cost-of-living premium it should be reviewed whether the applicable limit for the tax allowance is 2,000 or 3,000 Euros. It is also advisable to clearly designate the payment as a cost-of-living premium.
War in Ukraine
Many Ukrainian citizens have fled from the war to Austria and are now seeking employment. A privileged labour law regime has been introduced, which provides for a facilitated access to the Austrian labour market for such displaced persons.
Displaced Ukrainian citizens enjoy a temporary right of residence in Austria until 3 March 2023. The residence right, however, does not already entitle them to work in Austria. However, as soon as these persons have obtained a so-called ID card for displaced persons (also called “blue card”), work permits can be issued to them by the Public Employment Authority Austria (Arbeitsmarktservice-AMS) without any further requirements.
The procedure for obtaining a work permit is simplified for Ukrainians. A so-called labour market test does not need to be carried out. In practical terms this means that the Authority does not review whether there are other persons available who are registered as unemployed and would also be suitable for the job. If a Ukrainian displaced person is referred to a company by the Public Employment Authority Austria, no application for an employment permit has to be made, as the permit is issued by the Authority automatically. Generally, work permits are only valid for a certain workplace in a certain position. If the employee wants to change the employment position, a new work permit has to be obtained.
Before employing a Ukrainian displaced person, an employer should review if the designated employee disposes of a valid ID card for displaced persons. On the basis of such (“blue card”) the employer can apply for a work permit. The employment may only commence, once the permit has been issued.
KEY DEVELOPMENTS FOR 2022
Short-time working models to continue running until 30 June 2022
Short-time working models were introduced in the early phase of the Coronavirus crisis to mitigate the negative effects on the labor market. The employer and the employee or the works council (Betriebsrat) may agree in writing on the implementation of a short-time work scheme including its duration and the scope of work to be performed. "Phase 5" started in July 2021 and since then, a distinction is made between “particularly affected businesses” and “other businesses”. While initially it was possible to reduce the working time down to 0 hours with almost full wage compensation (up to 90%), as of 1 July 2021 the minimum working time is 50% (and 30% for particularly affected businesses), with a wage compensation up to 85% (and for particularly affected businesses, 100%).
If a short-time work arrangement has been implemented, the employer may file an application for support (Beihilfe) to the Austrian Employment Office (Arbeitsmarktservice - AMS). The remuneration for the actual work performed is to be borne by the employer. The AMS reimburses the employer for the balance of the total amount payable to the employee under the short-time arrangement according to fixed flat rates. Short-time work projects can be agreed for a maximum period of six months. Phase 5 was expected to run until 30 June 2022.
In terms of action items, note that new short-time work applications must be submitted before a short-time work project is started. Therefore, the employer should submit the application in time before the start of a new project.
Alignment of employee and worker notice periods
Austrian (labor) law traditionally distinguishes between workers (Arbeiter) and employees (Angestellte). Recently, the rights of workers and employees have already been streamlined in many respects. Up until now, the duration and dates relating to notice periods for employees were regulated in the Austrian Employees Act (Angestelltengesetz – AngG), while those for workers were governed by the Austrian Trade Code (Gewerbeordnung – GewO), the Austrian General Civil Law Code (Allgemeines Bürgerliches Gesetzbuch – ABGB) and the various collective bargaining agreements (Kollektivverträge).
The duration and dates for notice periods for workers were intended to be been aligned with those applicable to employees already as of January 2021. However, this plan was repeatedly postponed, but became effective as of 1 October 2021 and it will continue to be a key topic in 2022.
The aligned duration and dates regarding notice periods will apply to notices of termination given by the employer after 30 September 2021. In the event of termination by the employer, the “seniority principle” (Senioritätsprinzip) will also apply to workers. Accordingly, the duration of the notice period will increase depending on the years of employment as follows:
- from the 1st and 2nd year of service: 6 weeks
- from the 3rd year of service: 2 months
- from the 6th year of service: 3 months
- from the 16th year of service: 4 months
- from the 26th year of service: 5 months
The standard termination date for workers continues to be the end of the quarter, although it can be changed by mutual agreement to the 15th or the last day of a month.
We recommend updating employment agreements with workers as soon as possible if their employment agreements or collective bargaining agreements do not already contain provisions on the 15th and last day of the month as termination dates.
Working from home arrangements (COVID-19 measure)
Since the start of the Coronavirus pandemic, "working from home" has become increasingly important in Austria. Some legal regulations on the protection of employees working from home already existed, but they are scattered and incomplete, which has led to a discussion around the creation of a special law on homeworking. Since 1 April 2021, Sec 2h of the Labor Contract Law Amendment Act (Arbeitsvertragsrechts-Anpassungsgesetz – AVRAG) now legally regulates basic rights and obligations of employees working in a home office.
According to Sec 2h AVRAG, work from home is provided if the employee regularly performs services from his residence. The employer must provide the employee with any digital work equipment required for regular work from home. This may be deviated from by agreement if the employer bears the reasonable and necessary costs for the digital work equipment provided by the employee for the performance of the work. The costs may be compensated on a lump-sum basis.
Working from home must be agreed in writing between the employee and the employer for evidential reasons (including by means of a shop agreement). In the absence of an agreement, neither the employee nor the employer can unilaterally enforce a working from home arrangement. This is to some extent unsatisfactory as the Government strongly recommends working from home in light of the pandemic situation. Even when an employee has to stay at home without being sick because he/she is in quarantine, an employer cannot request working from home unless a relevant arrangement exists. A large employers' organization recently suggest that the law should be amended in this regard. However, practically such an amendment will require approval by the Unions and is not expected in the near future.
The arrangement on work from home may be terminated by each party for good cause by giving one month's notice to the last day of a calendar month. The arrangement may include a fixed term and termination provisions.
Note that the employer may not unilaterally request an employee to provide his work from home without a prior arrangement. Therefore, we recommend that employer should agree a work from home arrangement with employees if this is reasonably required and has not already been done.
KEY DEVELOPMENTS FOR 2021
Short-time work arrangements
A short-time working model had already been introduced in the early phase of the pandemic to mitigate the negative effects on the labour market. The employer and the employee or the works council (Betriebsrat) may agree in writing on the implementation of a short-time work scheme including its duration and the scope of work to be performed. "Phase 3" started on 1 October 2020. Although it was initially possible to reduce the working time down to zero hours with almost full wage compensation (up to 90%), as of 1 October 2020 the minimum working time increased to 30% of the regular working time.
If a short-time work arrangement has been implemented, the employer may submit an application for support to the Austrian Employment Office (Arbeitsmarktservice or AMS). The actual work performed is to be borne by the employer. The AMS reimburses the employer for the balance to the total amount payable to the employee under the short-time arrangement according to fixed flat rates.
Short-time work can be agreed for a maximum period of six months (initially three months with the option of an extension).
The short-time work model was initially expected to run until March 2021 but may be further extended.
Standardization of notice periods and dates
Austrian (labour) law traditionally distinguished between workers (Arbeiter) and employees (Angestellte) but recently, the rights of workers and employees have been streamlined in many respects. With effect from 1 July 2021, the notice periods and dates have been aligned.
Before 1 July 2021, the notice periods and dates for employees were regulated in the Austrian Employees Act (Angestelltengesetz – AngG), while those for workers were governed by the Austrian Trade Code (Gewerbeordnung – GewO), the Austrian General Civil Law (Allgemeines Bürgerliches Gesetzbuch – ABGB) and the various collective bargaining agreements (Kollektivverträge).
Under the new regime, the notice periods and dates for workers are aligned with those applicable to employees under the Employees Act.
In the event of a dismissal by the employer, the "seniority principle" (Senioritätsprinzip) will also apply to workers. Accordingly, the notice period increases depending on the years of employment. The notice period is generally six weeks and increases up to five months after 25 years of continued employment.
The standard termination date for workers continues to be the end of the quarter; but this can be changed by mutual agreement to the 15th or the last day of a month.
Home office regulations may be introduced
The number of people working in home office has rapidly increased in Austria since March 2020. Some legal regulations on the protection of employees working in home office already exist, but they are scattered and incomplete, which is why the creation of a special law on home office work is being discussed. However, it is unclear when this will actually be implemented.
KEY DEVELOPMENTS FOR 2020
Cancellation of termination fee
Employers were required to pay a public termination fee (Auflösungsabgabe) of €131 upon the termination of an employment relationship. This applied when an employer gave notice of termination or an employment relationship was terminated by mutual consent. However, this fee has been abolished as of 1 January 2020, so from an employer's perspective, the additional financial burden on termination of an employment relationship no longer applies.
Entitlement to nursing leave and part-time nursing care
From 1 January 2020, employees are legally entitled to take time off work or work part-time to care for their sick relatives, without needing to obtain consent from their employers. This was previously not a legal entitlement but could be agreed with the employer. The new rules only apply to businesses with more than five employees. Employees must have been employed for at least three months before they become eligible for care leave and the relative to be cared for must be assigned to care level 3 or higher. An employee can request up to two weeks' nursing leave/part time nursing leave but is entitled to an extension of two weeks, upon request. Therefore, the legal entitlement covers up to four weeks in total. Upon request, the employee must provide evidence that the legal requirements have been complied with.
Short-time work
A short-time working model has been introduced to deal with COVID-19. It is now possible to work down to zero hours with almost full wage compensation (up to 90%) without dissolving the employment relationship. The employer and the employee or the works council (Betriebsrat) should agree on the duration and the scope of short-time work in writing. Short-time work can be agreed for a maximum period of three months, whereby an extension is possible.
If a short-time work agreement exists, the employer can apply to the (Un-)employment office ("Arbeitsmarktservice" or "AMS") to receive a reimbursement of the additional costs incurred by the employee's lost working hours, according to fixed flat rates. The labour inspectorate has already identified over 500 infringements in connection with short-time work (as of May 2020). Some of these were intentional offences, while others were committed negligently. Incorrect calculations, for example, when overtime is offset against lost hours (even if not intentionally), can lead to sanctions. Therefore, employers should be aware that they may face such administrative penalties.
KEY DEVELOPMENTS FOR 2019
Extension of maximum working hours and overtime limits
Pursuant to an amendment to the Austrian Working Hours Act and the Austrian Rest Periods Act, which came into force on 1 September 2018, the maximum daily working time has increased from 10 hours to 12 hours and the maximum weekly working time from 50 hours to 60 hours. The regular working hours of 8 hours per day and 40 hours per week (or less, under an applicable collective bargaining agreement), however, remains unchanged. Any work performed beyond the regular working hours continues to qualify as overtime work for which employees are entitled to extra remuneration. Employees can choose whether they prefer to receive their overtime remuneration in cash or by way of compensation.
Extension of the personal exemptions from the Austrian Working Hours Act and the Austrian Rest Periods Act
In the past, executive employees have been exempt from the maximum working hours and mandatory rest periods under the Austrian Working Hours Act and the Austrian Rest Periods Act. The exemption was extended on 1 September 2018 and will also apply to any employees “having significant independent decision-making authority" as well as "close relatives of the employer".
Data of job applicants may be stored for seven months
Under the new EU General Data Protection Regulation, the processing of personal data in the context of a job application is strictly limited to the purposes of the application process (establishment of an employment relationship). Therefore, the personal data of applicants that are unsuccessful should be deleted without delay unless an applicant has specifically consented to it being stored. In addition, a legally binding decision of the Austrian Data Protection Authority has confirmed that the recipient of a job application has a legitimate interest to store the applicant's data for as long as a rejected applicant may raise claims for unlawful discrimination. Accordingly, an applicant’s data may be stored for a period of 7 months from the date of rejection.
KEY DEVELOPMENTS FOR 2018
Alignment of Rules Applicable to Blue Collar Employees with those Applicable to White Collar Employees
From 1 July 2018, there will be an alignment of the rules applicable to blue collar employees with the more employee-friendly rules applicable to white collar employees.
The changes will include:
- in cases of repeated illness, employees will only be eligible for sick pay for the maximum term applicable for a single incident, except where the illness relates to an accident at work or occupational illness;
- if an employee is unable to work, through no fault of their own due to reasons other than illness, there will be a mandatory entitlement to continued pay. Provisions to the contrary in existing collective bargaining agreements will no longer apply;
- termination of employment after December 31, 2020 will be subject to the same notice periods and dates currently applicable to white collar employees. Accordingly, termination with 14 days’ notice will no longer be possible;
- apprentices will be entitled to 8 weeks sick pay instead of 4 and employees’ entitlement to sick pay will be extended from 6 to 8 weeks; and
- it will be possible to stipulate in a collective bargaining agreement or a shop agreement that the calendar year rather than the employment year shall be relevant for the assessment of the maximum term of sick pay.
KEY DEVELOPMENTS FOR 2017
New Wage and Social Dumping Control Act
On 1 January 2017, a newly enacted Wage and Social Dumping Control Act (Lohn- und Sozialdumping-Bekämpfungsgesetz - LSD-BG) (the “Act”) came into force. The Act aims to combat wage and social dumping by foreign employers in the context of the cross-border assignment of employees into Austria. To a large extent, the new legislation only compiles existing rules which are currently spread over several laws. However, the Act, also includes a more strict liability regime for clients and general contractors in the construction industry, new exemptions for cross-border employee assignments within a group, and a simplification of reporting duties and rules on the cross-border cooperation of the competent authorities in EU Member States.
KEY DEVELOPMENTS FOR 2016
New disclosure requirement for all-in-arrangements
Under an all-in-arrangement, an employee is entitled to a fixed remuneration, irrespective of whether he/she is working normal working hours only or overtime. Any new all-in-arrangement concluded from 1 January 2016 onwards needs to specify the amount of the base salary, i.e. the portion of the overall remuneration relating to normal working hours. We recommend allocating a reasonable amount to the base salary as compared to the overtime portion to minimise the risk of legal challenges.
New restrictions on non-competition clauses
A non-competition clause will only be valid if it refers to activities within the employer’s line of business, it doesn’t exceed one year and it does not unreasonably impede an employee’s professional career.
In addition, from 29 December 2015 onwards, a non-competition clause will only be enforceable if the remuneration (excluding special payments) payable for the last month of employment is 20 times the daily maximum under the General Social Insurance Act (“ASVG”) (i.e. currently EUR 3,240). Furthermore, any contractual penalty linked to a non-competition clause and agreed from 29 December 2015 onwards must not exceed six times the last monthly net salary (excluding special payments).
New rules on the reimbursement of training costs
Agreements on the reimbursement of training costs concluded after 28 December 2015 are subject to two new restrictions. The maximum commitment period is generally reduced to four (previously five) years and the agreement needs to provide for a proportionate reduction of the reimbursable amount for every month of employment.
Information requirements vis á vis part-time employees
Since 1 January 2016, an employer needs to inform part-time employees about any job vacancies in the company involving a higher amount of working time. This can be done by posting a notice at an easily accessible place in the company, by electronic data processing, or telecommunication. The information requirement only applies in case a job vacancy is “advertised”, i.e. externally or internally communicated to more than one person. Any offer addressed to only a single person does not qualify as an “advertisement”. Non-compliance with the information requirement incurs a fine.
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