1 August 2019

Austrian employment law newsflash

At the end of 2018, the Supreme Court ruled on the correct application of collective agreements to mixed businesses. This ruling is vital in order to be able to determine the applicable minimum wage within a company.

For example, in mixed businesses – ie those that deal with production and distribution of products (which fall under different collective agreements) – the specialist area that gives the company its economic character is the key criteria for determining the applicable collective agreement.

In establishing this, an overall view must be taken on factors such as profit, turnover and number of employees. What's new is that the external perception by customers and the public may now play a significant role.

The Supreme Court has also ruled on holiday entitlements. It has determined that, in cases where an employee challenges the notice of termination by the employer and it is ruled by a court to be invalid, holiday entitlements will accrue retrospectively from the date of the declaration of termination.

Such entitlements may also not be forfeited during this time. In this context, it is also worth noting that the European Court of Justice recently ruled that there is no forfeiture of leave entitlements if the employer does not formally request the employee to take unused leave in time and does not make the employee aware of the consequence of forfeiture.

A further decision of the Supreme Court dealt with the "old" severance payment which applies to employment contracts concluded before 1 January 2003, and provides for an obligation on the employer to pay severance especially in case of termination of employment by the employer.

This obligation generally remains unchanged under the law in cases of a change of employment among group companies.

However, the Court has now ruled that the "old" system no longer applies if the employee themselves terminated the former employment with the group company, or if the employer paid out severance at the time of the change and if there is no unlawful circumvention of the law.

In cases where it is the intention of the employer to make several redundancies, the mass termination procedures must not be forgotten prior to the issuing of the notices. The Supreme Court has now ruled that the offer to conclude mutual termination agreements could trigger such obligation.

Lastly, it should be noted that the law on wage and social dumping provides for the establishment of an inspection plan by the competent ministries for the year 2018 for the first time (which should be published until June 2019), in order to ensure more effective controls. It still remains to be seen whether this has any consequence on the actual controls by the authorities.

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