Austria: Employment Market To Open On 1 May 2011

Facts

Transnational provisions currently allowing Austria to protect its employment market from nationals of countries which joined the EU in 2004 will partly expire at the end of April 2011.

As of 1 May 2011, the Austrian Act on the Employment of Foreign Nationals
(Ausländerbeschäftigungsgesetz-AuslBG) will no longer apply to citizens of Estonia, Latvia, Lithuania, Poland, Slovakia, Slovenia, the Czech Republic and Hungary. For Bulgaria and Romania further exceptions apply until 2013.

Due to the opening of the employment market, Austria intends to implement the "Lohn- und Sozialdumping Bekämfpungsgesetz – LSDB-G", which regulates measures to ensure minimum standards of terms and conditions of employment. In particular, working below the applicable minimum wage shall be prevented.

Implications

Parliamentary approval of the bill (Regierungsvorlage/ 1076 BlgNR 24. GP) implementing the new LSDB-G is still being awaited. If approved, the LSDB-G will enter into force on 1 May 2011.

The government has set the following objectives with the implementation of the LSDB-G:

  • measures against wage dumping and dumping of social securities (Bekämpfung von Lohn- und Sozialdumping);
  • protection of equal terms and conditions of employment;
  • protection of fair economic competition between companies;
  • protection of statutory taxes and social contributions.

If employees from the eight new EU countries are posted ("Entsendung") to work in Austria after 30 April 2011, the posting only needs to be announced ("EU-Entsendemeldung") to the competent authority one week prior to the start of the employment in Austria.

Measures of the LSDB-G

The LSDB-G will regulate some of the employer's obligations in case of a posting or transnational lease ("Überlassung") of a foreign employee from an EEA member state to Austria. In accordance with the comments on the draft bill, Austrian authorities shall also be enabled to control the terms and conditions of employment of permanent employees in Austria.

A new competent authority against wage dumping and dumping of social securities ("Kompetenzzentrum Lohn- und Sozialdumping Bekämpfung-LSDB") to be set up at the statutory health insurance company Vienna region ("Wiener Gebietskrankenkasse - WGKK") shall be able to control the payment of the minimum salary in accordance with the applicable statutory collective bargaining agreement and statutory law. Therefore, the competent authorities shall have the right to access ("Betretungsrechte"), inspect ("Einsichtsrechte") and question ("Befragungsrechte") employers.

Furthermore, in case of a posting or transnational lease of an employee, the employer is obliged to provide documents in German, which allow the authorities to assess compliance with the minimum requirements, as set out above.

The following documents may be used to prove the payments to the employee:

  • employment contract;
  • written statement of terms of employment ("Dienstzettel");
  • records of working time ("Lohnaufzeichnungen");
  • evidence of payment ("Zahlungsnachweis"), e.g., bank transfer ("Banküberweisung").

The employer must have German-language versions of these documents available at the employee´s workplace for the duration of the employee's employment.

Violations of the LSDB-G regulations are punishable by fines ("Verwaltungsstrafe") of up to EUR 50,000. In addition, the competent authority may forbid certain activities by (foreign) companies in Austria.

Employers are therefore well advised to consider the planned implementation of the LSDB-G carefully.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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