Executive Summary

On 1 January 2016, essential amendments in labour law came into force. In order to make all-in-clauses about the coverage of overtime more transparent it is now required to display the basic salary numerically in the contract. The applicability of post- contractual  non-compete  clauses  will  be  restricted  to  higher  income  earners  whereby  the  amount  of  a  possible  contractual penalty is  now limited. Besides  further  amendments  in  particular  regarding  the  repayment  of  educational costs  as well  as maternity  protection  and  parental  leave,  some  financial  discharges  have  been  implemented  for  employers  concerning  incidental wage   charges.

Tips for Practical Use:

These amendments affect material provisions of employment contracts. They do not only have to be considered in new contracts but also at changes of the respective contractual clauses. Caution is advised when using old model contracts or templates which have to be adapted to the new legal situation. But also when issuing new notes of employment („Dienstzettel“) the changes   have in general to be implemented so that this can result in a creeping adaptation also of existing provisions.

Details on the New Legislation

  1. Changes in General Labour Law

At the end of October the Austrian Federal Government met for a grandly announced labour market summit in order to combat record unemployment. On 10 December 2015 the National Assembly decided the results of the discussions in the form of new legislation which came into existence at the turn of the year.

1.1    New Regulations as regards All-In Agreements

Since  1  January  2016,  new  and  stricter  requirements  govern  the  all-in-clauses  in  employment  contracts. These  are agreements on a lump sum to cover extra and overtime work. In the future, the „basic salary“, which is the contractually agreed salary for the normal working time, will have to be numerically displayed in the contract. The mere reference to the minimum wage of the applicable Collective Bargaining Agreement will – in deviation from the former situation – not suffice in the future. In case of failure to numerically disclose the basic salary, an „appropriate“ basic salary is deemed to be agreed including overpayment which is customary for comparable employees in the industry at the particular  place. This can result in quite embarrassing consequences for employers, in particular, if the usual salary in their industry exceeds significantly the minimum wage of the Collective Bargaining Agreement. One of the most severe consequences is the fact that for the coverage of excess and overtime work there only remains a lower sum beyond the basic salary.Should this sum not cover the excess and overtime hours worked there exists not only the risk of additional claims from employees but also of administrative penalties because of wage and social dumping. Furthermore, the excess or overtime hours will be more expensive due to the higher basic salary. Lastly it remains unclear who is competent to determine the „appropriate“ basic salary.

The legal obligation to numerically display the basic salary applies in general to any all-in agreements concluded after 1 January 2016.

1.2    Disclosure of the Basic Salary in the Note of Employment

The legal amendments furthermore require the numerical disclosure of the basic salary in each newly issued note of employment. Due to the fact that notes of employment for example have to be re-issued in case of changes of their significant provisions (e.g. in case of promotions, changes in the services, in the working hours, (voluntary) amendments to the salary, etc.), a „creeping“ adaptation of the notes of employment to the new system will (has to) take place. The impact of a failure to re-issue a new note of employment on all-in-agreements already concluded before 1 January 2016 leaves a lot of questions. In the worst case, it is to be expected that also in such cases an „appropriate“ basic salary (usually exceeding the minimum wage according to the applicable Collective Bargaining Agreement) will be applicable as salary for the normal working hours if no adaptation takes place.

1.3    Restrictions regarding the Post-Contractual Non-Compete-Clauses

The agreement of post-contractual non-compete-clauses (the „non-compete-clauses“) will be restricted in the future in two respects: on the one hand, the minimum remuneration above which a non-compete-clause may validly be agreed on will be raised from previously EUR 2,635.00 to 20 times the daily social insurance contribution basis of the General Social Insurance Act (EUR 3,240.00 for 2016). At the same time it was implemented that special payments (13th and 14th salary, bonuses) do not have to be included into the calculation of the employees’ remuneration. On the other hand, the permitted maximum of a contractual penalty for the breach of a non-compete-clause has been limited to six net monthly salaries (whereby also in this  respect, special payments have expressly to be excluded). All this applies to non-compete-clauses concluded after 1 January 2016, either in new contracts or in the context of amendment agreements.

1.4       New Rules on the Repayment of Educational Costs

According to the legal situation in the past, an obligation could be imposed on employees to repay educational costs if the employment was terminated within five years after the end of the education by notice of the employee, by early unjustified termination by the employee or by dismissal. The amount of the repayment had to be divided in aliquot parts. However, it was not finally decided in judicature and literature whether a split in yearly aliquots is allowed.

Now, the possible duration of such an obligation to repay educational costs has been reduced to four years. In addition, it is expressly regulated that aliquot parts of the educational costs have to be determined monthly. In case of a breach of these legal requirements, the whole agreement is deemed to be invalid.

1.5        Extension of the Daily Working Hours

According to the new legislation, the daily admissible maximum working time of generally ten hours may be extended to twelve hours in case of driving a vehicle even if it is instructed (active travelling time). Hereby, the employees on business trips shall be given the possibility to return to their home instead of being forced to stay overnight due to the exceeding of the daily maximum working hours.

1.6       Information Obligation vis-à-vis Part-Time Employees

Part-time employees now have mandatorily to be informed about free working places in their operation with higher working time. In case of infringement, administrative penalties may be imposed in a range from EUR 20.00 to EUR 436.00.

1.7       Entitlement to an Overview of the Payroll Accounting

According to the new legislation, employees are entitled to a clear comprehensible and complete monthly written payroll accounting (remuneration and expense allowance) as well as to a copy of their registration to the social insurance which they may claim at court.

  1. New Regulations in Maternity Protection and Parental Leave

Together with the amendments in labour law, there have been implemented partly drastic changes for expecting parents and employees with children.

2.1        Restrictions of Parental Leave

Employees are in general entitled as before to reduce their working hours if they are responsible for the education of children as long as the general requirements are fulfilled (service at the employer of at least three years, at least 20 employees in the operation). Until now, employees were principally free to determine the extent of the parental part time. Through the legislative change, a restrictive „range“ has now been implemented. The reduction of the weekly normal working time has at least to reach 20 % whereby the normal weekly working  time must not drop below 12 hours.

2.2       Implementation of a „Second Notification Time“ for Parental Leave

According to the legislation up to now, an employee was not entitled to parental leave if the other parent, who  is self-employed, took over the care of the child immediately after the end of the maternity protection time. The new legislation now allows the employee to start the parental leave flexibly until the 2nd year of the child’s life. The leave only has to be notified to the employer three months before the planned start at the latest.

2.3       Facilitations for Freelancers

The absolute prohibition of employment (8 weeks before and 8 weeks after the birth) is now also applicable to freelancers. Furthermore freelancers enjoy according to the new legislation a protection from termination of employment by reason of pregnancy or by reason of the prohibition of employment for a period of 4 months after the birth of the child.

2.4       Protection from Termination of Employment in case of Miscarriage

Female employees enjoy in future a protection from termination of employment and dismissal also in case of a miscarriage which period starts with the miscarriage and ends four weeks thereafter.

2.5        Possibility of a Paternity Leave for homosexual Women

Women are now expressly included in the scope of application of the Act on Paternity Leave. This enables homosexual women to make use of paternity leave even if they do not fall within the scope of the Act on Maternity Leave. Consequently, there is now the possibility of both parents for parental leave (such as in case of heterosexual couples).

  1. Discharges for Undertakings

The labour market summit aimed not only at ameliorations for employees but also at discharges for employers. The Ancillary Budget Act now contains the following concrete subjects in this respect.

3.1        Reduction of the Incidental Wage Charges

The employer’s contributions to the Family Assistance Fund will be reduced as of 2017 from 4.5 % to 4.1 % and as of 2018 again to 3.9 %.

3.2        Bonus-Malus-System for the Employment of Older Employees

As of 2018 employers with at least 25 employees have to pay the double dissolution charges in case of notices of termination (which amounts now to EUR 118.00) if the employment rate of older employees in   their undertaking is lower than the average in the industry. The Malus will however only be applicable if legally defined target amounts are not exceeded. In return, the employer’s contribution to the Family Assistance Fund will be reduced by 0.1 % for employers who achieve or exceed the average in the industry (in addition to the above mentioned general reduction of the employer’s contribution to the Family Assistance Fund).

3.3       Insolvency-Remuneration  Assurance  Contribution

The Insolvency-Remuneration Fund is mainly financed by contributions of the employees. These are surcharges in percentage terms to the Unemployment Assurance Contribution – the Insolvency-Remuneration Assurance Contribution (IESG-contribution). The amount of this contribution is defined by the Ministry of Labour, Social Issues and Consumer Protection by regulation. In the year 2015 the surcharge amounted to 0.45%. For 2016 it is now reduced to 0.35%.