The shift of liability from the officers and directors entitled to represent the company to so-called "Responsible Representatives" pursuant to Sec 9 Para2 Administrative Penal Act (Verwaltungsstrafgesetz ‒ VStG) aims at disburdening and protecting the company’s senior executives from being held liable for breaches of public law provi-sions in their company. Given this intent, the senior executives concerned are regu-larly astonished to discover in the course of administrative penal proceedings that the manner in which Responsible Representatives have been appointed has not been compliant with the law and their appointment was, therefore, ineffective. Con-sequently, the supposedly protected senior executives may remain liable if the vi-olation the company is accused of is established and they are found guilty.
Requirements for the valid appointment of a Responsible Representative
- Only individual persons may be appointed;
- the appointed individuals must not benefit from any immunity from crimi-nal prosecution;
- the appointed individuals must have their principal residence in Austria or be EEA citizens with principal residence in a State in which the service of notifications in matters of administrative penal proceedings is ensured by a treaty or by other means.
- an agreement on an individual’s appointment as a Responsible Representa-tive must be concluded by the regular representatives amongst them-selves, or between the employer and the employee to be appointed Re-sponsible Representative;
- the Responsible Representative to be nominated must demonstrably con-sent to his/her appointment;
- both the nomination and the consent of the Responsible Representative must refer clearly and in an unequivocally identifiable manner to the as-signment of penal liability;
- the Responsible Representative must have the authority to issue instruc-tions in the field of responsibility assigned to him/her;
- The scope of responsibility of the Responsible Representative must be clearly defined as to its territorial and substantive application (räumlich und sachlich abgegrenzter Bereich).
According to certain substantive public laws, particular requirements may add to the general requirements. In most cases, those particular requirements subject the ef-fectiveness of the appointment of the Responsible Representative to the notification of a specific authority, together with evidence of the consent of the designated Re-sponsible Representative (cf. Foreignersꞌ Employment Act – AuslBG, Labour Inspec-tion Act – ArbIG). The ArbIG, on the other hand, restricts the employees eligible for Responsible Representatives to those belonging to the executive staff (cf Sec 23 Pa-ra 2).
When is the scope of responsibility defined clearly enough?
Due to the rather restrictive and casuistic jurisprudence applied by Austria’s Su-preme Administrative Court (VwGH), a failure to provide the required clear determi-nation of the scope of responsibility to be assigned to the Responsible Representa-tive turned out to be the most prevalent reason for the invalidity of the appointment of the Responsible Representative.
In this respect, it should be pointed out that the law distinguishes between two cas-es, namely whether a regular representative or "another person" is nominated as a Responsible Representative (Sec 9 Para 2 Sent 1 or 2 VStG). Only in the first case (the nomination of a regular representative) can an individual be assigned the re-sponsibility for the whole company. "Other persons", as employees, may only be appointed for certain determined territorial and substantive areas.
The jurisprudence on the sufficiently precise determination of the areas of responsi-bility assigned to the Responsible Representative is extensive. However, the case law must be evaluated on a case-by-case basis according to both the circumstances of the company and the public laws concerned. In simplified terms, the territorial area attributed to the Responsible Representative refers to the company’s premises or parts thereof. The territorial area concerned shall be determined as precisely as possible. The substantive area, essentially, refers to the provisions for which the Responsible Representative shall be responsible. These provisions too shall be de-termined as precisely as possible. In particular, if several public laws or provisions are mentioned in the appointment agreement of the Responsible Representative – which is often the case, given the wide range of public law –, it must be guaranteed that there are no ambiguities, let alone inconsistencies as to the assigned scope of responsibility.
Moreover, it should be kept in mind that the appointment of several persons as Re-sponsible Representatives for the same area of responsibility is prohibited and, thus, invalid. However, the appointment of several persons as Responsible Representa-tives is admissible if each of the attributed areas of responsibility is distinct from the others, is clearly determined and, in particular, does not overlap with another.
Preferably, the appointment of the Responsible Representative must be clear to the authority "at first sight"…
As an indication for the assumption that the requirements of the law and the juri-sprudence for the appointment of a Responsible Representative are met, the VwGH has ruled – in a manner of speaking from the authorityꞌs point of view – that the au-thority may not be compelled to "conduct investigations on the premises in question and its territorial and substantive organization, in particular, as to its size and loca-tion and the use of separate installation facilities" (VwGH 16 December 2010, 2009/07/0142). Furthermore, the authorities shall be "released from the obligation to examine and interpret the appointment [of the Responsible Representative] and its evidence if this is only possible with recourse to further evidence due to the un-clear declarations and content of the appointment" (ibidem). Though it remains va-gue in which cases declarations shall be deemed to be ambiguous, it must be as-sumed that the authority must not be burdened with major additional tasks when examining the appointment of a Responsible Representative.
The appointment of Responsible Representatives shall relieve and protect a compa-ny’s senior executives by releasing them from the liability which they generally bear. For this reason, it is all the more annoying, and often surprising, if the ap-pointment of Responsible Representatives turns out to be invalid due to its non-compliance with the requirements of the law and, in particular, of the – rather re-strictive and complex – jurisprudence. As a consequence, those officers and directors entitled to represent the company who are supposed to be protected by the shift of liability to the Responsible Representatives may still be held liable if the vi-olation the company is accused of is established and the senior executives are found guilty. Therefore, companies are well-advised to invest from the very beginning suf-ficient accuracy and diligence in the agreements on the appointment of Responsible Representatives to ensure that these are fully compliant with the respective re-quirements.