On 1 January 2015 the New Labour and Social Law Amendment Act 2014 (Arbeits-und Sozialrechtsänderungsgesetz 2014 (”ASRÄG 2014“)) came into force in Austria. The law provides for several significant changes for employers in the fields of wage and social dumping.
Initial ideas behind the amendment act were to (i) prevent wage and social dumping and to (ii) gain profit for the state budget by intensified authority and control and, quite considerable, administrative fines.
Fines, fines, fines
According to the ASRÄG 2014, employers must not only comply with the respective minimum wage but also with all statutory supplementary payments such as special payments, allowances and/or surcharges, in order to not be prosecuted and fined. The new ASRÄG 2014 however, not only controls compliance with the relevant legal provisions with regard to wages, connected tax and social security contributions. The law also provides for administrative fines in cases of non-compliance with the document storing obligations.
An employer has to store employees’ relevant documents at their place of work in order to enable the authority to properly control the process. The relevant documents are: employment contract (or service note), payslips, evidence of payment (bank transfer receipts), wage records, working time records and documents on the classification regarding the respective collective bargaining agreement salary scheme.
This also applies to foreign employers engaging employees in Austria as well as to international secondments and temporary agency work within the EU or the EEA. Even if an employee is insured according to the social insurance system of a foreign country, an evidence document (social insurance document A1) has to be stored by the employer.
What makes the situation even more complicated for foreign employers is, that all the mentioned documents have to be provided in German to the authority in case of an audit. The documents also have to be stored at their place of work. If however, storing at their place of work in Austria is not reasonable then documents must be provided to the authority within two working days of a request to do so (before 1 January 2015 the deadline was within 24 hours). An employer who does not provide the relevant documents within the deadline or denies access to information or hinders or complicates the authority’s audit in some other way, risks being fined between EUR 500 and EUR10,000 (cumulative) for every affected employee (in case of recurrence EUR 1,000 to EUR20,000).
First preliminary experiences have revealed that the authority has a somewhat excessive practice which has led to high, and arguably unreasonably high, fines in some cases. For example, fines of up to EUR 60,000 have been imposed for not providing the necessary (wage) documents within 24 hours in spite of full compliance with all the relevant wage, tax and social security regulations.
Success story? – Negative!
Another downside to the new regulations is that categorising an employee into the relevant collective bargaining agreement salary scheme can be very tricky in some circumstances as (i) it can be hard to distinguish between some collective bargaining agreements as they can be quite similar, and (ii) there is no official body that helps with the categorisation. Needless to say, foreign employers who are not familiar with the Austrian collective bargaining agreement system are commonly hit even harder by these regulations.
In addition, the intention of the amendment act was to encourage compliance with wage, tax and social security regulations and not to result in high value fines for failing to comply with the document storing obligations.
Furthermore, expanding this thinking, if an employee has a varying place of work, it might not even be clear where the documents ought to be stored.
These uncertainties have resulted in political discussions about a new amendment act so there is hope that more practical regulations will come, however, currently, employers are in the difficult position of having to comply with the existing regulation.