New Wage and Social Dumping Control Act

On 1 January 2017, a newly enacted Wage and Social Dumping Control Act (Lohn- und Sozialdumping-Bekämpfungsgesetz - LSD-BG) (the “Act”) came into force. The Act aims to combat wage and social dumping by foreign employers in the context of the cross-border assignment of employees into Austria. To a large extent, the new legislation only compiles existing rules which are currently spread over several laws. However, the Act, also includes a more strict liability regime for clients and general contractors in the construction industry, new exemptions for cross-border employee assignments within a group, and a simplification of reporting duties and rules on the cross-border cooperation of the competent authorities in EU Member States.


New disclosure requirement for all-in-arrangements

Under an all-in-arrangement, an employee is entitled to a fixed remuneration, irrespective of whether he/she is working normal working hours only or overtime. Any new all-in-arrangement concluded from 1 January 2016 onwards needs to specify the amount of the base salary, i.e. the portion of the overall remuneration relating to normal working hours. We recommend allocating a reasonable amount to the base salary as compared to the overtime portion to minimise the risk of legal challenges.

New restrictions on non-competition clauses

A non-competition clause will only be valid if it refers to activities within the employer’s line of business, it doesn’t exceed one year and it does not unreasonably impede an employee’s professional career.

In addition, from 29 December 2015 onwards, a non-competition clause will only be enforceable if the remuneration (excluding special payments) payable for the last month of employment is 20 times the daily maximum under the General Social Insurance Act (“ASVG”) (i.e. currently EUR 3,240). Furthermore, any contractual penalty linked to a non-competition clause and agreed from 29 December 2015 onwards must not exceed six times the last monthly net salary (excluding special payments).

New rules on the reimbursement of training costs

Agreements on the reimbursement of training costs concluded after 28 December 2015 are subject to two new restrictions. The maximum commitment period is generally reduced to four (previously five) years and the agreement needs to provide for a proportionate reduction of the reimbursable amount for every month of employment.

Information requirements vis á vis part-time employees

Since 1 January 2016, an employer needs to inform part-time employees about any job vacancies in the company involving a higher amount of working time. This can be done by posting a notice at an easily accessible place in the company, by electronic data processing, or telecommunication. The information requirement only applies in case a job vacancy is “advertised”, i.e. externally or internally communicated to more than one person. Any offer addressed to only a single person does not qualify as an “advertisement”. Non-compliance with the information requirement incurs a fine.

With thanks to Dr. Philipp Spatz of Held Berdnik Astner & Partner Rechtsanwälte GmbH for his invaluable collaboration on this update.