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CHSH Newsletter - Changes to Labour Law as of 1 January 2016

Date Published: 1/19/2016

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A number of amendments affecting Austrian labour law that are relevant to almost all employers in Austria entered into force on 1 January 2016. This newsletter should provide you with a brief summary of the most significant and important legislative changes. It should therefore not be deemed a conclusive account of all amendments introduced. If you have further questions regarding the new regulations, the labour law team at CHSH will be happy to advise you at any time.

Greater transparency for all-in contracts (Sec 2g of the Labour Contract Law Amendment Act)

The most important amendment was made to Sec 2g of the Labour Contract Law Amendment Act (Arbeitsvertragsrechtsanpassungsgesetz, AVRAG). This provision states that all employment contracts concluded or notices of employment issued from 1 January 2016, which provide for total pay comprising a basic salary (i.e. the remuneration payable for normal working hours) and other salary components, must specify exactly what the basic salary is. If the employer fails to specify the basic salary, the employee is mandatorily entitled to the basic salary, including excess payments common in the industry and area, that is paid to comparable employees by comparable employers in the area where the work is performed ("actual basic salary").

This amendment mainly concerns the all-in contracts that are so widespread in Austria. To date it has been commonplace for these contracts merely to show a total amount which should compensate employees not only for normal working hours but also for all additional hours worked. As of 1 January 2016, all-in agreements must explicitly specify the basic salary as part of total pay so as to prevent employees being entitled to the basic salary commonly paid in the industry and area where the work is performed. If such entitlement were to arise, this would simultaneously result in the excess payment made to the employee being lower compared with that under the collective agreement; the actual basic salary common in the industry and area will most likely exceed the minimum salary specified in the collective agreement. As fewer overtime hours would consequently be covered by the all-in payment, there is an increased risk of underpayment, which is a criminal offence, in particular in light of the extremely strict anti-wage dumping provisions that have been in force since 1 January 2015.

Stricter monthly factoring and a shorter period for the reimbursement of training costs (Sec 2d para 3 AVRAG)

Agreements on the reimbursement of training costs that are concluded from 29 December 2015 onwards may oblige the employee to reimburse training costs only if the employment relationship is terminated within four years of the completion of such training (previously five years). In specific cases (e.g. extremely cost-intensive and sustainable training programmes), an agreement can be reached with employees under which they are obliged to reimburse such costs, as before, for a period of up to eight years after completing a training programme.

Furthermore, it is mandatory for agreements concluded as of 29 December 2015 that the amount to be reimbursed by the employee is subject to monthly factoring. If the employer completely exhausts its statutory possibilities, an agreement on the reimbursement of training costs is then only possible for a period of four years after completion of the training programme, with the amount to be reimbursed decreasing by 1/48 each month.

Restrictions on post-contractual non-competition clauses (Sec 36 para 2 of the Employee Act and Sec 2c AVRAG)

It is – as before – permissible for parties to agree on post-contractual non-competition clauses. However, the legislator has tightened up the requirements for the validity of such non-competition clauses contained in contracts concluded from 29 December 2015 onwards. Whereas the employee until recently had to earn seventeen times the daily maximum contribution basis (2016: EUR 2,754.00) in the final month of his/her employment relationship pursuant to Sec 45 of the General Social Security Act, this has now been increased to twenty times (2016: EUR 3,240.00). If an employee whose noncompetition clause was agreed after 29 December 2015 earns less than EUR 3,240.00 in the final month of his/her employment relationship, the employer therefore cannot invoke a non-competition clause that had been agreed upon.

If the non-competition clause provides for the imposition of a penalty for non-compliance, the agreement regarding this penalty is valid only insofar as it does not exceed six times the last net monthly salary paid to the employee.

Part-time work for parents now requires a clear reduction in working hours (Maternity Protection Act and Parental Leave for Fathers Act)

The most important amendment affecting the Maternity Protection Act and the Parental Leave for Fathers Act concerns part-time work for parents. Whereas until recently the change of the allocation of working times was already sufficient to allow parents to take advantage of the rules regarding part-time work and consequently benefit from special protection against termination, however as of 1 January 2016 a reduction of working hours is unavoidable. In light of the new rules, parental part-time is only possible if the working hours are reduced by at least 20% but nevertheless amount to no fewer than 12 hours per hour.

Greater protection for foster parents, those on freelance service contracts and in the case of miscarriages (Maternity Protection Act and Parental Leave for Fathers Act)

Foster parents were previously only entitled to parental leave if they had taken a child into their care, without being paid to do so, with the intention of adopting the child. The wording referring to the 'intention' has now been dropped, which means foster parents are now entitled to parental leave even if they do not seek to adopt the child afterwards. This amendment applies to all foster parents whose children were fostered on or after 1 January 2016.

From 1 January 2016, the employment restrictions laid down in the Maternity Protection Act will also apply to mothers on freelance service contracts, as defined in Sec 4 para 4 of the General Social Security Act. Any mother on a freelance service contract whose employment is terminated up to four months after the birth of a child due to pregnancy or an employment restriction can contest this in court. The employer must demonstrate in proceedings that it is highly likely that other motives were a determining factor for the termination.

In future, the special protection afforded under the Maternity Protection Act against termination and dismissal will end four weeks after a miscarriage.

Extension of daily working hours for active travelling time (Section 20b para. 6 of the Act on Working Time)

From 1 January 2016, the daily working hours of an employee may be extended to up to 12 hours if the employee leaves his/her place of work at the behest of the employer with a view to continuing his/her work at another location even though he/she renders services during the journey by driving a vehicle on the orders of his/her employer ("active travelling time"). However, the prerequisite for extending working hours is that driving the vehicle is not one of the principal activities performed by the employee.

Prior to 1 January 2016, it was only possible to extend daily working hours due to passive travelling time.

Duty to inform employees about full-time positions (Section 19d para. 2a of the Act on Working Time)

In accordance with the new Sec 19d para 2 of the Act on Working Time, an employer must inform its part-time employees about vacancies that become available which could lead to them working a greater number of hours. This information can be made available at a suitable location within the business premises that is easily accessible for part-time workers or by disseminating a suitable electronic message or via other suitable means of telecommunication.

For more information:

Mag. Julian Feichtinger, LL.M.
Partner
julian.feichtinger@chsh.com
Tel: +43 1 514 35 191

Mag. Barbara Klinger
Senior Attorney
barbara.klinger@chsh.com
Tel: +43 1 514 35 191

Mag. Susanne Molitoris, LL.M.
Senior Attorney
susanne.molitoris@chsh.com
Tel: +43 1 514 35 191

Mag. Christopher Peitsch
Senior Associate
christopher.peitsch@chsh.com
Tel: +43 1 514 35 191

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In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

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