Amendment of the Austrian Wage and Social Dumping Combating Act (“LSD-BG”) – A brief overview
The first version of the “LSD-BG” entered into force some time ago with the aim of ensuring that all employees working in Austria receive the minimum wage to which they are entitled according to Austrian regulations and that both domestic employees and foreign employees posted or assigned to Austria enjoy the same conditions on the labour market. In addition, it is also intended to ensure fair competition between companies.
Since its first entry into force, this law has been continuously amended and so another – long awaited – amendment to the Wage and Social Dumping Combating Act was announced today. The new provisions entered into force retroactively as of 1st September 2021 and, in principle, are to be applied to postings and assignments that began after 31st August 2021. However, the amendments regarding the penal provisions are also to be applied to proceedings already pending at the time of entry into force.
Within the scope of the amendment, among other things, the previous administrative penalty provisions were adapted to the case law of the European Court of Justice (in short: ECJ) and at the same time a part of the new (amended) Posting of Workers Directive of the European Union was implemented at national level (the implementation of other provisions can be found, for example, in the amendment to the Temporary Employment Act [in short: AÜG]). A brief overview of the main amendments:
- Amendment of the scope of the LSD-BG:
- Explicit exemption from the scope of application of the LSD-BG of employment relationships with public-law corporations to which such service-law provisions are applicable that compulsorily regulate the content of the employment relationship and correspond to those that are applicable to employment relationships with the federal government, federal states, associations of municipalities and municipalities; in essence, this thus corresponds to an exemption of “foreign civil servants” from the scope of application of the LSD-BG.
- Harmonisation of the scope of application with that of the EU Posting of Workers Directive; in future, a posting within the meaning of the LSD-BG will therefore only (no longer) be deemed to exist if it is based on a cross-border service contract;
- Introduction of a legal definition of “mobile worker” as well as additional exceptions (in addition to the already existing exceptions related to small scale and short duration of the activity) that further limit the scope of the LSD-BG, such as:
- Not applicable to employment relationships with employees who receive a gross monthly salary of at least € 6,660 (2021; depending on the maximum contribution base pursuant to Section 108 (3) ASVG), regardless of the scope and duration of the activity,
- Not applicable to postings or assignments in the framework of exchange, training, education or research programmes,
- Not applicable to postings or assignments as lecturers at universities, colleges or “pedagogical schools”,
- Not applicable to workers sent by the seller/lessor or buyer/lessee to deliver or collect goods,
- Not applicable to workers seconded by the vendor/lessor who carry out activities involving a small amount of time which are essential for the commissioning and use of goods supplied,
- No application on temporary intragroup postings of special skilled workers if these are working on delivery, commissioning and related training, maintenance, service work and repairs of machinery, equipment and IT systems,
- Not applicable to postings and assignments for training purposes under certain conditions;
- Changes in connection with the holding and transmission of documents:
- All wage documents that must be kept available under the LSD-BG (including any document indicating the existence of foreign social insurance) may now also be kept available in English. Previously, this was only permitted for the employment contract or “service note”.
- The Anti-Fraud Office and the Construction Workers’ Leave and Severance Pay Fund are now additionally entitled to demand the transmission of wage records even up to one month after the end of the posting or transfer.
- In the event that repeated cross-border assignments of employees have been agreed, the posting/transfer notification can be submitted for a “framework period” of up to 6 months prior to the first commencement of work. In this case, all documents required under the LSD-BG must be kept available or made electronically accessible at the place of work or assignment for the duration of the entire framework period.
- In the case of postings which do not exceed 48 hours and do not concern mobile employees, only the employment contract or “service note” and working time records must be kept available.
- Changes related to penalty provisions:
- Abolition of the accumulation principle – According to this principle, the number of employees affected by a violation of formal obligations of the LSD-BG is no longer relevant, but only one administrative violation is deemed to have occurred, whereby this also applies to violations of the provisions in connection with the underpayment of employees.
- Abolition of minimum penalties and creation of a new “range of penalties” with a fixed maximum, with the future ranges of penalties being as follows:
- Fine of up to € 20,000 for breaches of the reporting and standby obligations,
- Fine of up to € 40,000 for acts of frustration in connection with wage control,
- Fine of up to €20,000 or up to €40,000 (in a repeat case) for failing to keep and submit wage records,
- Fines of up to € 50,000 for underpayment of wages, distinguishing between different “pay levels” with correspondingly varying maximum penalties:
- up to € 20,000, if the sum of the withheld remuneration amounts to less than € 20,000 in the first case for employers with up to 9 employees (“micro-enterprises”),
- up to € 100,000 if the amount of the withheld remuneration exceeds € 50,000,
- up to € 250,000 if the amount of the withheld remuneration exceeds € 100,000,
- up to € 400,000 if the sum of the withheld remuneration exceeds € 100,000 and more than 40 % of the remuneration was withheld intentionally on average;
- In the case of immediate and complete cooperation of the employer in establishing the truth, a lighter punishment is provided for and thus the application of the lower penalty range (e.g. up to € 100,000 instead of up to € 250,000).
- In addition, it is clarified that underpayments that consistently cover more than one pay period are considered a single administrative offence and any overpayments are to be credited against underpayments in the same pay period.
- Introduction of an additional mitigating factor in the absence of information on the website to be set up under the EU Posting of Workers Directive as to which national legal standards apply to postings or assignments.
- Introduction of a new provision according to which a ZKO declaration (including change declarations) is deemed to have been made in full even if an incorrect form (declaration of a transfer instead of a posting and vice versa) has been used by mistake, but this form has been completed in full.
- Further amendments to implement the EU Posting of Workers Directive:
- In accordance with the EU Posting of Workers Directive, a new paragraph 3 was added to Section 2 of the LSD-BG, according to which Austrian statutory labour law standards and those laid down by ordinance or collective agreement – subject to certain exceptions such as the provisions of the BMSVG or BPG – are to be applied in full if a posting or assignment exceeds a period of 12 months and the Austrian provisions are more favourable than the corresponding provisions in the country of origin.
However, the aforementioned 12-month period may be extended to 18 months for certain reasons if the employer submits a reasoned notification to that effect.
- In addition, a mandatory entitlement of posted workers to reimbursement of expenses for travel, accommodation or subsistence costs incurred during the posting in Austria was introduced.
For questions and support do not hesitate to contact: Árpád Geréd and Alexandra Prodan.
Status: 10 .09 .2021
Disclaimer: This article has been carefully researched and prepared, but is for information purposes only and is in no way a substitute for legal advice. Liability for correctness and completeness is excluded.