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The new Wage and Social Dumping Prevention Act

By:
Karina Chiang, MSc
12 Aug 20213 min read
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On the occasion of the current ECJ case law, the new Wage and Social Dumping Prevention Act (" Lohn-und Sozialdumping-Bekämpfungsgesetz", LSD-BG) was amended accordingly. The decisive factor for this was, among other things, a decision of the European Court of Justice (ECJ 12.09.2019, Rs Maksimovic, C-64/18) which recognized the accumulation principle in millions as a violation of the Charter of Fundamental Rights. The amendment to the Wage and Social Dumping Prevention Act was under review until 21 May 2021 and is to enter into force on 1 September 2021. The new regulations are to be applied to postings and assignments that begin after 31 August 2021.
In this Article

1. Improvement of working conditions for posted employees

There will be comprehensive regulation of Austrian labor law for employees posted or assigned to Austria from a duration of posting or assignment of 12 or 18 months. The new provisions to the LSD-BG are intended to ensure that employers comply with the wage law provisions in collective agreements as well as the minimum wage tariffs. The planned amendment will put posted foreign and domestic employees on an entirely equal footing after one year. The aim is in particular to improve the current framework conditions in order to combat unfair competition in the EU area. Thus, among other things, the national regulations on travel allowances (Section 26 EStG) for travel during postings (assignments) have been included accordingly in the LSD-BG.

 

2. New penalty regulations

According to the ECJ, the Austrian provisions are disproportionate due to the principle of cumulation and thus contrary to Union law. The aim of the Wage and Social Dumping Prevention Act is to improve working conditions for posted and temporary workers and to improve the enforceability and effectiveness of the provisions of the Wage and Social Dumping Prevention Act (LSD-BG).

In line with ECJ case law, proportionality is to be established by eliminating cumulation and by creating a penalty framework with a maximum limit. The new regulation therefore departs from the previous model of punishment per employee.

In the future, penalties of up to 20,000 euros can be imposed for violations in connection with reporting and readiness obligations, regardless of the number of employees affected.

In the future, penalties of up to 40,000 euros can be imposed for thwarting acts in connection with wage control, regardless of the number of employees.

In connection with underpayment of wages, a five-level penalty range, which depends on the degree of fault of the employer, is to be applied in the future. This so-called capped penalty by offense is based on the amount of remuneration withheld. According to the graduated scale, penalties of up to a maximum of €400,000 can be imposed for violations related to underpayment of wages.

 

3. Relaxations and changes in connection with obligations to keep wage records available

The planned law provides for measures to reduce bureaucracy. Companies will also benefit in the case of short-term postings of up to 24 hours; here, proof of service slips or work records will now be sufficient. The implementation of this regulation is intended to ensure that employers comply with the wage law provisions in collective agreements as well as the minimum wage tariffs.

Another new feature is that all documents will also be recognized in English (previously, only the employment contract in English was permissible). In the future, the wage documents can be requested by the authority up to one month after the end of the posting or assignment and must be submitted within 14 days.

Do you still have questions? Our experts Julia Saric-Bischof and Karina Chiang will be happy to assist you.

 

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