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The Labour Constitution Act (Arbeitsverfassungsgesetz §2 (2)/2) stipulates that collective agreements can regulate ‘the mutual rights and obligations of employers and employees arising from the employment relationship’. This includes the employee’s obligation to work and the employer’s obligation to pay wages and provide care.
According to this legislation (§4), statutory interest groups of employers and employees have the legal capacity to establish collective agreements if they are independent of their negotiating partners and are responsible for the regulation of working conditions. Independence from the other party means that it must be possible to clearly assign the organisation to the employers’ or the employees’ side. Thus, collective agreements are concluded between employers’ representatives and employees’ representatives who have the capacity to enter into such agreements. The statutory interest groups which have the capacity to conclude collective agreements include the Chamber of Labour (AK) for the employees’ side, as well as the Federal Economic Chamber (WKO) and the chambers of the liberal professions (e.g. doctors, lawyers) on the employers’ side. However, in addition, the capacity to conclude collective agreements can also be granted to voluntary professional associations of employers and employees and certain other associations by the Federal Arbitration Office (Bundeseinigungsamt), a permanent tripartite body at the Federal Ministry of Labour and Economy, as well as by legislation (as is for example the case for the Austrian Federal Computing Centre). Voluntary professional associations have legal priority over statutory associations; thus, the collective agreements on the employee side are signed by the Austrian Trade Union Federation (ÖGB), as a voluntary organisation having priority over the statutory AK. In practice, the negotiations are conducted by the individual sectoral member unions (of which there are seven) of the ÖGB.
Collective agreements have a normative effect in their area of application as they create binding law for the employers and employees covered by the scope of application (Labour Constitution Act §11). A collective agreement is binding on all employers which are members of the signatory organisation, as well as on all employees working in these employers' establishments. This is regardless of whether these employees are trade union members or not, which is called the non-member effect (Außenseiterwirkung) (§12).
At the same time, there is no comparable mechanism of automatic extension to employers which are not covered by an agreement, either because they are not affiliated to the signatory employers’ association or there is no collective agreement at all due to the lack of an employers’ association capable of concluding such an agreement. In such cases, the Labour Constitution Act (§18) provides for a so-called extension order (Satzungserklärung), whereby a collective agreement can be extended by the Federal Arbitration Board to include employment relationships of essentially the same nature which are not covered by an agreement. Extension orders have the same legal effect as the reference collective agreements. They may be issued upon the written request of an employers’ or employees’ organisation provided that the collective agreement has prevailing importance in the relevant field of industrial relations. The working conditions in the extension order must be essentially the same as those in the collective agreement.
For groups of employees for who a collective agreement cannot be concluded (either because there are no organisations on the employer side capable of concluding collective agreements or no extension order of a collective agreement has been made), a minimum wage tariff (Mindestlohntarif) may be set through the Federal Arbitration Office. Such minimum wage tariffs are in place only for very few groups of employees, including domestic care workers, childcare workers in private-law institutions, au pairs or janitors.
In Austria, around 98% of workers are covered by collective agreements (OECD/AIAS ICTWSS). This encompassing scope of collective bargaining results mainly from companies’ obligatory membership of the statutory employer organisation WKO (and, as mentioned above) the legal extension of collective bargaining coverage to employees who are not union members: According to law, all businesses whose activities fall within the scope of the representational domain of the WKO are obliged to be a member of the chamber and its sectoral subunits. A collective agreement is binding on all employers which are members of the signatory organisation, as well as on all employees working in these employers' establishments. Coverage gaps have been closed within the last years and decades (for example, in the large social care sector or in the private education sector), so that only very few (mostly small) sectors do not have collective agreements; among them is the advertising and communication sector for most of Austria (there is only one regional agreement for Vienna), the beauty sector or waste management sector and there are also no collective agreements for dental technicians or employees of lawyers.
Minimum wages are generally set in collective agreements, concluded between the respective employer organisation (mostly sectoral subgroups of the mandatory WKO, but occasionally also voluntary employer organisations, see above) and the respective sectoral unions (formally signed by their umbrella organisation, the ÖGB).
Collective bargaining generally takes place at the industry level and is quite strongly coordinated and synchronised within and between the sectors. The practice of ‘pattern bargaining’, in which the metalworking industry takes on a leading role as the first major sector conducting wage negotiations in the annual bargaining process in autumn, has somewhat lost ground within the last years. The results of this sectoral wage bargaining, however, still have a considerable signal effect for other sectors in as far as they are taken as a role model. In practice, though, the metal industry agreements often mark one of the highest increases as compared to other (also low-paid) sectors due to the relative strength of the metalworkers’ trade unions. In addition to the autumn bargaining rounds, the spring bargaining rounds have received increased importance, with agreements in several large industries being negotiated. Despite a high degree of bargaining coordination, Austria’s collective bargaining system is not marked by a centralised, tripartite concertation of wages; this is reflected by a high degree of pay inequalities between sectors (see above), gender and employee statuses, and by flexibility.
Usually, collective bargaining takes place annually; in specific circumstances, however (e.g. COVID-19 pandemic or unstable economic situation due to the Russian invasion of Ukraine and the following energy crisis), bi-annual agreements have been concluded in some sectors in recent years.
Subminima in collective agreements mostly relate to the remuneration of apprentices and generally distinguish between the year of apprenticeship, with the lowest remuneration in the first and the highest in the last year of the apprenticeship training. In addition, subminima often apply to trainees or school students working during their summer vacation (seasonal/summer trainees). They are also often dependent on the apprenticeship rates (for example, receiving a second-year apprenticeship remuneration). Alternately, rates for trainees can be established as a percentage of the regular minimum wage (for example, in the case of the Red Cross collective agreement).
The basic rate relates to the minimum wage of the respective collective agreement; bonus payments, holiday and Christmas allowances, as well as other wage supplements (e.g. for night/Sunday work, or so-called dirt, danger and hardship allowances) do not count towards the minimum wage. When piece rate wages apply, the total wage received must also not lie below the collectively agreed minimum wage. According to case law (Supreme Court), a minimum wage must remain entirely at the employee's free disposal. ‘Breaking the prohibition on offsetting benefits in kind against the minimum wage is only permissible if the collective agreement itself provides for this and if the socio-political purpose of securing livelihoods is also complied with’.
In the minimum wage tariff for domestic workers, two separate minimum wages are provided; one for those not living at the premises of the client, and a second rate for those living at the client’s premises and receiving boarding there besides lodging, as well.
The amount of basic minimum wage in an agreement depends on the classification of work (more/less qualified, lower/higher education) and the length of service (seniority).
Statistics Austria provides an index of minimum collectively agreed wages, the so-called Tariflohnindex, a representative sample of collective agreements, works agreements that are on equal terms with collective agreements and wage regulations set by law. The index is calculated on a monthly and annual basis and differentiates between employment groups (blue-collar workers, white-collar workers, public employees) and sectors. Via this index, the development of minimum wages can be observed.
Databases of collective agreements:
Research: