Temporary Employment Act amended

The Temporary Employment Act has been amended by Austria’s Council of Ministers after tripartite negotiations lasting two years. The agreement brings Austrian employment legislation into line with the EU Directive on temporary agency work. The act gives those employed on temporary agency contracts equality with full-time staff and guarantees better working conditions. It also establishes a social fund and finance for further training for unemployed temporary workers.

Background

After lengthy tripartite negotiations, Austria’s Council of Ministers agreed in September 2012 to an amendment of the country’s Temporary Employment Act.

Changes to the act had been discussed for two years between the Federal Ministry of Labour, Social Affairs and Consumer Protection (BMASK), the Federal Economic Chamber (WKÖ) and the Austrian Trade Union Federation (ÖGB). The amendments were needed to bring Austrian employment law into line with Directive 2008/104/EC on temporary agency work, which should have been incorporated into national legislation in December 2011. These belated changes mean that Austria has avoided being reprimanded by the European Commission.

The amendment establishes equality between temporary agency workers and employees on permanent contracts. Around 75,000 temporary agency workers – approximately 58,000 men and 17,000 women – are affected by the new regulations.

More protection, rights and information

The new rules, due to come into force on 1 January 2013, will give increased protection and improved rights for temporary agency workers, both during and between temporary work assignments.

The information provided in work contracts will have to be much more detailed than before. There will be better information on pay, safety measures, and the finishing date of a contract. Employees will have to be given at least 14 days’ notice of termination of any contract that lasts longer than three months.

Information about pay must now include details of any collective wage agreement which is in place, and about how pay is calculated. Details will have to be given about basic pay, any allowances or bonuses, and any other increments.

Austrian employment laws already guarantee temporary workers the same basic pay as permanent staff. A collective agreement for temporary agency workers has been in place for the past 10 years, and where a job is covered by both this and a sectoral collective agreement, the rule has been to pay the higher of the two applicable rates.

However, in addition to equal pay, the amendment will ensure that employees are informed in writing about the specific requirements of their job and the health risks they are likely to encounter. According to the Austrian Social Insurance for Occupational Risks (AUVA), temporary agency workers are two and a half times more likely to be the victim of an occupational accident than permanent staff members. New regulations in the amendment aim to cut these disproportionally high accident risks.

Another important part of the amendment aims to ensure that all permanent job vacancies at a company employing temporary staff are announced publicly, making it possible for these workers to apply for any available jobs.

The amendments also give temporary staff access to social benefits that were previously available only to permanent staff, such as subsidised lunches, participation in annual work outings, access to company childcare, and special working time arrangements. After a temporary worker has been employed on fixed-term assignments for more than four years, they will even be able to join occupational pension plans.

Companies violating the new rules could face fines of between €1,000 and €5,000, a 40% increase in the previous level of fines. Discrimination against temporary agency workers will be harshly penalised, and employers will have to pay a penalty of €110 for every early termination of an agency worker’s contract.

Fund for temporary agency workers established

On 1 January 2014, a year after the changes come into force, the new law provides for the establishment of a ‘social and further training fund’.

Unemployed temporary agency workers will receive a one-off payment, in addition to their unemployment benefit, from this fund, and will be able to draw on it to finance further training courses that will improve their employability.

A similar fund had already been established for blue-collar workers, but only at the collective bargaining level. The new fund, which will apply to both white and blue-collar workers, will be financed by payments from the agencies that offer temporary work. In the fund’s first year, they will have to contribute 0.25% of their total payroll costs to the fund and this contribution will increase to 0.8% by 2017.

It is expected that the fund will have about €10 million at its disposal. An existing education fund that has current assets of about €1 million will be added to the temporary agency work fund, and the Public Employment Service (AMS) will provide start-up funding of €2–€3 million a year for the first three years. The AMS money will be ring-fenced to fund only further training measures.

During autumn 2012, a committee of employers’ and employees’ representatives will discuss how one-off payments and funds for training are to be allocated.

Reaction

Both employees and employers were, by and large, content with the compromise reached. This was perhaps not surprising after two years of intensive tripartite negotiations.

Erich Foglar, President of the ÖGB, said the amendment would bring important improvements and increasing equality for temporary agency workers. He also said the ÖGB was in favour of the BMASK’s plan to implement a social and further training fund for temporary agency workers.

The WKÖ was also happy with the amendment. Gerhard Flenreiss, Chair of the Vienna WKÖ branch of service providers, said new rules on the provision of information would help the fight against law breakers. He also saw it as an important step towards creating increased legal certainty for temporary agency workers.

He was happy with the reduction in administrative requirements and saw the preservation of the validity of the sectoral collective agreement for temporary agency workers as a positive outcome. The WKÖ was also pleased that the unions’ demands for a proposed extension of an employee’s period of notice was blocked.

However, the WKÖ has been involved in discussions over the temporary agency workers’ fund, because temporary agencies are not happy with the further increase that contributions to the fund will add to their incidental wage costs. But the WKÖ Chair says he believes that the fund will be the sector’s contribution to long-term employment security.

Other employers’ associations, however, have not given their wholehearted support to the amendments.

The Austrian Association of Employment and Placement Agencies (VZA) is a business association for agencies and recruitment firms with about 50 member companies, and has warned that the amendments could put at risk around 50,000 ‘employment relationships’, especially among less-qualified workers. It is particularly concerned about the new obligation to give workers 14 days’ notice of termination of employment because this threatens the flexibility of the service offered by temporary agencies.

The VZA also criticises the fact that the penalty payment of €110 for every employment relationship terminated will also be applied in the case of temporary agency workers who will be taken on in a regular employment relationship by the (former) receiving company.

The amendments have also been criticised by Birgit Schatz, Worker and Consumer Protection Spokesperson for the opposition Green Party. She says the amendment does not go far enough and temporary workers will continue to be cheaper than permanent staff, because it will still be more cost-effective for a temporary agency to ‘park’ a jobless worker with the AMS. She also criticised the lack of sanctions for companies who fail to observe the new notice period of 14 days for ending a temporary worker’s contract.

Bernadette Allinger, Working Life Research Centre (FORBA)

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