Austria: Anti-wage dumping and social dumping law updated

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Tough new anti-wage and social dumping laws have been introduced by the Ministry for Employment, Social Affairs and Consumer Protection (BMASK).

Legislation was first introduced in 2011 in anticipation of the end of the transitional restriction for workers from the new Member States to access the Austrian labour market.

The most important part of the new legislation specifies that underpayment of workers is no longer considered a matter of civil law. Employers who pay their employees less than required by collective agreements now violate administrative law.

In Austria, more than 90% of the economy is covered by a collective agreement. This has two important consequences. First, the authorities can take legal action even if the affected worker does not want to sue their employer. Secondly, employers who are found guilty by the administrative court do not only have to pay the difference between what they paid and what they had to pay – including additional social security contributions – they also face a fine of up to €50,000.

The amendment will expand the scope of control in the construction industry, the sector with the highest incidence of underpayments. In future, inspectors will not only check the basic wage and supplements, but all wage elements, including social security contributions.

At the same time fines for not presenting proper wage documentation are increased from a maximum of €5,000 to a maximum of €10,000 and will be imposed per affected worker rather than as a lump sum.

In cases where employers are fined for underpaying workers, the affected workers will be informed by the authorities to give them the opportunity to sue the respective employer for the outstanding salary.

Finally the amendment also improves the possibilities for the authorities to demand security deposits from contractors in case of a reasonable suspicion that a subcontractor is underpaying its staff.

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