Scandal over illegal employment of posted workers

Trade unions and authorities have uncovered new practices of illegally employing workers, particularly from outside the European Union. The problem arises when companies obtain permission to hire ‘posted workers’ under false pretences. The working conditions of these foreign workers may be found to be in contravention of legal requirements. As a result, the trade unions are demanding more effective controls and tougher fines.

During early spring 2006, the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) and the media made allegations about new practices of illegally employing workers mostly from outside the European Union (EU). The ÖGB and some member unions have accused several companies of forcing third-country nationals to perform ‘modern forms of slave labour’. With respect to the case of a certain construction and demolition company in Upper Austria – which has widely been commented on as only the ‘tip of the iceberg’ – representatives of the Federal Ministry of Economy and Labour Affairs (Bundesministerium für Wirtschaft und Arbeit, BMWA) confirmed that existing pay and working conditions had been seriously violated.

Hiring posted workers under false pretences

In recent months, both trade unions and the authorities have uncovered the fraudulent practice of some employers illegally employing third-country nationals from outside the EU, by obtaining permission to hire posted workers under false pretences. According to law, a domestic company aiming to employ foreign workers for a short-term period of up to four months needs to obtain a so-called ‘posting permit’ or – in the case of third-country nationals – an ‘EU posting certificate’ for each worker, issued by the Labour Market Service (Arbeitsmarktservice, AMS). These provisions apply only to posted workers, i.e. workers who are posted by an enterprise from abroad (without any subsidiary in the national territory of Austria) to perform work for projects with a duration of no longer than six months on behalf of a company in Austria. The basic principle is that the working conditions and (minimum) pay in effect in Austria should be applicable also to the workers posted to work there (AT0306204T). The AMS is in charge of issuing the necessary permission on the basis of the information supplied by the applicant domestic firm.

According to the trade unions, an increasing number of Austrian companies have begun to abuse the system by using posted workers under false pretences. In fact, according to union representatives, these companies deliberately deceive both authorities and the AMS for the sole purpose of exploiting foreign workers. Trade unionists claim that such a practice of ‘trafficking in human beings’ not only violates the basic human rights of foreign nationals, but also threatens regular jobs as well as undermining Austria’s standards in terms of pay and labour protection and, therefore, the working conditions of the domestic workforce.

Case of the SSU company

The case of SSU, an enterprise headquartered in Linz, Upper Austria, which specialises in the construction and demolition of old industrial plants, was revealed for the first time in July 2005. This establishment uses almost exclusively workers from low-wage countries to work for short-term demolition projects. In 2005, up to 150 workers from South Korea and Indonesia were deployed by SSU on behalf of the power station Simmering in Vienna and the steel producer Voestalpine in Linz. On the basis of a posting contract concluded between SSU and an Indonesian firm, the AMS issued the posting permits necessary for the workers’ legal transfer to Austria.

After the Metalworking and Textiles Union (Gewerkschaft Metall-Textil, GMT) had given the authorities a tip-off, the labour inspectorate and a special law enforcement unit to combat illegal work practices (Kontrolle illegaler Arbeitnehmerbeschäftigung, KIAB) scrutinised the working conditions at the sites concerned. In the course of these examinations, the authorities found that the weekly working hours of the posted workers amounted to up to 62 hours and that pay per hour on average came to €1.30 instead of the required €10.50 rate according to the applicable collective agreement. Moreover, the workers’ accommodation – in old manufacturing premises – was classified as being unfit for human beings.

The KIAB instituted proceedings against SSU on the grounds of a breach of the Foreign Persons Employment Act (Ausländerbeschäftigungsgesetz, AuslBG), while the AMS withdrew all posting permits that had been issued for foreign workers on behalf of this company. However, as all foreign workers concerned have since left the country, any civil action against the company on the grounds of breaching Austrian labour law appears to be difficult.

Union demands

In the light of such cases, the unions are calling for stricter controls and tougher punishments for such exploitative practices (AT0302202F). They criticise current labour legislation for not providing any measures to effectively curb the illegal employment practices of either Austrian or foreign nationals. Moreover, the unions demand closer cooperation and coordination between the responsible monitoring authorities (AT0202203F), as well as a stricter procedure with regard to posting permits. However, the current government has shown no willingness to amend the legislation in these respects so far.

Georg Adam, Institute of Industrial Sociology, University of Vienna

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