Economically dependent workers to get full social protection

In January 2007, Austria’s new coalition government adopted a proposal put forward by the social partners to extend social insurance coverage for self-employed people, in particular for self-employed workers who are deemed as being ‘economically dependent’. Accordingly, self-employed people working under the same conditions as employees will be obligatorily covered by unemployment insurance or, like genuine self-employed people, may opt for this scheme on a voluntary basis.

The new coalition government of the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ) and the conservative People’s Party (Österreichische Volkspartei, ÖVP), which took office on 11 January 2007, has announced better protection measures against social risks for self-employed people, in particular so-called ‘economically dependent worker s’. In their joint programme for the legislative period 2007–2010, the two parties committed themselves to enacting legislation extending unemployment insurance coverage, as well as sickness and maternity benefits, to self-employed persons. In doing so, the government has adopted part of a comprehensive package of social partner proposals (Wachstum und Vollbeschäftigung (in Austrian, 304Kb PDF)), drawn up by Austria’s four major social partner organisations in December 2006.

Social partner proposals

In accordance with the package of proposals put forward by the social partners, holders of so-called ‘free service contracts’ (Freie Ddienstverträge), whose incomes exceed a defined minimum amount laid down by law and increase annually (Geringfügigkeitsgrenze), should be covered by unemployment insurance. All other groups of self-employed people, including those working on a so-called ‘contract for work’ (Werkvertrag), should be given the right to voluntarily opt for the unemployment insurance scheme. Furthermore, it is proposed that ‘free service contract’ workers would be fully integrated into social protection legislation that applies to ‘standard’ dependent employees, who are covered by the General Social Insurance Act (Allgemeines Sozialversicherungsgesetz, ASVG). This would result in total coverage in relation to health and occupational injuries insurance, pensions and unemployment insurance, the severance pay scheme, and statutory protection in the event of insolvency, an issue which is still subject to ongoing debate.

Economically dependent self-employed workers

Under Austrian labour and social security law, people employed under either a ‘free service contract’ or a ‘contract for work’ are classified as being self-employed in the narrow sense, even though they do not employ other people and mostly work for only one client. In one sense, their working situation largely resembles that of ‘dependent’ employees. In formal terms, the difference between these two forms of ‘atypical work’ is as follows: while people working on a ‘contract for work’ basis are obliged to fulfil a certain, well-defined task, ‘free service contract’ workers provide an ongoing service, often on a fixed-term basis (AT0309201N). Even though the latter group of workers are, formally, also not subject to the instructions of the client and free to schedule their own working time, they are in fact often completely dependent on their quasi-employer in many respects.

A growing number of employers have deemed the use of such atypical jobs, as distinct from a ‘standard’ employment relationship, as being very attractive, since it enables them to save on social insurance contributions and bypass labour law commitments. At present, both types of ‘economically dependent self-employed workers’ are since 1998 only partially covered by the country’s social insurance system; this coverage has included health services, without sickness and maternity benefit, along with state pensions.

Need for further social partner negotiations

Both employers and trade unions have approved of the new government’s willingness to realise the social partners’ proposals. The Austrian Federal Chamber for the Economy (Wirtschaftskammer Österreich, WKO) welcomed the planned possibility for all self-employed people to opt for an unemployment insurance scheme. Against the background of a growing number of insolvencies in recent years, this has assumed particular importance from the perspective of small-scale craft producers and ‘one-person companies’ (AT0404202N). For their part, trade unions, which have begun to organise and represent ‘bogus’ self-employed workers since the late 1990s, have praised the partial closure of gaps in social security law. However, the trade unions consider that there is still some room for further negotiations. On the one hand, it remains unclear whether the planned unemployment insurance contributions on behalf of ‘free service contract’ workers will be equally shared between these workers and the quasi-employer; moreover, in the case of genuine self-employed people and those working on a ‘contract for work’ basis, the amount of their contributions when opting for a voluntary unemployment insurance scheme has not yet been agreed. On the other hand, the trade unions have called for regulations aimed at avoiding possible abuses of the planned unemployment insurance scheme by self-employed people, whereby they could opt for the scheme only a few weeks before closing down their business.

The trade unions’ initial attempts to bring ‘economically dependent self-employed workers’ under the terms of ‘standard’ social security, but also under ‘standard’ labour law, have however not been reflected either by the joint social partner proposal or the government agenda.

Georg Adam, Institute of Industrial Sociology, University of Vienna

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