What are collective agreements in Austria?
Posting undertakings, i.e. companies posting workers abroad, are required to comply with certain laws in Austria.
They must also meet certain obligations arising from Austrian collective agreements, the main ones being:
- Payment of the minimum remuneration applying in Austria
- Compliance with working hours
In the case of temporary agency work on a cross-border basis, the agency is in general required to comply with all of the terms of the collective agreements that apply to workers placed in Austria.
It is particularly important, prior to posting or placing workers, to be aware of the minimum wage levels stipulated in the applicable Austrian collective agreement.
Paying wages below the collective agreement level entails heavy fines in Austria.
Austrian collective agreements serve to complement employment laws – stipulating in some cases added obligations that are found only in collective agreements.
In the following you will find information about the purpose and significance of collective agreements.
What is a collective agreement?
Collective agreements are written inter-company agreements made between the bodies representing employees and employers that are entitled to enter into collective agreements (usually trade unions and associations representing employers).
Collective agreements specify significant mutual rights and obligations arising from employment relationships, including rules for working hours and minimum wages or salaries and criteria for classifying employees into remuneration categories.
Collective agreements apply to employment relationships falling under the particular scope (i.e. sector, domain, blue-collar or white-collar workers).
The terms of collective agreements must not be limited or impaired by works agreements (i.e. written agreements concluded at company level between the works council and the company owner) or by employment agreements.
On the employees’ side of the table, collective agreements are normally negotiated and concluded by the Austrian Trade Union Federation (ÖGB) and by the individual trade unions (GPA-djp, GÖD, younion, Bau-Holz, PRO-GE, vida, GPF), while the Austrian Federal Economic Chamber and the particular professional associations (Fachverbände) represent employers.
Collective agreements normally apply to an entire economic sector.
What legal effect does a collective agreement have?
The most important rights and obligations between employers and employees are laid down in law, collective agreements, works agreements and employment agreements.
Laws have the highest priority, followed by ordinances, collective agreements, works agreements and employment contracts.
Collective agreements have statutory effect, i.e. similar to acts and ordinances, they apply in general. They are to be applied to all employment relationships falling within their scope.
Employment laws, collective agreements and works agreements mostly contain terms or provisions that are unilaterally binding, meaning that a provision cannot be modified to the disadvantage of employees by a term agreed at the next lowest level.
Only where more favourable for employees, does a term agreed at the next lowest level remain in effect and is not superseded by the higher-priority rule (referred to as the “favourability principle” - Günstigkeitsprinzip).
Works agreements and employment contracts must not therefore contain any terms that are less favourable for employees than those contained in laws and collective agreements – unless explicitly tolerated by the latter.
The significance of collective agreements
- Minimum wages and minimum salaries,
- special payments (e.g. annual leave pay and Christmas bonus)
- as well as numerous other entitlements and obligations
are not defined in law but in collective agreements.
Collective agreements also contain, for example, specific rules for various occupational groups, e.g. with a view to protection against termination.
Collective agreements also set forth terms governing the supplements paid out for shift work, working on holidays, overtime and working extra hours. Employees’ entitlement to time off (e.g. for relocation or marriage), allowances and bonuses, and travel expenses or daily allowances are also governed by collective agreements.
Collective agreements in Austria apply to all employees, including those who are not members of a trade union (referred to as “non-member effect” - Außenseiterwirkung).
Virtually all employees working in Austria, posted to Austria by their employer or a temporary work agency (about 98%) are covered by collective agreements.
There are more than 800 collective agreements in Austria. The various trade unions negotiate roughly 450 collective agreements each year. An OECD study recently identified Austria among the international forefront with regard to collective bargaining coverage of employees.