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P) NEWS PRESLM AYR RECHTSANWÄ LT EP) NEWS PRESLMAYR RECHTSANWÄLTEAPRIL 09
Ever since the onset of the economic crisis, an increasing number of companies have beenopting to change to a short-time regime for their workers. Legislators have responded to thegrowing demand for this workmodel and the changing economic framework that it reflects:on 26 February 2009, the Austrian Parliament adopted the Employment Promotion Act of2009 which became retroactively effective as of 1 February 2009 (BGBl I 12/2009). The newregulation extends the short-time allowance, a scheme to provide state financing for shorterworking weeks, and defines new retention periods.
New short-time work regimeto help ride the economic crisis
the start of the short-time regime, and that in actualpractice unions are frequently able to negotiate a short-timework support that is higher than the short-time workallowance. A recent example at Austrian Airlines providesfor its ground staff to be paid 90% of their standard pay fora reduction of their working hours to 80% of the standardworking hours, or a pay of 95% for a reduction of hoursworked to 90% of the standard.
Duration: In future, the short-time work allowance may beobtained for a maximum of 18 months, or up to 20 monthsin exceptional cases (compared to the three months whichwere previously the rule). The allowance is first grantedfor a maximum of six months, after which an extension maybe applied for at the AMS.
Reduction of working hours: In future, working hoursmust not, on average within the agreed short-time workperiod, be cut by less than 10% or more than 90% of thestandard working hours (previously, the short-time workinghours were, as a rule, not allowed to be less than 80% ofthe standard working week within a four-week period foraveraging working time).
Retention obligation:While the short-time work regime isin place, the firm must not shed any employees. A newfeature is the reduced retention period (period during whichemployees are protected against dismissal) after return-ing to normal working hours: Previously, the retention peri-od after returning to normal work was equal to the dura-tion of the short-time work regime. Now the social partnersprovide for a retention period of one month for up to twomonths of short time; two months for up to four monthsof short time; three months for up to 12 months of shorttime; and four months for any longer period of short-timework. The retention period after short-time work now appliesonlyto workers on short time. In special cases, however,the retention obligation during and after short-time workmay be waived, as had been the case before.
Short-time work combined with skills training: A noveloption is a scheme to combine short-time work withfurther education. If the hours gained are used for trainingand (further) education of employees affected by short-timework regimes, the short-time work allowance granted bythe AMS is increased by 15% (skills training allowance) tocover the additional expenditure from training.
Little has changed with regard to the procedure to applyfor a short-time work allowance as foreseen in the Employ-ment Promotion Act of 2009. As before, the employer mustcontact the local AMS office at least six weeks prior tothe envisaged start of the short-time work regime, in orderto consult on the situation. The AMS includes the workscouncil and the applicable interest group entitled to entera collective bargaining agreement in the consultationprocess. Together they examine whether there are anyother options apart from state-funded short-time work toovercome the crisis, such as reducing accumulated timecredits, introducing flexitime schemes, etc. If the consulta-tion process finds for a short-time work allowance, theinterest groups enter into a so-called social partnershipagreement (Sozialpartnervereinbarung) that regulates thespecific terms of the short-time work in the companyaffected with due regard to the above principles. Theemployer then needs to file an application for a short-timework allowance (co-signed by the works council or theemployees affected) with the relevant AMS office not laterthan three weeks before the short-time regime is introducedin the firm.
To conclude: In the event of an expected temporary down-turn, government-funded short-timework reduces personnelcosts while helping businesses to retain well-trained staffwho will be needed once the economy picks up again. If,however, a company suffers from a fundamental problemin its personnel structure, the scheme is just an expen-sive way of delaying necessary staff cuts (retention period!).It should be noted that members of the Federation of Aus-trian Industry called for further reforms (higher allowancesby the AMS) only a few days after the Employment Promo-tion Act of 2009 had been passed.
Short-time work (“Kurzarbeit”) means a temporary reduc-tion in the standard working hours. Companies mayintroduce such a regime through a collective agreement atshop level (“Betriebsvereinbarung”), generally, however,without being allowed to reduce workers’ pay. If workinghours are to be reduced concomitantly with a reductionin pay, this is permissible only (through a shop-levelagreement) when the applicable collective bargainingagreement makes provision for such a scheme (as do, i.a.,the collective bargaining agreements for metal-workingSMEs and large-scale industries, or for electric andelectronic industries) and the parties to the collectivebargaining agreement have come to an individual, case-based agreement. If the applicable collective bargainingagreement does not authorise any shop-level agreementon short-time work (as is the case for wholesale and retailtrade workers), all employees affected by the regime needto give their consent.Employees or works councils will typically consent to areduction in working hours only if they are granted at leasta partial compensation for the pay loss. In this situation,the short-time work allowance (“Kurzarbeitsbeihilfe”)will be of help. It is paid out by the Public EmploymentService (“AMS”) to the employer who then passes it onas a payment to workers affected by short-time workinghours (so-called short-time work support; “Kurzar-beitsunterstützung”). An employer accepting the short-timework allowance is then bound by a range of conditionsgoverning short-time work (maximum duration, periodduring which employees must be retained and are protect-ed against dismissal, etc.).
Government-funded short-time work is regulated byseveral legal provisions. The short-time allowance is basedon the Public Employment Service Act (Arbeitsmarkt-servicegesetz; AMSG) as amended by the EmploymentPromotion Act of 2009 (Beschäftigungsförderungsgesetz2009; Sections 37b and 37c AMSG). The provisions of theAMSG are implemented by a guideline of the Administra-tive Panel of the AMS (Federal Guideline for Allowancesfor Short-time Work and Short-time Work Combined withSkills Training). Added to this is a basic agreement betweenthe social partners which, i.a., regulates the retentionperiod once the short-time regime has been discontinued(Declaration by the Presidents of the Austrian Trade UnionFederation, Austrian Federal Economic Chamber, FederalChamber of Labour and Federation of Austrian IndustryRegarding the Employment Promotion Act of 2009).Summarised, these provisions stipulate the following frame-work for short-time work subsidised by a short-time workallowance:
Economic problems: The firm must be in temporaryeconomic trouble which is not connected to seasonalvariations (e.g. loss of orders).
Short-term work support: The employer must pay affectedemployees a short-term work support equal at least to theamount of the (pro rata) unemployment benefit for time notworked; this minimum short-time work support is coveredby the short-time work allowance paid by the AMS. Thesupport is subject to taxation. It should be noted that thecontributions and benefits under social insurance are com-puted from the assessment basis applicable just prior to
For more information on this subjectplease contact
Dr. Esther HoldTrainee lawyerand designated partner
PM-News_E_20.3.09:F-News_ENGLISCH 06.04.2009 14:19 Uhr Seite 2
P) NEWS PRESLM AYR RECHTSANWÄ LT EP) NEWS PRESLMAYR RECHTSANWÄLTEAPRIL 09
Ever since the onset of the economic crisis, an increasing number of companies have beenopting to change to a short-time regime for their workers. Legislators have responded to thegrowing demand for this workmodel and the changing economic framework that it reflects:on 26 February 2009, the Austrian Parliament adopted the Employment Promotion Act of2009 which became retroactively effective as of 1 February 2009 (BGBl I 12/2009). The newregulation extends the short-time allowance, a scheme to provide state financing for shorterworking weeks, and defines new retention periods.
New short-time work regimeto help ride the economic crisis
the start of the short-time regime, and that in actualpractice unions are frequently able to negotiate a short-timework support that is higher than the short-time workallowance. A recent example at Austrian Airlines providesfor its ground staff to be paid 90% of their standard pay fora reduction of their working hours to 80% of the standardworking hours, or a pay of 95% for a reduction of hoursworked to 90% of the standard.
Duration: In future, the short-time work allowance may beobtained for a maximum of 18 months, or up to 20 monthsin exceptional cases (compared to the three months whichwere previously the rule). The allowance is first grantedfor a maximum of six months, after which an extension maybe applied for at the AMS.
Reduction of working hours: In future, working hoursmust not, on average within the agreed short-time workperiod, be cut by less than 10% or more than 90% of thestandard working hours (previously, the short-time workinghours were, as a rule, not allowed to be less than 80% ofthe standard working week within a four-week period foraveraging working time).
Retention obligation:While the short-time work regime isin place, the firm must not shed any employees. A newfeature is the reduced retention period (period during whichemployees are protected against dismissal) after return-ing to normal working hours: Previously, the retention peri-od after returning to normal work was equal to the dura-tion of the short-time work regime. Now the social partnersprovide for a retention period of one month for up to twomonths of short time; two months for up to four monthsof short time; three months for up to 12 months of shorttime; and four months for any longer period of short-timework. The retention period after short-time work now appliesonlyto workers on short time. In special cases, however,the retention obligation during and after short-time workmay be waived, as had been the case before.
Short-time work combined with skills training: A noveloption is a scheme to combine short-time work withfurther education. If the hours gained are used for trainingand (further) education of employees affected by short-timework regimes, the short-time work allowance granted bythe AMS is increased by 15% (skills training allowance) tocover the additional expenditure from training.
Little has changed with regard to the procedure to applyfor a short-time work allowance as foreseen in the Employ-ment Promotion Act of 2009. As before, the employer mustcontact the local AMS office at least six weeks prior tothe envisaged start of the short-time work regime, in orderto consult on the situation. The AMS includes the workscouncil and the applicable interest group entitled to entera collective bargaining agreement in the consultationprocess. Together they examine whether there are anyother options apart from state-funded short-time work toovercome the crisis, such as reducing accumulated timecredits, introducing flexitime schemes, etc. If the consulta-tion process finds for a short-time work allowance, theinterest groups enter into a so-called social partnershipagreement (Sozialpartnervereinbarung) that regulates thespecific terms of the short-time work in the companyaffected with due regard to the above principles. Theemployer then needs to file an application for a short-timework allowance (co-signed by the works council or theemployees affected) with the relevant AMS office not laterthan three weeks before the short-time regime is introducedin the firm.
To conclude: In the event of an expected temporary down-turn, government-funded short-timework reduces personnelcosts while helping businesses to retain well-trained staffwho will be needed once the economy picks up again. If,however, a company suffers from a fundamental problemin its personnel structure, the scheme is just an expen-sive way of delaying necessary staff cuts (retention period!).It should be noted that members of the Federation of Aus-trian Industry called for further reforms (higher allowancesby the AMS) only a few days after the Employment Promo-tion Act of 2009 had been passed.
Short-time work (“Kurzarbeit”) means a temporary reduc-tion in the standard working hours. Companies mayintroduce such a regime through a collective agreement atshop level (“Betriebsvereinbarung”), generally, however,without being allowed to reduce workers’ pay. If workinghours are to be reduced concomitantly with a reductionin pay, this is permissible only (through a shop-levelagreement) when the applicable collective bargainingagreement makes provision for such a scheme (as do, i.a.,the collective bargaining agreements for metal-workingSMEs and large-scale industries, or for electric andelectronic industries) and the parties to the collectivebargaining agreement have come to an individual, case-based agreement. If the applicable collective bargainingagreement does not authorise any shop-level agreementon short-time work (as is the case for wholesale and retailtrade workers), all employees affected by the regime needto give their consent.Employees or works councils will typically consent to areduction in working hours only if they are granted at leasta partial compensation for the pay loss. In this situation,the short-time work allowance (“Kurzarbeitsbeihilfe”)will be of help. It is paid out by the Public EmploymentService (“AMS”) to the employer who then passes it onas a payment to workers affected by short-time workinghours (so-called short-time work support; “Kurzar-beitsunterstützung”). An employer accepting the short-timework allowance is then bound by a range of conditionsgoverning short-time work (maximum duration, periodduring which employees must be retained and are protect-ed against dismissal, etc.).
Government-funded short-time work is regulated byseveral legal provisions. The short-time allowance is basedon the Public Employment Service Act (Arbeitsmarkt-servicegesetz; AMSG) as amended by the EmploymentPromotion Act of 2009 (Beschäftigungsförderungsgesetz2009; Sections 37b and 37c AMSG). The provisions of theAMSG are implemented by a guideline of the Administra-tive Panel of the AMS (Federal Guideline for Allowancesfor Short-time Work and Short-time Work Combined withSkills Training). Added to this is a basic agreement betweenthe social partners which, i.a., regulates the retentionperiod once the short-time regime has been discontinued(Declaration by the Presidents of the Austrian Trade UnionFederation, Austrian Federal Economic Chamber, FederalChamber of Labour and Federation of Austrian IndustryRegarding the Employment Promotion Act of 2009).Summarised, these provisions stipulate the following frame-work for short-time work subsidised by a short-time workallowance:
Economic problems: The firm must be in temporaryeconomic trouble which is not connected to seasonalvariations (e.g. loss of orders).
Short-term work support: The employer must pay affectedemployees a short-term work support equal at least to theamount of the (pro rata) unemployment benefit for time notworked; this minimum short-time work support is coveredby the short-time work allowance paid by the AMS. Thesupport is subject to taxation. It should be noted that thecontributions and benefits under social insurance are com-puted from the assessment basis applicable just prior to
For more information on this subjectplease contact
Dr. Esther HoldTrainee lawyerand designated partner
PM-News_E_20.3.09:F-News_ENGLISCH 06.04.2009 14:19 Uhr Seite 2
New short-time workregime to help ridethe economic crisis
We are proud to announce the con-tinuation of a well-established tradition– the striking success of our traineelawyers in passing the bar exam:Mag.Oliver Walther and Dr. Esther Hold(who authored this issue of P)-News)passed the exam with “excellentsuccess”; Mag. Clemens Irrgeher
Mag. Peter Resch wants to enhance his law skills abroad and there-fore renounced his partnership position in late March 2009.
AN OUTSTANDING CROP OF JUNIOR LAWYERS
passed with “very good success”.Clemens Irrgeher, who focuses on civilactions, claims for damages andinvestor protection, has been a partnerin our law office since January 2009.Oliver Walther is the co-author of the
“Handbuch Vergaberecht”, a manualon tendering laws, and concentrateson labour law and regulations gover-ning commercial agents. Oliver Waltherwill become a partner in early June2009; Esther Hold will follow suit inJanuary 2010.
PM-News_E_20.3.09:F-News_ENGLISCH 06.04.2009 14:19 Uhr Seite 1
