Anti-Wage and Social Dumping Act, Federal Law Gazette No. 44/2016 (Lohn- und Sozialdumping-Bekämpfungsgesetz, LSD-BG)
Austrian law against wage and social dumping is into force - We are glad to advice
Austria first brought in a law against wage and social dumping in May 2011 which was modified over the last years (Bundesgesetz, mit dem ein Gesetz zur Bekämpfung von Lohn- und Sozialdumping erlassen wird (Lohn- und Sozialdumping-Bekämpfungsgesetz – LSD-BG)). The law aimed to ensure that foreign companies would adhere to Austrian wage regulations and provide employees with wages according to Austrian minimum standards. It applied to domestic companies and to foreign employers (including temporary agencies) posting workers to Austria.
There were penalties for those who paid wages less than the Austrian national minimum wage or less than those provided for in collective agreements.
Sending / posting of employees to Austria – Wage and social dumping duties
If a foreign employer without a permanent establishment in Austria posts one or several employees to Austria, the employer must comply with wage and social dumping rules under Austrian law. Please note there is no minimum or maximum duration for wage and social dumping aspects.
The existing law in regards to the wage und social dumping is called Anti-Wage and Social Dumping Act (“Lohn- und Sozialdumping-Bekämpfungsgesetz”).
The LSD-BG is also applicable for temporary workers, homeworkers, and agricultural and forestry workers as defined by the Agricultural Labour Act (“Landarbeitsgesetz”). All documents have to be available for inspection to Austrian authorities. These inspections are usually conducted by the Austrian Financial Police.
The penalty range for the infringements of the reporting requirement or keeping reporting documents and social security documents available are high.
Companies established in an EU, an EEA Member State or in Switzerland are required - before the start of work (when posting or hiring out mobile workers in the transport sector, prior to their entry to Austria) - to notify the Austrian Central Co-Ordinating Agency Charged with Investigating Illegal Employment (Zentrale Koordinationsstelle für die Kontrolle der illegalen Beschäftigung, ZKO) of the posting or hiring out of workers by using form ZKO 3 (when posting workers) or ZKO 4 (when hiring out workers).
Relevant regulations - Anti-Wage and Social Dumping Act, Federal (Lohn- und Sozialdumping-Bekämpfungsgesetz, LSD-BG)
Section 21. (1) Employers established in an EU Member State or EEA State or the Swiss Confederation shall keep the following documents readily available at the domestic place/site of work during the posting period or shall make them accessible electronically to the tax authorities or the Construction Workers’ Holiday and Severance Pay Fund on site and at the time of the investigation:
1. documents showing the employee's registration for social insurance (social security document E 101 in accordance with Regulation (EEC) No. 1408/71, or social security document A 1 in accordance with Regulation (EC) No. 883/04 on the coordination of social security systems), unless the posted worker is subject to mandatory social security in Austria; if, at the time of the investigation, the employer furnishes evidence in German showing the inability to obtain these documents from the competent social security institution prior to the posting, equivalent documents in German (application for issuance of social security document E 101 or A 1 and confirmation of the competent social security institution that the employee is subject to a foreign social security scheme for the period of posting) shall be kept readily available;
2. the report pursuant to Section 19;
3. the official permit for employment of the posted workers in the country where the employer is established pursuant to Section 19 Para. 3 no. 11 or Para. 7 no. 8, provided such permit is required.
Who is responsible? – Appoint a Responsible agent. Avoid the responsibility of the whole management
To avoid the responsibility of the whole management of a company it is recommended to appoint a responsible person (responsible agent). For this legal binding appointment the legal requirements have to be met according to paragraph § 24 LSD-BG.
According to paragraph § 24 LSD-BG an appointment is legally binding if you file the statement to the Zentrale Koordinationsstelle (ZKO) or to the social security institution in Austria together with the proof that this person agrees with this appointment. Please see § 24 LSD-BG as follows:
Section 24. (1) The appointment of responsible agents (or “special responsible representatives”) pursuant to Section 9 Paras. 2 and 3 VStG required to comply with this Federal Act shall become legally effective only after receipt of a written notification on the appointment including evidence of the appointed person's approval at
1. the Central Co-ordinating Agency: by employers pursuant to Section 3 Para. 2, Section 8 Para. 1, or Section 19 Para. 1, by a user undertaking pursuant to Section 19 Para. 1 last sentence, or a temporary work agency established abroad; or
2. the competent health insurance institution, by employers or user undertakings established in Austria. This shall not apply to the appointment of responsible agents at the authority's request pursuant to Section 9 Para. 2 VStG. Notifications received pursuant to no. 1 shall be forwarded to the CWSD Competence Centre, notifications received pursuant to nos. 1 and 2 related to the construction sector (Chapter I or Section 33d BUAG) shall be forwarded to the Construction Workers’ Holiday and Severance Pay Fund as well.
(2) The employer or the user undertaking as defined in Section 19 Para. 1 last sentence, the temporary work agency or the user undertaking shall without delay notify in writing the institution where the notification of the appointment was to be made pursuant to Para. 1 of the withdrawal of the appointment or the resignation of responsible agents.
For an appointment of responsible persons for a company with its legal headquarters abroad pursuant to Section 24 Para. 1 (1) of the Wage and Social Dumping Combat Law (Lohn- und Sozialdumping-Bekämpfungsgesetz - LSD-BG) in conjunction with Section 9 Para. 2 and 3 of the Administrative Penal Law (Verwaltungsstrafgesetz - VStG) to the Zentrale Koordinationsstelle des Bundesministeriums (ZKB) get into contact with our office.
> Find main forms and additional information as follows: