Wage and social dumping
Guaranteed remuneration in construction sector
On 1 May 2011, restrictions on the free movement of workers and services for the EU member states of Estonia, Latvia, Lithuania, Poland, Slovakia, Slovenia, the Czech Republic and Hungary came to an end. Since then, companies from the aforementioned member states can participate in the Austrian market without barriers to their workers. The Anti-Wage and Social Dumping Act [Lohn- und Sozialdumping-Bekämpfungsgesetz] (LSD-BG) came into effect at the same time.
The purpose of the law is to prevent any circumvention of the Austrian minimum wages established by collective agreements, and thus to guarantee Austrian wage levels for workers employed in Austria. Since 1 January 2014, the EU member states Bulgaria and Romania also enjoy full freedom of movement for workers and services.
Underpayment
Pursuant to the LSD-BG, employers both within and outside of Austria must always pay their employees working in Austria the wage they are entitled to under (Austrian) law, regulations or collective agreements, and in compliance with all appropriate classification criteria, except for the remuneration components listed in § 49 (3) ASVG.
BUAK is the supervisory body for the construction industry. BUAK take this role very seriously, and perform inspections on construction sites and in payroll offices within Austria. Their inspection authority covers both domestic and foreign employees subject to BUAG.
DocumentationAs a general rule, employers that are not registered in Austria (as per §§ 7, 7a (1) or 7b (1) and 9 AVRAG) must, at all times during the period in which workers are posted in Austria, have all of the following documentation on hand at the work (assignment) site, in German, even if individual workers’ employment in Austria ended earlier:
- Employment contract or statement of employment terms (§ 7b (1) line 4 AVRAG)
- Payslips
- Evidence of wage payment or bank transfer note
- Payroll records
- Work records
- Documents relating to wage classification
In the case of temporary work spanning multiple countries, the obligation to have the payroll documentation on hand applies to the employer within Austria. The temporary employment company must demonstrably provide the documentation to the employer (§ 7d AVRAG).
In addition, insofar as no social security obligation exists in Austria vis-à-vis the posted or hired out employees, employers registered in an EU/EEA member state other than Austria must always have the following documentation on hand at the work (assignment) site in Austria, or immediately provide BUAK with access to it in electronic form:
- Documentation of the employee’s registration for social security (social security document E 101 as per (EEC) directive no.1408/71, social security document A 1 as per (EC) directive no. 883/04)
- A copy of the posting form pursuant to § 7b(3) and (4) AVRAG (the so-called Entsendemeldung – ZKO 3)
If the posted workers’ activities require an official permit in the country where the employer is registered, the permit must also be kept on hand (§ 7b (5) AVRAG).
BUAK is legally authorised to check the availability of these documents, to view and make copies of these documents, and to request that they be handed over (in which case the documents must be sent by the end of the second working day following the request).