The Anti-Wage and
Social Dumping Act
(LSDB-G)
including amendments as of 1 January 2015
What are the goals of the LSDB-G?
• Problem: Wage dumping = real phenomenon, but hardly any
consequences
– Many employees shy away from asserting their claims (for fear of losing jobs,
residence rights etc.), mainly when employment contract is in effect
– Bringing claim to court: Employer must pay difference (including interest), but
no fine is imposed
– Control by regional public health insurance is “cheaper“ than correct payment
(employees concerned often are not even aware of controls having taken
place and that they have not received all claims they are entitled to)
• Wage and social dumping has repercussions on the entire labour market
and on the whole workforce!
What are the goals of the LSDB-G?
• Reason for LSDB-G: Labour market opening as of 1 May 2011
• Ensuring equal work and wage conditions for all domestic and foreign
workers
• Fair conditions of competition among companies
• Preventing cut-throat competition in the labour market
• Securing duties and social insurance contributions
LSDB-G – A socio-political success
•
•
•
•
Extending controls to statutory and/or collective agreement PAYS
Underpayment can both be sued for and is punishable
Range of penalties with deterrent effect
Obligation of authorities to inform employees concerned
With the above provisions, the legislator clearly demonstrates :
WAGE DUMPING IS NOT A MINOR OFFENCE!
Which employers are subject to the LSDB-G?
The LSDB-G applies to domestic and foreign employers
– Domestic recruitment of employees (citizenship irrelevant)
– Secondment from abroad (employees seconded provisionally from
foreign establishments to Austria for completion of an order)
– Leasing of domestic and foreign personnel
– EU/EEA and “third countries“
What is punishable under the LSDB-G?
1.
2.
3.
4.
5.
Underpayment – as of 1 January 2015, not only basic wage, but (almost)
all wage components
Foreign employers must keep German-language wage documentation
available at the place of work and present it on inspection
Unacceptability or several places of work: If requested by the authority,
documents must be forwarded to the authority, also for domestic
employers
Impeding, obstructing or preventing inspections
Secondment from EU/EEA: Previous notice of secondment and proof of
foreign social security
Underpayment (“wage dumping“)
Section 7i (5) AVRAG
(Employment Harmonisation Act)
LSDB-G: Pay instead of basic wage
Collective agreement
Law or ordinance (e.g. public service,
by-laws)
Works agreement,
employment contract
•
Basic wage (as before)
•
Special payments
•
Overtime including surcharges
•
Shift allowances, fitter‘s
allowances, allowances for
difficult working conditions, etc.
•
Reference surcharges for leased
personnel
What is not part of the “pay“?
•
Overpayments on basic wage as defined by collective agreement may be credited
to missing components of the pay (e.g. surcharges) in the respective wage
payment period (that is month) (Section 7e (3) and Section 7i (1) AVRAG)
•
This applies also if a works agreement or employment contract contains no explicit
stipulation (agreement)
•
Remuneration of expenses or payments in kind cannot be credited (Section 7e (4)
AVRAG)
•
But this applies only to the penal provisions of the LSDB-G; not to employees‘
claim under labour law
•
Exemptions from the term ‘pay‘ and thus from control are defined also in Section
49 (3) ASVG (General Social Security Act) (e.g. tax-exempt bonus for dirty work)
LSDB-G penalty range for wage dumping
Underpayment
More than 3
employees concerned :
Penalty per employee:
In the event of recurrence :
EUR 1,000 – 10,000
EUR 2,000 – 20,000
EUR 2,000 – 20,000
EUR 4,000 – 50,000
LSDB-G – Non-applicability of penalties
No penalty is imposed if the employer
– pays the difference between underpayment and the pay due within a
defined period, at the latest, after having been requested to do so by
the authority
and
– If underpayment is only minor (max 10%; case 1) or underpayment
was due only to slight negligence on the part of the employer (case 2)
What does that mean for our work?
• When underpayment has been established to exist
1. Request employer to pay the differences + point out that this is a punishable offence (in
particular high penalties!)
2. If such payment is made demonstrably within a defined period of time, official notification
may be disregarded
3. If the employer fails to pay: Information of regional health insurance branch or financial
police (or both) or direct report to district administrative authority
• In companies without works council, try to contact the employees concerned
at any rate (recruit new members)
• Perhaps consider to set up a works council
Who is in charge of what?
• All documents are available and the facts have been established clearly:
Anyone may make a direct report to the district administrative authority
at the place of employment
– Attention! We are not a party to the procedure and have no right to information!
• Normally: Documents and/or information are missing: Report to the
competent supervisory authority (local branch of health insurance,
finance police, BUAK (Construction Workers’ Annual Leave and Severance Pay Fund)
– Detailed investigation on the spot and subsequent report to the district
administrative authority, if required: Party to the procedure = right of
information
Employer
Underpayment
Penalty
Employee
In Austria subject to compulsory
insurance (ASVG) – regardless of
nationality!
Local branch of health
insurance
Notification of
penalty (not
report!)
Report
Conducts inspection on the spot: either on its own (during joint audit
of wage-dependent levies) or following report of suspected wage
dumping
District administrative
authority: may impose penalty
on employer
Employer
Penalty
Underpayment
Employee
District administrative authority:
may impose penalty on employer
Not insured in Austria
(seconded or leased from
abroad)
Finance
police
Notification of penalty
(no report!)
Forwarded for fine check
Back for more “rough
investigations“ on the spot
Report
Competence centre LSDB
(Vienna branch of health insurance)
Non-availability of German-language wage
documentation at the place of work
Section 7d in conjunction with Section 7i (4) AVRAG
Non-transmission of wage documentation
following request by inspection authority
LSDB-G: Availability of wage documentation
•
As a fundamental rule, foreign employers must keep wage documentations
available at the place of work (or assignment) in German
•
The law specifies the following wage documents
–
–
–
–
–
•
Employment contracts or service notes
Wage slips
Proofs of wage payment (e.g. bank transfer receipts)
Working time records
Documents on employee classification
When personnel is leased from abroad, the domestic employer must comply with
this obligation!
LSDB-G range of penalties
Non-availability of
wage documentation
in German
More than 3
employees concerned :
Penalty per employee :
In case of recurrence:
EUR 1,000 – 10,000
EUR 2,000 – 20,000
EUR 2,000 – 20,000
EUR 4,000 – 50,000
As of 1 January 2015: Adjustment to range of penalties for underpayment to
ensure that violation is no longer possible! Similar penalties apply to avoiding
inspections and controls …
LSDB-G security
• Problem: It has to be assumed that penal prosecution and/or execution
will be impossible or may be impaired considerably (usually because the
employer has its registered seat abroad)
• In case of justified suspicion, the authority may collect a security from the
foreign employer
– Cash payment (“deposit“)
– Even provisional confiscation of exploitable items (e.g. motor vehicles)
• If this fails, a payment stop may be imposed on, and a security may be
requested from, the domestic client or employer (in the amount of the
penalty at most)
LSDB-G – other new provisions
• If the district administrative authority issues a notification of
penalty for underpayment, the employees concerned must be
informed accordingly.
• The limitation period commences on the due date of the pay and is
three years
• Prohibition of providing service for foreign employers and/or in
case of cross-border personnel leasing to Austria, if underpayment
applies, and in case of non-availability of wage documentation or
preventing inspections (one to five years)
Our goal is not to seek penalties, but additional payment
This is appropriate only in clear cases, in particular repetition of the same “mistakes“ –
no test cases in administrative penalty procedures!
Therefore not appropriate for doubtful classification of employees, disputes on
individual hours of overtime worked, and the like. Presumption of innocence applies!
As a rule, this is required only for companies without works councils – now, the
managing directors talks with us even if have no “power of attorney“!
 Information by someone from such companies – we can help anonymously; everyone!
 Information about “dirty competition“ or at the regulars‘ table in the pub ….