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Austrian Collective Bargaining Agreement Classification - Legal Implications

What "freedom" does 9Y (as an employer) have in classifying employees?

• The classification must be determined on the basis of the CV, the insurance data extract and the references (which activities the employee has already performed and how many months).

• The only freedom that exists is that in an absolutely different sector, only half of the previous period of employment/experience can be taken into account. For example, a project manager who applies for a job with us but previously worked as a project manager for a bakery. (In other words, the profession is the same, but the industry is completely different.)

• Attention: A software developer who has previously programmed for 5 years in language "X" must still be credited with the full 5 years, even if he now programs in a completely different language.

What are the consequences of a wrong classification (apart from the fact that the minimum salary is then not correct) for us the company and for the employee?

• "Incorrect classifications" are increasingly claimed by the Chamber of Labour (representing the former employee) when the employment relationship is terminated.

• In the event of an audit, the salaries have to be rolled up and a penalty is imposed, because the job experience can be clearly deduced from the curriculum vitae and the references.

• A penalty of between € 1,000 and € 10,000 can be levied upon the employer for each underpaid employee; furthermore, wage tax, social security contributions and ancillary wage costs will be re-imposed.

• If the employee is just classified wrong, but the salary is "ok" then the classification will be corrected and there are no penalties or similar.

Who can be held responsible in the event of a lawsuit, for example, if someone has been wrongly classified?

• The managing director, because he has violated the Employee Protection Act.

• If several managing directors are registered in a company, the administrative penalty is imposed on each individual managing director personally.

Is it the company that did not check the employee's information properly or the employee because he did not provide sufficient information? (Is it the employee's responsibility to bring the information to the company or is it the company's responsibility to collect the information?)

• The employer bears the entire responsibility.

What counts as proof of the correct classification of a new employee?

• Curriculum vitae, insurance data extract and employer's past references.

If an employee agrees to the contract and the wrong classification contained in it and signs it, does the classification according to the collective agreement still apply or is the classification in the contract valid?

• Then the contract is valid, unless the employee's position can be assessed as being worse (=underpaid) in the course of a review, in which case the contract loses its validity.

Example: A project manager has 5 years of experience in project management (Regelstufe) according to his CV, but after an interview we think he is more of a "beginner" and classify him in the "Einstiegsstufe".
Which classification is correct or valid?

• If he was already employed as a project manager in Regelstufe, this level must continue to be used and he cannot be paid according to the Einstiegsstufe, then there is clearly underpayment, because I can never pay an employee according to a lower level just because he does not meet my requirements 100%, he can only be classified higher and never lower.

• If the salary is at the correct level or even higher, only a reclassification is made, otherwise there are no problems as the employee is not underpaid. You only have to be careful with the next "Vorrückung" that the salary is not too low and you have to consider that the next "Vorrückung" will probably happen earlier than originally thought.

Does the salary have to be rolled up and corrected later?

• Yes, in the event of an audit, the salary must be rolled up later. Then the documents have to be resubmitted to the authorities and if the Arbeitnehmerveranlagung has already been submitted by the employee, there will be a correction.

• It is possible to make a "selbstanzeige" before start of the audit.

Is there a time limit here?

• The limitation period for underpayments (towards the employee) is three years from the due date.

• GPLA checks can also be applied to earlier periods, which leads to back payment to SV + penalties in case of underpayment.

What does this mean?

• Before making job offers to candidates, check that the amount that we want to pay them is legally possible. If not, then we should reconsider extending the job offer. There is the possibility that someone’s skills are legally considered as relevant, but not actually relevant for the job, e.g. someone having worked 5 years at a company doing IT support managing call center staff, but not ever having had contact with software development will be a beginner if he applies as a PM at 9Y, and so we have to pay him in line with other beginner PM’s at 9Y; legally however we’d have to pay this person as a senior since the law would consider this relevant work experience. If we were to hire this person, we’d have 2 options: a) break the law, b) break our internal fairness. Neither are an option.