Client liability pursuant to the Austrian Anti-Wage and Social Dumping Act [Lohn- und Sozialdumping-Bekämpfungsgesetz] (LSD-BG) since 1 January 2017
New law to protect wage entitlements for workers from other countries who are posted to or temporarily employed in Austria
Client liability pursuant to § 9 LSD-BG was created to secure remuneration claims for employees from other countries who are posted or hired out to Austria to work in the construction industry. This was intended to further contribute to combatting wage and social dumping.
It should be noted that the scope of application of the liability provisions for the construction industry pursuant to LSD-BG (pursuant to § 3 (6) LSD-BG) is broader than it had been in the past under the general provisions of the Construction Workers’ Annual Leave and Severance Pay Act [Bauarbeiter-Urlaubs- und Abfertigungsgesetz] (BUAG). In addition to typical construction activities pursuant to BUAG, the construction industry is also understood to include such activities as equipment and furnishings, maintenance and servicing (e.g. painting and installation work).
The client is liable to the employees posted or hired out by their contractor in connection with work performed in Austria as part of construction work commissioned as defined above. The client is liable for the claims of such cross-border workers posted or hired out to Austria up to the remuneration provided for by law, regulation or collective agreement, pursuant to the relevant classification criteria.
In principle, only the immediate client is liable. A client who is not the contractor for the commissioned construction work (initial client) is only liable if they knew before the contract was agreed that the remuneration would not be paid, or should have recognised this as a serious possibility based on clear evidence, and accepted it. If cross-border employees hired out to Austria are employed by a client to perform construction work, the client is liable as an employer (§ 14 Temporary Agency Work Act [Arbeitskräfteüberlassungsgesetz] (AÜG) shall not be applied in this case).
Pursuant to § 9 LSD-BG, the employee has the option of personally informing the Construction Workers’ Annual Leave and Severance Pay Fund (BUAK) of unfulfilled remuneration claims for their work in the construction sector in Austria within eight weeks of becoming due. This applies even if the employment contract is not governed by BUAG.
After BUAK has reviewed the matter, the client receives a letter to inform them of their liability pursuant to § 9 (1) LSD-BG including the specific amount. Liability is established upon receipt of this written information, and is limited to the amount specified in the letter. Liability expires nine months after the remuneration become due, except in case of successful legal proceedings by the employee.
In addition to the client, the information letter is also sent to the contractor and the employee.
Client liability for BUAK supplement claims
Pursuant to § 9 (10) LSD-BG, the liability regime is also extended to include the supplements to be paid by the contractor pursuant to § 33d BUAG.