Greater parity between white and blue collar employees – what you need to know
On 12 October 2017, the Austrian parliament (Nationalrat) agreed a partial harmonisation of employment law provisions for white and blue collar employees. The most significant changes are to regulations on continued remuneration during sick leave as well as notice periods regarding the termination of employment relationships.
I. Changes to continued remuneration from 1.7.2018
- Previous entitlement to continued remuneration
Previously, both white and blue collar employees with five years of service or less were entitled to six weeks sick leave on full pay, and four additional weeks on half pay. After 5, 15 or 20 years of service, this entitlement increased to 8, 10 or 12 weeks on full pay and 4 weeks on half pay respectively.
- New entitlement to continued remuneration
According to the new legislation, after one year both white and blue collar employees have a right to 8 weeks on full pay and 4 weeks on half pay. The increased entitlement to continued remuneration for 10 or 12 weeks on full pay and 4 weeks on half pay after 15 or 25 years of service remains unchanged. For apprentices, the continued remuneration will be increased to 8 weeks on full pay and 4 weeks on half pay.
- Elimination of regulations on renewed illness
From the point at which the alterations come into effect, white collar employees are also entitled to a fixed amount of continued remuneration for 1 working year at a time: if a white collar employee suffers a relapse in the same year, he is only entitled to continue remuneration if he has not already consumed his entitlement to paid sick leave for the year in question. This was already the case for blue collar employees.
- Continued sick pay even in cases of termination by mutual agreement
Furthermore, an amendment was made both for white and blue collar employees: Continued remuneration during sick leave is also owed beyond the termination of an employment relationship in cases of termination by mutual agreement. This was previously true in cases of termination by the employer, unfair dismissal, as well as substantiated premature resignation.
- In future, no restrictions will be placed on continued remuneration for blue collar employees if important personal reasons prevent them from working.
In addition, the possibility of using collective bargaining agreements to limit continued remuneration for blue collar employees in the case of absence due to important personal reasons has been removed.
- When the changes take effect
The changes to continued remuneration will be effective from 1 July 2018 and may be applied to absences from work starting on 30 June 2018, as well as terminations by mutual agreement during a period of absence or with respect to absences that lead to a termination of employment after 30 June 2018.
II. Harmonisation of notice periods from 1.1.2021
- When the changes take effect
A further significant change to legislation is the harmonisation of notice periods for blue collar employees in line with those of white collar employees. The changes will take effect from 1 January 2021 and will be applied to terminations by notice made after 31 December 2020. As long as no more beneficial agreements for blue collar employees exist (e.g. in existing employment contracts), the new termination provisions will therefore soon come into force. For reasons of transparency and legal certainty, it is recommended that existing contracts are amended to reflect the provisions that will become effective from 2021.
- New notice periods
According to the new legislation, employers are obliged to observe notice periods of at least six weeks for both white and blue collar employees. The employees – both white and blue collar – have to observe a notice period of four weeks. The notice period for employers will increase at the same intervals and to the same degree as already for white collar employees with increasing years of service.
- New effective dates of termination
Furthermore, from the date the provisions become effective, blue collar employees may only be dismissed – like white collar employees in current legislation – at the end of a quarter. However, as with white collar employees – frequently the case in practice – the effective date of termination can be set for the end of the month or the 15th of a calendar month if this is agreed upon.
For sectors in which seasonal work dominates, collective bargaining agreements can be used to determine alternative provisions (for example, in tourism or the construction industry).
III. Termination rules also apply to white collar employees with few hours from 1.1.2018
According to the new legislation, the termination rules for white collar employees will also apply to people employed for less than a fifth of the normal working hours stipulated in the collective bargaining agreement. This change will apply to terminations made after 31 December 2017.
Do you have questions on this topic, or other aspects of employment law? Can we support you in adapting your employment contracts to conform with the latest legislation? We would be happy to provide advice.