New collective bargaining agreement for commercial employees effective from 1.12.2017

On 24.7.2017 the Austrian social partners agreed on a reform of the remuneration system for commercial employees and apprentices and created a fundamentally new pay scale as part of a modernisation and further development of the collective bargaining agreement (“CBA”). The CBA was published on 18.10.2017.

We recommend analysing the changes now, ahead of time, to be prepared for them when they take effect. The changes affect all Austrian commercial enterprises, enterprises belonging to the professional association of insurance agents and insurance consultants (“Fachverband der Versicherungsmakler und Berater in Versicherungsangelegenheiten”), as well as enterprises belonging to the professional association for the book and media trade (“Fachverband für Buch- und Medienwirtschaft”). The changes will come into force on 1.12.2017, although a transitional period of four years is foreseen.

The key points of the social partners’ agreement are as follows:

• New pay scale with a minimum basic salary of € 1,600 gross (previously € 1,546 gross) for employees with an concluded apprenticeship in retail trade or commercial administration
• Consideration of previous employment periods for new employees up to a maximum of seven or eight years respectively
• Consideration of parental leave in the course of incremental pay adjustments up to a maximum of 22 months per child, as well as consideration of parental leaves as part of previous employment periods up to a maximum of 24 months (in total)
• Transparency for ‘all-in’ agreements via simple general rules and compulsory verification of coverage

The new CBA foresees only a single pay scale rather than the previous eight scales or two salary areas respectively. The occupation groups (A to H) are described more generally and abstractly, although 75 reference functions have been developed to describe typical activities for each group. New functions, such as online business, are represented, along with provisions for management and representation. Additionally, the income curve has been levelled. Instead of the previous nine incremental pay adjustments, there will now only be four incremental pay adjustments for each occupation group.

The shift to the new system will take place over a four-year transitional period (from 1.12.2017) up to a cut-off date of the company’s choosing. Until the cut-off date, the old pay scale will remain valid for all new employment contracts. The important point is that employees’ income is protected and that no one may be disadvantaged by the shift. The involvement of works councils in the transition was incorporated into the changes.

We would be happy to advise and support you should you need information or assistance in the transition to the new pay scale. This includes an overview over the advantages and risks during the first two years of the change, and to lay the foundations for a ‘clean’ legal transition for companies with or without works councils.