The majority of internationally assigned employees coming to Austria need to go through a formal and cumbersome immigration/registration process, which only short trips for internal meetings which are not project- or client-related, entail no service delivery, and last no longer than five days do not entail.
This process includes the obligation: (i) to register incoming employees one week in advance with the Austrian Central Coordination Authority for the Control of Illegal Employment (“Zentrale Koordinationsstelle fur die Kontrolle illegaler Beschaftigung”), and (ii) to retain wage documents (including employment contracts, pay slips, working time records, etc.) and make them available to the finance police upon request. Violations of these obligations are subject to severe administrative fines ranging up to EUR 50,000. Austrian authorities have become increasingly strict in recent years when enforcing these requirements.
These obligations on employers are currently regulated by the provisions of various legal acts, such as the AVRAG and the AUG. As of January 1, 2017, these provisions will be consolidated into and regulated by one single Act – the Social and Wage Dumping Combat Act (“Lohn- und Sozialdumping-Bekampfungsgesetz” – or the “Act”). This new Act will also bring some legal easing for companies sending employees to Austria and some exemptions from the relevant provisions on international assignments.
Exemptions
The international employment of particularly skilled employees – those who have imperative special skills – will be exempted from the Act if the following conditions are met: (i) the employee will not stay in Austria more than two months in any one calendar year; and (ii) the scope of the employee’s work involves one of the following internal activities: research and development, trainings to be provided by the employee, planning of project activities or exchange of experience, business consulting, controlling, and co-operation in group departments which have competence over other jurisdictions (provided that the Austrian department has strategic planning and control functions, i.e., cluster departments, typically including: HR, technical processes, project monitoring, controlling, finance management, and regional management).
In addition, employees who have a monthly gross salary of at least EUR 6,075 (this value is applicable for 2016 and will be updated at the beginning of 2017) are exempted for stays of up to five days (this exemption cannot be invoked for repeated short term engagements for one and the same candidate).
The following exemptions apply to both categories of employees identified above:
EU/EFTA/third-country nationals employed by an EU/EFTA-based employer are not subject to registration requirements before the start of the international assignment, nor to document-keeping requirements for salary related information, and third country nationals not employed by an EU/EFTA-based employer are also not subject to document-keeping requirements for salary-related information.
These exemptions apply only to internal activities and not to client-related activities.
Easing
As of January 1, 2017, the deadline for notifying the authorities of an international assignment of seven or more days will be abolished. This will not have any major impact, as under the document-keeping rules the relevant documents and information will still be required to be available on site as of the first minute of the engagement of the employee in Austria. Therefore, it is recommended to keep the seven-day filing deadline for processing purposes.
Also, as of January 1, 2017, the document-keeping requirements will also be satisfied if all relevant information and documents (for all employees engaged on a specific project) can be handed over to the immigration control officers at the place of work in electronic form at the time of inspection.
Furthermore, it will be sufficient to provide the authorities with one registration for all continuous international assignments during a reference period of three months.
Conclusion
The new law on international assignments to Austria will bring some improvements to the legal situation of companies sending employees to Austria. The legal requirements for the majority of employees will, however, remain the same as before, and companies will have to implement a sufficient compliance system in order to prevent significant financial impacts via administrative fines.
By Philipp Maier, Partner, Baker & McKenzie Austria
