Cross-Border Work in the Construction Sector
Workers who are posted or hired out to Austria for construction work by employers or agencies based abroad have to be included in the Construction Workers Paid Leave and Severance Pay Fund. In the following sections, details are given on the most important entitlements of posted or hired-out building workers as well as the obligations of employers.
The Construction Workers’ Paid Leave and Severance Pay Fund Process
Workers who are posted or hired out to Austria for construction work by employers or agencies based abroad have to be included in the Construction Workers Paid Leave and Severance Pay Fund (BUAK).
If the company posting or hiring out workers also carries out other activities, the following have to be included:
- in the case of organisational separation: workers in the parts of the company which carry out construction work.
- In the case of no organisational separation: workers who predominantly carry out construction work. This will regularly be the case with employees who are posted or hired out for construction work.
The employment of workers whose normal place of work is Austria is also considered to be posting when this takes place within the framework of an employment relationship with employers or agencies based outside Austria.
An Exception: Foreign Social and Paid Leave Funds
The entire paid leave fund process only applies when:
- BUAK concludes agreements with foreign social or paid leave funds via the reciprocal offsetting of and exemption from the obligation to impose surcharges, or
- employers are provenly subject to a comparable paid leave and social fund system in the country in which they are based.
The Payment of Wage Tax and Social Insurance Contributions
BUAK passes on the wage taxes for construction workers in Austria to the tax authorities. If a worker is only posted or hired out briefly, and thus is not subject to income tax in Austria, they can demand reimbursement from the tax authorities.
In addition, BUAK passes employees’ and employers’ social insurance contributions on to the relevant social insurance institution abroad, as employees often remain in the social insurance system of their home country. BUAK knows which is the relevant social insurance institution from the A1 social insurance form which has to be filled in for posting. The social insurance institution has to be indicated when asserting an entitlement towards BUAK.
In the case of longer-lasting postings, it is possible that compulsory social insurance in Austria becomes effective, which then has to be paid to the relevant Austrian social insurance institution.
The Entitlements of Posted or Hired-Out Building Workers
Entitlement to Paid Leave
Depending on the duration of their posting or hiring out to Austria, employees acquire entitlement to paid leave. After employment periods of 52 entitlement weeks, the employee is entitled to paid leave of 30 working days; this rises to 36 working days when a period of employment of at least 1,150 entitlement weeks has been reached. A calendar week counts as an entitlement week.
If the paid leave is not taken while they are in Austria, employees can take it in their country of origin for up to six months after their return and receive their holiday pay from BUAK.
Employees who carry out shift work on a three-shift basis or certain forms of two-shift work are entitled to one day’s additional paid leave for every eight weeks of shift work.
Workers are entitled to payment during their leave (holiday pay and holiday bonus). When the leave is taken in Austria, the holiday pay is paid directly to the employee by BUAK. Employees or employers have to provide evidence of an agreement reached on paid leave to BUAK in order to assert their entitlement.
The amount of the entitlement is limited to the contributions paid to BUAK (see the obligations of employers). BUAK is not obliged to make any payments until the contributions have been received.
Entitlement to Severance Pay
If employees do not take any holidays during their posting or hiring out or immediately after their return to their home country, they have a right – after the expiry of a six-month waiting period – to payment of their severance pay entitlement. In the case of:
- a renewed posting of hiring out to Austria, or
- the establishment of an employment relationship with employers from the construction sector and based in Austria
Before the severance pay becomes due, the entitlements are accumulated and not paid out in cash every time.
The Obligations of Employers
Financing of Paid Leave
In order to finance paid leave, employers have to pay surcharges to BUAK for every week of entitlement. The level of the surcharges is laid down by a regulation of the Minister of Labour and Economy in response to applications made by the bodies of the employers and employees which are responsible for collective agreements.
If employers do not comply with their obligation to pay surcharges, BUAK has to take legal action to force them to make the outstanding payments. In addition, BUAK can take all other measures necessary to collect the surcharges. These include reminders, seizures, and applying for the opening of insolvency proceedings abroad, etc.
The Obligation to Notify the Authorities
Foreign employers and agencies posting or hiring out their employees to carry out work in Austria have to notify the relevant provincial office of BUAK two weeks before the person starts work in Austria at the latest.
The initial notification has to include the following:
- The name, address and trade licence or field of business of the employer or agency, and its VAT identification number.
- In the case of the hiring out of workers: the name and address of the company hiring the workers;
- the name and address of the representative of the employer or agency;
- the name and address of the Austrian client (general contractor);
- the names, addresses, dates of birth, social insurance numbers and relevant social insurance institutions as well as the citizenships of the workers posted to Austria;
- the total duration of the posting, the beginning and the presumed end of the deployment of the individual workers in Austria as well as the agreed normal working hours and place of work of the individual workers;
- the actual end of their deployment in Austria;
- the amount of pay due to the individual workers and the start of the employment relationship;
- the place (exact address) of their employment in Austria (and also other places of deployment in Austria);
- the type of work and the use of workers (in accordance with the relevant Austrian collective agreement).
Employers based in another Member State of the European Union can fulfil this obligation by making a notification in accordance with Section 19 of the Anti-Wage and Social Dumping Act.
Furthermore, employers have to make regular follow-up notifications to BUAK in relation to wages and changes to them, including the beginning and end of the employment relationship, so that the surcharges can be calculated.
Further information on cross-border work in the construction sector can be viewed at the Posting Platform.