No individual protection against termination because of COVID-19 short-time work

Overview

Short-time work was established as an instrument to safeguard jobs in times of temporary economic difficulties. It has also proven its worth during the COVID-19 pandemic and is already being continued in a “Phase V”. Due to the lockdown imposed in December 2021, it was amended in some key points. This should ensure that those companies affected by the COVID-19 crisis continue to be supported.

In practice, there has been a controversial discussion as to whether an individual protection against termination is granted when an employment relationship is terminated during the COVID-19 short-time work or at least during the retention period afterwards. There has not yet been an Austrian Supreme Court ruling on this controversial issue so far.

In its decisions of 22 October 2021, 8 ObA 48/21y, and on 29 November 2021, 8 ObA 50/21t, the Austrian Supreme Court has now provided clarification on this controversial question.

Facts of the case 8 ObA 48/21y

In the first COVID-19 lockdown, an employer concluded a Social Partner Agreement (“Sozialpartnervereinbarung”) in the form of an individual agreement on COVID-19 short-time work with 15 employees (but not with the plaintiff employee). As of 15 April 2020, the employer announced the extension of COVID-19 short-time work to all employees in the company. However, the plaintiff employee was subsequently not included. The employment relationship with him was terminated by the employer for personal reasons. The number of employees – which had been reduced due to the employee's termination – was restored. The plaintiff employee claimed, among other things, payment of compensation for wrongful termination. He argued that the employer had not been entitled to terminate the employment relationship before the end of the retention period due to the three-month short-time work agreement that applied to the entire employees.

The court of first instance dismissed the claim and ruled that the employee's termination did not contradict the conditions of COVID-19 short-time work. In the present case, a permissible exceptional case of termination for personal reasons while retaining the number of employees applied. The court of appeal shared that opinion.

Decision of the Austrian Supreme Court

The Austrian Supreme Court confirmed the dismissal of the complaint. In summary, the Austrian Supreme Court ruled, that the provisions of Sec 37b Labour Market Service Act (“Arbeitsmarktservicegesetz”, “AMSG”) in connection with the relevant provisions of the short-time work agreements did not result in the invalidity of a termination during the COVID-19 short-time work or the subsequent retention period. However, the subsidy (COVID-19 short-time work subsidy) must be considered in the context of a termination challenge when assessing the existence of “business reasons” for the termination. However, since the employee was not covered by the Social Partner Agreement in the form of an individual agreement, because he did not sign it, the Austrian Supreme Court did not rule whether the conclusion of the individual agreement provided individual protection against termination.

Facts of the case 8 ObA 50/21t

A Social Partner Agreement in the form of an individual agreement on COVID-19 short-time work was concluded with the plaintiff employee. In the following, the employment relationship was terminated by the employer for personal reasons on 2 October 2020. On 1 October 2020, a new employee was already hired to perform the employee's activities. Thus, the number of employees was restored. The plaintiff employee claimed payment of compensation for wrongful termination. She argued that because of the retention obligation in the individual agreement, there had been a prohibition of termination.

Decision of the Austrian Supreme Court

In the case at hand, the Austrian Supreme Court referred to the previous decision on 8 ObA 48/21y. In summary, the Austrian Supreme Court stated that the wording of the Social Partner Agreement must be considered. According to this agreement, employer's notices of termination can be given at the earliest after the expiry of the retention period. However, the Social Partner Agreement does not specify a legal consequence (ie the legal invalidity of a termination) in the event of a violation of this provision. Therefore, the ineffectiveness of a termination that is nevertheless pronounced cannot be derived from the wording of the agreement. In its decision, the Austrian Supreme Court also refers to a template works agreement drafted by the Trade Union before the COVID-19 pandemic, which explicitly provided the invalidity of a termination. If an individual protection against termination had been intended, such an explicit formulation would have been expected.

Conclusion

As a result, this means that the conclusion of a Social Partner Agreement on COVID-19 short-time work does not establish individual protection against termination for the concerned employee.