New Posted Workers’ Fine Arrangement Forthcoming

At a Glance  

• According to a recent European Court of Justice holding, sanctions imposed in Austria on sending and receiving employers for posted worker record keeping violations are not proportionate and are therefore in violation of European Union law.  As a result, the Austrian government must revise its related sanctions.
• Due to the decision, Austrian authorities can no longer apply the disproportionate sanctions for record maintenance violations, and employers who paid fines under the current sanction regime may be able to claim monetary damages from the Austrian government.  

The situation 

A recent European Court of Justice (EUCJ) holding will require the Austrian government to implement a new penalty scheme for employers hiring posted workers in Austria who violate record keeping requirements since the current fine and penalty scheme was found to violate the principle of proportionality under European Union law.

A closer look 

The facts of the case before the EUCJ included the following:

• Calculation of sanctions. The Austrian system imposed a fine for each violation; for example, by not keeping payroll records for 100 employees, a company would have had 100 violations with 100 fines imposed. Furthermore, the Austrian government did not impose a maximum limit on the total amount of fines that could be incurred and each violation had a minimum penalty of EUR 2,000 to 50,000. In the case before the EUCJ, the company was found to have committed 400 individual offenses which resulted in the extreme penalties.
• EUCJ decision. The EUCJ held that the combination of the Austrian law punishing each violation separately; the fact that there was no maximum penalty for all violations; and that the fines could not be lower than a pre-determined minimum resulted in a violation of the EU principle of proportionality. Additionally, the EUCJ found that the law could be enforced effectively with less restrictive measures, such as imposing lower penalties or adding a maximum limit for penalties.
• Result. Due to the holding, the Austrian government will have to revise its national law to comply with the EUCJ ruling.

Impact

• Previously sanctioned employers. Employers who paid fines under the current sanction regime may be able to claim monetary damages from the Austrian government.  
• Future sanctions. Due to the EUCJ decision, Austrian authorities can no longer apply the disproportionate sanctions for record maintenance violations. However, it is not yet clear whether Austrian authorities will impose alternative fines or other sanctions.

Background 

• Fine system in European Union generally. Employers in EU Member States who hire workers from other EU countries for temporary assignments (posted workers) are subject to fines and penalties imposed by each Member State’s government for violating national rules that require the employer to maintain certain records about such workers. Generally, posted workers are subject to the same rules for work (such as working hour limits, work conditions, etc.) as local workers, and the record maintenance requirements are the government’s way to ensure compliance with such rules.
• Austria-to-EU comparison. The Austrian fine and penalty system generally imposes higher fines for such violations than many other EU Member States with no maximum amount. Austria also has a rigorous compliance system with inspections frequently carried out by the financial police. 

Looking ahead 

Revisions to the sanctions will largely depend on the newly-formed government administration following the September 29 national election. Fragomen will report on further relevant developments regarding this holding.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to emea@fragomen.com.