Authorities Announce Increased Social Security Enforcement Activities

The situation

Following recent reports of widespread wage fraud and unequal employment practices among subcontractors, particularly in low-wage industries, the Austrian financial police announced that they are seeking to increasingly enforce social security laws in connection with foreign employees temporarily working in Austria.

A closer look

The government’s efforts to enforce social security laws among subcontractors will result in intensified focus on social security compliance during employer inspections.

Background

Austria has a rigorous employer inspection system, with recent unannounced and random inspections taking place across various fields of employment. Government officials routinely check employer and foreign nationals’ records during inspections.

Impact for employers

Foreign employers subcontracting staff to companies in Austria or employers with foreign subcontracted staff in their own Austrian company should ensure that their foreign and national employees’ files are complete and accurate in case of an inspection. Affected employers are advised to contact Fragomen to discuss the appropriate compliance approach.

Employers should ensure they particularly document subcontracting chains – where the subcontractor in turn subcontracts part of the work.

Impact for foreign nationals

Foreign nationals are advised to check their social security status with their human resources contact to ensure it complies with Austrian laws.  If they are subject to a foreign social security system and are working in Austria temporarily, they should also check applicable social security coordination rules, and store supporting documentation (e.g., certificates of coverage, known as A1 documents if issued in the European Union/European Economic Area/Switzerland) in their personal files.

Looking ahead: EU-wide social security compliance

In the same announcement as above, Austrian government officials mentioned the creation of an EU-wide database to track social security records of both EU and non-EU national cross-border workers. Such a database would speed up and facilitate social security checks during worksite inspections at a national level.

Although a central Electronic Exchange of Social Security Information (EESSI) system has existed since July 2017, EU countries have until 2019 to connect their national registers to the EESSI system. Not all the EU countries, including Austria, are actively using the system yet.

It is expected that the question of cross-border cooperation among EU countries may be reviewed by EU officials following the creation of the European Labour Authority in 2019, since one of the objectives of the new agency is increased cross-border enforcement, including inspections. 

 

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 [email protected].