Salary and Social Security Compliance Enforcement Increased

The situation

The Austrian Labor Authority is more frequently requesting foreign workers’ payroll records, which may increase the risk of withdrawal of work permits in the case of discrepancies in information.

A closer look: post-arrival salary check

• Documents required. Upon the Labor Authority’s request, employers must submit foreign workers' payslips covering the first full month of work in Austria and proof of social security coverage (Austrian social insurance registration, A1 certificate or Certificate of Coverage). Authorized representatives can submit these documents on the employer’s behalf.
• Review process. The Labor Authority checks whether the data in these documents matches the information provided in the course of the immigration process. In case of underpayment, significant overpayment or other discrepancies, the Labor Authority requests clarification from the employer. If the Labor Authority is not satisfied with the clarification, it may contact the Immigration Authority to request cancellation of the foreign worker’s residence permit.
• Affected permit types. Although the Labour Authority is currently focused on EU Blue Cards, Red-White-Red Cards and EU Intracompany Transferee (ICT) Permits, the check applies to short-term work permits and short-term secondment permits as well.

• Impact. Employers should consult their payroll department or provider to ensure that information on foreign workers’ payslips matches the information provided as part of the immigration application for all permit types.

Additional warnings for employers

• Additional reasons for permit withdrawal. The Labour Authority can also withdraw the work permit if an employer fails to notify the Labor Authority of a change in a foreign worker’s compensation package or source of payroll in a timely manner, or if the employer does not provide social security coverage starting the first day of work in Austria.
• Impact. Employers should contact their immigration consultant to proactively plan a compliant approach to salary payment and social security registration.

Background

• Austrian system. In general, Austria has a rigorous employer inspection system, with unannounced and random inspections across various fields of employment. The salary check fits in a broader policy of increased social security enforcement in Austria, which has been ongoing since early this year.
• EU-wide comparison. Enforcement of salary and social security compliance varies significantly between EU countries. The continued increase in intra-EU mobility for short-term (posted) work necessitates a structured approach to social security compliance, especially considering that EU countries have until 2019 to connect their national social security registers to the central Electronic Exchange of Social Security Information (EESSI) system.

Looking ahead

Austria is expected to continue its current strict approach to salary and social security enforcement. Fragomen will monitor developments and will report relevant developments as they occur.

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].