According to Section 61 of the Austrian Labor and Social Courts Act (ASGG), claims under labor law should be enforceable as soon as the first-instance judgment is available. However, this intention – which is clear from the legislator – is viewed extremely restrictively by the courts. This is shown by a recent decision by the Higher Regional Court of Vienna (OLG Vienna).

In the first instance, JMKS obtained an award of outstanding remuneration components in the context of an ongoing employment relationship that had not been terminated. Pursuant to § 61 ASGG, the filing of an appeal against a judgment of the first instance does not suspend enforceability under certain conditions. However, under certain conditions, the filing of an appeal against a judgment of the first instance does not suspend enforceability and a judgment of the first instance can therefore already be enforced.

Pursuant to Section 61 (1) no. 1 ASGG, judgments on the continuation of the employment relationship and claims to current remuneration in arrears derived therefrom, as well as judgments on claims to current remuneration in arrears upon termination of the employment relationship pursuant to no. 2 are already enforceable after the first instance.

In the case in question, which has now been decided by the Vienna Higher Regional Court, the claims were admittedly more complicated. The employee represented by JMKS was in an ongoing employment relationship, but was deprived of remuneration components as part of this employment relationship. For this reason, the Vienna Labor and Social Court (ASG Vienna) refused to confirm the enforceability of the first-instance judgment granting the claim, as it was of the opinion that the dispute had not been settled regarding the continuation of an employment relationship and the resulting claims (Section 61 (1) no. 1 ASGG), as the employment relationship had undisputedly not been terminated.

The ASG Vienna also assumed that a confirmation of enforceability would subsequently also have to be refused because no claims arising from the termination of an employment relationship were asserted in the proceedings in question (Section 61 (1) no. 2 ASGG).

An appeal against this decision was lodged with the Vienna Higher Regional Court on the grounds of incorrect legal assessment.

JMKS argued that the clear intention of the legislator when creating Section 61 ASGG was that employees should be able to claim back pay quickly, i.e. as soon as the first-instance court decision was available. In this respect, the legislator had in mind the main cases of application in which an employment relationship may have been terminated unjustifiably and the outstanding wages are claimed due to the contested unjustified termination (no. 1) or that an employee has claims after the (justified) termination of an employment relationship for wages outstanding at the time of termination (no. 2). The main case of application of no. 1 are probably those situations in which an unjustified dismissal or termination is pronounced and the employee asserts claims from the current, not effectively terminated employment relationship in addition to fighting the termination.

The main case of application of no. 2 is probably those situations in which employers do not pay their employees over a longer period of time and these employees (justifiably) resign. Insofar as these employees assert claims for the remuneration in arrears at the time of resignation, the legislator has created a clear regulation that a first-instance decision is sufficient for enforceability in these cases as well.

JMKS’s grounds of appeal stated that the legislator does not take into account the case where the employer does not formally terminate the employment relationship, but the employee does not receive their full salary and at the same time does not resign prematurely and justifiably. However, this represents an unintentional loophole in the law, as otherwise employers would have a means of exerting pressure, for example, to persuade employees who cannot be dismissed (e.g. older employees in the banking or insurance sector) to leave early by not paying their wages and thus exerting economic pressure, and employers would not have to fear having to make payment after a first-instance ruling (which experience shows takes at least a year anyway), but could delay this again and further by lodging an appeal.

In turn, older employees who are permanently employed would be under particular pressure if they were to be burdened with waiting until the final legal decision or a second-instance decision is available before asserting their salary claims. The alternative of resigning prematurely is not a suitable option for older employees who have been permanently employed, as they will probably find it very difficult to find a comparable job, if at all. In its recent decision of 31.1.2013 (9 Ra 139/12w), the Vienna Higher Regional Court nevertheless concludes that the appeal is unfounded and that the refusal of enforceability by the ASG Vienna would have been justified.

First of all, the Vienna Higher Regional Court agrees with JMKS’s argument that the legislator’s main motive for the provision was to ensure that wages were paid as quickly as possible.

However, the Higher Regional Court of Vienna assumes that the wording of no. 1 and no. 2 is unambiguous and therefore not applicable to the case at hand, as on the one hand it is not disputed whether the employment relationship was terminated at all and on the other hand an undisputed termination and resulting claims would also not be elements of the facts. The Vienna Higher Regional Court believes that this differentiation would mean that the legislator did not intend to cover all remuneration claims derived from an employment relationship. It therefore denied the existence of a loophole that could be closed by analogy and also pointed out that the lists in Section 61 ASGG are exhaustive and would have to be interpreted narrowly as an exceptional provision, which is why a teleological interpretation would not be possible.

Unfortunately, it is no longer possible to appeal to the Supreme Court against this appeal decision of the Vienna Higher Regional Court.

The decision of the Vienna Higher Regional Court is disappointing, as it harbors the risk that employers will now be able to take even greater advantage of the economic pressure on employees whose rights are being infringed, precisely because of the long duration of the proceedings. The decision of the Vienna Higher Regional Court now makes it possible for employers to stop payments to employees who cannot be dismissed but whose employment relationships are not terminated (without justification in any case) and, by cleverly delaying the proceedings, to persuade the employee who cannot be dismissed to give up their employment relationship that cannot be terminated in order to accept a new employment relationship. After all, it should not be overlooked that the employer in the proceedings negotiated by JMKS managed to ensure that the proceedings at first instance took around two and a half years due to formal, albeit all unjustified, objections and that at the time of the application for a declaration of enforceability a considerable “dry spell” had already been covered, which is far too much for most employees.

Of course, the legislator could easily change this situation by amending § 61 ASGG and thus give all employees the security of not ultimately being deprived of their rights through economic starvation.

Dominik Konlechner as a party to the proceedings