Personalkostenersparnis (reducing personnel costs)

Scope of application

Measures to reduce personnel costs may be relevant in the following situations:

• economic difficulties and persistently falling revenue
• restructuring after company acquisitions
• staff reductions as a result of changes to the business model
• reorganisation or outsourcing to improve operational processes

‍

Legal basis

Depending on the measure, the following legal sources must be taken into account in particular:

• § 37b AMSG: requirements for short-time work support
• § 109 ArbVG: information and consultation rights of the works council in the case of operational changes, and requirements for a social plan
• § 3 AVRAG: transfer of existing employment relationships in the case of a transfer of undertaking (Betriebsübergang), which may also occur in the course of outsourcing
• AngG and ABGB: remuneration entitlements under the employment contract and rules on termination in the case of an Änderungskündigung

‍

Deadlines

The following periods must be observed in particular for measures to reduce personnel costs:

• Short-time work: The application for short-time work support must be submitted to the Public Employment Service (AMS) before the short-time work period begins.
• Mass redundancies: Where a threshold under § 45a AMFG is reached, the notification must generally be received by the AMS at least 30 days before the first declaration ending an employment relationship. Terminations declared before the notification or within the waiting period without consent to a shortening of the period are ineffective.
• Social plan: There is no fixed statutory deadline for concluding one. Where an operational change is planned, the works council must be involved in good time; if no agreement is reached on an enforceable social plan, the conciliation board can be called upon.

‍

Rights and obligations

Rights:

Employers, the works council and employees have the following rights in particular:

• Employer: the possibility of ending employment relationships for operational reasons, observing notice periods and protection against termination
• Works council: the right to negotiate a social plan where the statutory requirements are met
• Employees: entitlement to outstanding remuneration and, where the respective requirements are met, to severance pay

‍

Obligations:

When taking measures to reduce personnel costs, employers must in particular:

• inform and, where applicable, consult the works council in good time about planned operational changes, and comply with the statutory preliminary procedure before giving notice
• submit any notification to the AMS required under § 45a AMFG in good time
• observe prohibitions of discrimination and the applicable protection against termination when selecting the employees affected

‍

Common mistakes

Typical mistakes in measures to reduce personnel costs are:

1. The agreed remuneration is reduced unilaterally without a valid basis; the difference can be claimed back.
2. A notification required under § 45a AMFG is not made or the waiting period is not observed; the terminations concerned may be ineffective.
3. The works council is not informed in good time of a planned operational change, or is not properly notified before terminations.
4. Before outsourcing, no check is made as to whether a transfer of undertaking under § 3 AVRAG exists; if it does, the existing employment relationships generally pass to the transferee.

‍

Recommended steps

The following steps are recommended for legally sound measures to reduce personnel costs:

1. Before implementation, check the requirements and consequences of the measure chosen.
2. Involve the works council in good time in accordance with the statutory requirements.
3. Where larger staff reductions are planned, check the notification obligation under § 45a AMFG and the waiting period in good time.
4. In the case of temporary economic difficulties, check whether short-time work is a suitable alternative to termination.