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Kurzarbeit: An Alternative to Lay-Offs - International Law Office

International Law Office

Employment & Benefits - Austria

Kurzarbeit: An Alternative to Lay-Offs

May 27 2009

Across the Atlantic the US government is implementing several stimulus packages in an attempt to stimulate its economy, while looking on as entire industries make massive lay-offs of staff. In contrast, Austria - along with several other European countries - has in place a system whereby employers are permitted to reduce their employees' working hours while keeping the employment relationship intact. In accordance with this system, employers pay their employees government-subsidized special allowances instead of regular pay in order to cover most of the earnings shortfall.

The model for this procedure is known as Kurzarbeit, which literally translates as 'short work'. According to the model, employees accept a reduction in working hours of between 10% and 90%. The allowance paid by the employer is a (staggered) flat rate depending on the income level of the employees affected. A supplement of 15% to this flat rate is payable if the employee agrees to attend professional training courses during the period of Kurzarbeit.

While the initial period of Kurzarbeit must not exceed six months, in the light of the ongoing recession in early 2009 the government changed the rules and Kurzarbeit can now last up to 18 months in extreme cases.

The introduction of Kurzarbeit requires a special arrangement between the so-called 'social partners' of the Austrian collective bargaining landscape (ie, the Chamber of Commerce and the labour union). Under the agreement, on behalf of employer and affected staff, the social partners negotiate:

  • the scope of the Kurzarbeit arrangement, in terms of both staff covered and the maximum period of application;
  • the conditions for any lay-offs during Kurzarbeit; and
  • the scope of any professional training or re-training courses included.

The model allows employers to reduce labour costs in an economic downturn while at the same time ensuring that they need not lay off their experienced workforce which will remain on hand when the economy recovers. Employees in turn keep their jobs and most of their spending power, helping to stimulate economic recovery.

Whether these economic projections of the model's effectiveness prove accurate remains to be seen. However, Kurzarbeit is well accepted and widely used across various industries and all sizes of business.

For further information on this topic please contact Jakob Widner at Graf & Pitkowitz Rechtsanwälte GmbH by telephone (+43 1 401 17 0) or by fax (+43 1 401 17 40) or by email (widner@gmp.at). The Graf & Pitkowitz Rechtsanwälte GmbH website can be accessed at www.gmp.at.

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