Are the Statutory Dismissal Rules for Workers Unconstitutional?

The harmonisation of the rights of blue and white-collar workers has been on the legislative agenda for decades. The implementation of this project is taking place in stages, with the last step being taken in autumn 2017. At that time, parliament decided to align the dismissal regulations for blue-collar workers with those for white-collar workers. Due to the COVID-19 pandemic, the amendment did not come into force until 1 October 2021.

Exception for Seasonal Industries
However, not every worker benefits from the (longer) notice periods for termination by employers. For industries in which ‘seasonal businesses’ predominate, the social partners were allowed to deviate from the new legal regulations by collective agreement to the detriment of workers. Numerous collective agreements have made use of this, mostly maintaining the status quo.

In a groundbreaking decision in 2019 (9 ObA 116/21f), however, the Austrian Supreme Court (OGH) ruled that it had not been proven that seasonal businesses predominate in the hotel and catering industry and thus the exception did not apply. As a result, companies could no longer rely on the shorter collective agreement notice periods when terminating workers since the amendment.

This decision suddenly put the numerous other collective agreements that made use of the exemption rule for seasonal businesses under scrutiny. It was therefore only a matter of time before the Supreme Court would be confronted with further cases.

Supreme Court’s Request for Constitutional Review
In its decision of 14 February 2024 (9 ObA 38/23p), the Supreme Court requested the Constitutional Court (VfGH) to examine whether the relevant statutory termination regulations for workers (Section 1159 of the Austrian Civil Code) are in conformity with the constitution. The application targets the exemption for seasonal industries, which the OGH has constitutional concerns about due to its lack of clarity (violation of the principle of legality) and lack of objective justification (violation of the principle of equality).

If the Constitutional Court should annul the exemption clause of § 1159 para. 4 last sentence of the Austrian Civil Code (ABGB) on the grounds of unconstitutionality, it will most likely grant the legislator a period of time to enact a new regulation that conforms to the constitution, which must not exceed 18 months (Art. 140 para. 5 of the Federal Constitutional Law (B-VG)).

Elimination of the Exception for Seasonal Industries?
It is currently unclear what the new regulation will look like. The simplest option would be to abolish the exemption for seasonal industries without replacing it. This would mean that the same dismissal rules would apply to all workers as to salaried employees.

However, it is to be expected that the Chamber of Commerce (WKO) will continue to demand the retention of shorter collective agreement periods for the termination of workers in certain industries. How this can be reconciled with the constitutional principle of equality is an open question.

According to the above-mentioned Supreme Court decision from 2019, the purpose of the exception is to allow companies in seasonal industries to make relatively short-term adjustments to their workforce through shorter notice periods because specific personnel planning is not always predictable (especially due to weather conditions), and fixed-term agreements are not always sufficient. Consequently, this should also apply to the employment relationships of employees in seasonal operations.

Will the Exception Become the Rule?
From a legal point of view, a new regulation that is in line with the constitution could also generally grant the collective bargaining parties the option of deviating from the statutory notice periods. However, such a solution would probably be rejected by the Chamber of Labour and the trade unions.

It remains to be seen how and for whom the termination periods will ultimately be re-regulated. We will keep you posted on this matter.