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Employment contract, contract for work and services, free service contract in Austrian labour law - distinction and legal consequences of incorrect contract classification

  • Austria
  • Employment law

12-05-2021

The essential characteristic of a "genuine" employment contract is the personal dependence of the employee on the employer. Indicative for the genuine employment contract is the obligation of the employee to submit to the personal and factual instructions of the employer. What is owed is the provision of the work performance, not a specific result. In the case of a genuine employment contract, the employee is subject to the full scope of labour laws, collective agreements and the social insurance provisions of the General Social Insurance Act (ASVG).

If a contract for work and services exists, on the other hand, the production of a specific result is owed and not mere effort. The contractor acts independently and must guarantee that the work has been properly completed. Social security contributions and taxes are paid by the contractor.

The free service contract offers the possibility to individually arrange the course of work. In general, there are no rigid working hours or instructions from the employer. Therefore, only those provisions of labour law are applicable, which do not assume the personal dependency relationship of the freelancer. Nevertheless, the social security contributions of the freelancer must be paid by the employer.

The factual type of contract is determined by the actual form of the employment relationship, the name of the contract is irrelevant. The nationality of the wage earner is also not significant and thus also affects Czech citizens working in Austria.

If a staff member is incorrectly assigned, for example, this may result in (up to 5 years retroactive) additional payments of social security contributions, default interests or non-wage costs. Due to the Social Insurance Assignment Act (SV-ZG), which has been in force since 01.07.2017, it is possible to request a review of the social insurance assignment and thus achieve legal certainty.