Published on 9/11/2022
Under certain conditions, employees are entitled to reduce the number of hours they work in order to care for a child (part-time parental leave). What generally happens in such cases is that the salary is reduced in line with the number of hours reduced. At the same time, the law states that individuals on part-time parental leave cannot be required to work overtime because working extra hours and overtime cannot be reconciled with the purpose of such an arrangement, namely providing necessary childcare.
The Supreme Court ruling in OGH 9 Ob A 30/15z held that, in the case of a “genuine” fixed sum for overtime, this amount is to be suspended in its entirety for the duration of the part-time parental leave, instead of the entire salary including fixed sums being reduced in line with the reduction in hours. The result is that the fixed sum can be deducted from the employee’s pay. Making such a deduction is even permissible if the agreement on the fixed sum for overtime pay does not include a cancellation proviso. Since this ruling, what has remained controversial is the transferability of these principles to all-in arrangements. In a recent ruling (OGH 9 ObA 83/22d), the Supreme Court has now clarified that making such a reduction is also possible for all-in salaries under certain conditions.
The claimant was a senior director with a gross annual salary of over EUR 200,000.00 gross. It was stipulated in the contract of employment that the basic monthly salary included 25 (or 15) hours of overtime for each month. The claimant went on part-time parental leave (with a slight reduction in his weekly working hours). The manner in which he was deployed was changed and, later on, his working hours were further reduced due to the birth of his second child.
The Supreme Court held that, even in the case of an all-in salary, the salary can be reduced by the amount provided for the performance of overtime and extra hours over and beyond the basic salary during part-time parental leave. The condition is that it can be clearly determined from the all-in agreement which portion of the individual’s pay is for performing extra hours and overtime. If there are no specific details about the fixed sum for overtime or this cannot be determined from the agreement, this arrangement is deemed not transparent and therefore any reduction or suspension of claims by way of the pro-rata reduction in pay is not permissible.
This means that the recent Supreme Court ruling concerns “fake” all-in agreements, not “genuine” ones, that include a certain number of overtime hours expressed in figures. These constitute conventional fixed-sum overtime payments and not the all-in arrangements commonly found in practice, which include extra payment as a fixed sum to cover a range of different claims.
Whether and to what extent part-time parental leave may justify reducing an individual’s salary in excess of any pro-rata reduction depends on the specific all-in agreement in each case. It is for this reason, among others, that employers are advised, certainly in cases where the extra payments make up a substantial amount of an individuals total salary, to make all-in agreements as specific as possible and, even in the case of “genuine” all-in agreements, to specify which component is intended as compensation for overtime and extra hours.
Author: Caroline Pavisits |Legal employee | Employment Law & Pensions
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