Legal validity of dismissals during short-time work clarified!

The short-time work allowance is granted on condition that the number of employees is maintained during the short-time work (retention obligation) and, as a rule, for one month after its termination (retention period) (Section 37b Labour Market Service Act (AMSG)). Until recently, it was unclear whether dismissals for operational reasons in contravention of this prohibition were effective or not.

In Episode 7, we reported on a decision of the Linz Higher Regional Court (OLG Linz), which considered dismissals for operational reasons made during short-time work to be legally valid. Later, the OLG Innsbruck (27.7.2021, 13 Ra 21/21t) ruled that dismissals without cause were also legally valid. In passing, it was stated that a special protection against dismissal during short-time work granted by the social partner agreement is to be denied. Neither the regulatory purpose nor the wording of the social partner agreement could be interpreted in such a way.

The OLG Vienna (21.9.2021, 10 Ra 38/21p) recently ruled the opposite. An employer’s notice of termination served during short-time work or before the expiry of the retention period without one of the exceptional cases mentioned in the social partner agreement was deemed invalid. This followed from the wording of the social partner agreement. In addition to its significance under subsidy law, it also created a binding framework under the employment contract.

Fortunately for employers, the Supreme Court has now clarified the inconsistency of the previous case law from the Higher Regional Courts. In its decision (OGH 22.10.2021, 8ObA48/21y), the Supreme Court, reviewing the existing doctrinal opinions, has concluded that the provisions of Section 37b AMSG in conjunction with the social partner agreement do not invalidate a notice of termination given during short-time work or the subsequent retention period. Nor would short-time work result in a change of the notice periods and dates. However, the short-time work allowance as a subsidy from the employer was to be taken into account in the context of a challenge to termination (Section 105 Labour Constitution Act (ArbVG)) when assessing whether operational requirements justified a termination.

Thus, the controversial and, at the same time, important question for employers regarding the legal validity of terminations during short-time work and the retention period seems to have been clarified by the highest court for the time being. The fact that the plaintiff in the case at hand was not covered by the short-time work introduced by individual agreement and “rightly” did not refer to an “individual contractual agreement of a special protection against dismissal” does not alter the result due to the reasoning that goes beyond the individual case. It is consistent that the short-time work allowance must be included in the weighing of interests pursuant to Section 105 para. 3 (2) ArbVG.