Published on April 30
Payments to works council members who violate the prohibition of preferential treatment have always been null and void. The Supreme Court has now ruled for the first time that excessive remuneration payments to works council members can be reclaimed (9 ObA 96/24v).
The works council position is an honorary position for the workforce; there is no special remuneration for works council activities: If employees work as works council members during their working hours, they receive the remuneration they would have earned if they had continued to perform their contractually agreed work (loss of earnings principle). It makes no difference whether a works council member is exempted on a case-by-case basis or permanently (Sections 116, 117 ArbVG).
This is because works council members must not be disadvantaged or favored on the basis of their works council activities. They should not be corruptible, but independent, and should not become alienated from the workforce. (Financial) benefits based on or during works council activities are therefore prohibited according to established case law (OGH 9 ObA 10/21t; OGH 9 ObA 40/22f; OGH9 ObA 96/24v).
If works council members are permanently exempted from work, they are entitled to compensation for their presumed earnings in accordance with these principles (OGH 9 ObA 1/91; OGH 9 ObA 10/21t; 9ObA 40/22f; OGH 9 ObA 96/24v). This refers to the earnings that they would have earned with a high degree of probability in the normal course of events if they had not been permanently exempted. This can best be measured by comparing the “average career” of comparable employees within the company: reference is made to the career path of employees who were largely comparable to the works council member before their release from work (9ObA 40/22f; OGH 9 ObA 96/24v).
If remuneration agreements are concluded with works council members that violate these principles, e.g., remuneration agreements that are too high, they are absolutely void. The same applies to other privileges.
Employers who have concluded such agreements can also invoke this nullity and discontinue privileges at any time. According to the Supreme Court, the purpose of the prohibition would otherwise not be achieved (Supreme Court 9 ObA 96/24v 9 ObA 133/12t).
The Supreme Court has now clarified for the first time that employers can not only discontinue privileges for the future: they can also reclaim privileges, such as excessive remuneration payments, for the past. It would simply be incompatible with the prohibition of preferential treatment if a claim for repayment were not possible. This also applies if the employer knew that the remuneration was excessive and the remuneration agreement was therefore void.
Remuneration payments to works council members that violate the prohibition of preferential treatment can therefore also be reclaimed for the past.
However, the Supreme Court left some questions open in its remarkable decision: For example, it is not clear what effects a mutual error on the part of the employer and the works council regarding the fictitious career path has: Is a remuneration agreement also absolutely void ex tunc if both sides mistakenly assumed a career path that was too favorable? And how does the good faith use of excessive remuneration relate to the prohibition of preferential treatment of works council members?
The conclusion is that it makes sense to review remuneration models, especially those for exempt works council members, so that any necessary adjustments can be made. We would be happy to advise and support you in this regard.
