Short-time work – no special protection for individual employees

Published 21 April 2021

Pursuant to Section 37b of the Labour Market Service Act (AMSG), maintaining the number of employees during short-time work (retention obligation) and, as a rule, for one month after its termination (retention period) is a prerequisite for granting the short-time work allowance. Up to now, it has not been clarified whether dismissals for operational reasons in contravention of this prohibition are effective.

The Linz Higher Regional Court (10. 2. 2021, 12 Ra 6/21w) recently ruled that such terminations are effective. Employees are not individually entitled to a continuation of the employment relationship – neither from Section 37b of the AMFG nor from the social partner agreement. According to the court, maintaining the employment relationship has an (exclusively) labour market policy background. In the event of temporary economic problems, companies are assisted to continue employing their employees to prevent (national) unemployment. 

In accordance with the purpose of Section 37b of the AMSG, the Short-Time Work Directive provides for recovering the subsidy if the employer violates the conditions. However, this does not imply individual employees are protected.

The ordinary appeal to the Supreme Court was admitted. It should also be noted that the decision was issued on "short-time work phase I" and on a very specific version of the social partner agreement and of Section 37b of the AMSG. Although unlikely, it cannot be ruled out that the assessment could be different for later versions and phases of short-time work.

The decision not only has far-reaching significance for the numerous pending court cases, but also provides employers with flexibility in the crisis. Dismissals for operational reasons remain permissible as a restructuring measure even during short-time work and at most entail consequences under state aid law.