Building law and regulation in Austria during Covid-19

Updated on 14.04.2020

There is no COVID-19 law or regulation in Austria which exclusively applies to the construction industry. However, five packages of COVID-19 laws have been passed by the Austrian parliament which form the legal basis for several ordinances/regulations by ministers of the federal government, provincial governors and/or administrative bodies at the district level. For COVID-19 laws no. 1 and 2, both houses of the Austrian parliament for first time in the history of Austria convened over the weekend and passed and published a law within one day. At the same time, they did so in full compliance with the constitutional requirements.

The most important COVID-19 ordinance restricts access to public space in order to limit individual contacts. It is valid until 30 April 2020. No construction works in public space such as public roads are allowed. Secondly, workers are not allowed to go/commute to any working place including construction sites. However, there are exceptions to both bans, namely if:

1. workers can maintain a distance of at least 1 metre from each other at work; or 
2. the same level of protection against an infection can be achieved by other means such as face masks. For transports of workers (e.g. to and from the site) the distance of 1 meter and face masks must be used at the same time. Masks however are only allowed if the workers agree; or 
3. where work at any other place than the working space is possible ("home office") and employer and employee agree.

Another important restriction requires service providers to close office space which they use for meeting their customers etc. As a result, designers or architects may continue to work but meetings are not allowed.

The social partners agreed on binding guidelines how to safeguard workers' security on construction sites. Security measures will be implemented by addenda to the works security plans, which are obligatory for most construction sites. These measures are:

• maintaining a 1-meter distance during works at the site or other effective steps resulting in an equivalent protection against infection;
• machines, tools, meeting and communication facilities etc. have to be regularly disinfected;
• protective gloves and masks to be used;
• different works by different contractors are phased and/or locally unbundled; 
• employees with increased health risk may not be used for works in cramped conditions.

Finally, the Federal Epidemic Act of 1917 forms the basis for more traditional restrictions like closing a facility or certain means of transport, sending individuals to quarantine, or isolating an entire village if infections occur. Unlike the COVID-19 laws, the Epidemic Law also provides for compensation to individuals or companies affected by such restrictions.

First, an additional possibility for short time work has been enacted in order to help all undertakings to keep their work force employed but drastically reduce their costs. Most construction companies in Austria have not laid off their employees but have used this new form of short time work since 1 April 2020.

Secondly, deadlines for payment of taxes have been suspended.

In cases of severe economic difficulties caused by COVID-19 to an employer who is therefore unable to make a payment that is due between 1 April 2020 to 30 June 2020, the employer does not have to pay more than the statutory delay interest for normal contracts (at the moment 3.38% p.a.). 

A contractor delayed by comparable difficulties or because of governmental restrictions does not have to pay contractual penalties and liquidated damages.

The federal government and most of the provincial governments announced support schemes, such as liquidity aids, which amount to more than EUR 40 billion at the federal level. 

According to most legal scholars and some supreme court rulings, an epidemic like COVID-19 is considered a force majeure event (SARS was considered an FM event too). The effects for construction contracts under Austrian law depend on whether the parties included any specific provisions in their contract. If so, the contractual stipulations prevail. 

If the contract is silent on the issue, force majeure falls within the contractor's sphere of risks.

The Austrian standard forms of construction contracts, in particular the ÖNORM B2110, are more favourable to the contractor because they allocate events to the employer's sphere of risks which (a) make it objectively impossible to perform the contractual obligations; or (b) were unforeseeable at the time of conclusion of contract and cannot be avoided by the contractor even if using all appropriate means. Epidemics and their consequences, such as many of the COVID-19 restrictions listed above, are the employer's risk.

Risk means that the contractor may slow down or even suspend works without being in delay and/or claim additional costs for maintaining the time plan. However, in order to be entitled to claim an extension of time for completion and/or additional costs, the contractor must be able to provide evidence that and in how far such an event actually impeded the contractual performance of his works. The rules are the same as for any other event that causes delay or additional costs.
In most construction projects with the public being the employer, the necessary adjustments were mutually agreed. However, the strict limits to amending existing contracts in public procurement law must be kept in mind.

In some but fewer cases the employer and/or contractor may even be entitled to terminate the construction contract due to the performance of the contractual obligations becoming impossible ("Unmöglichkeit") or because the basis of the contract falls away ("Wegfall der Geschäftsgrundlage", which is comparable to 'frustration of contract' under common law).

Yes, these measures may also be considered a change in law. However, if not specifically agreed otherwise, negative consequences of a change in law must be borne by the party which is affected by the change in performing its contractual obligations.

Under an ÖNORM contract (see above), a change in law can be an event which makes the performance of works objectively impossible, for example if no contractor can access a construction site or is able to supply specific construction materials

New governmental steps must be expected every few days (including at the provincial level). The government restrictions were reduced beginning with 14 April 2020 but may become stricter at any time if the fight against COVID-19 requires so. Please contact CMS in Austria for an update. However, most sources do not expect stricter rules but an extension of the current rules and a slow return to normality until/during the summer. More detailed rules for aid schemes are likely.

What should be mentioned is that almost all court procedures and administrative procedures are being suspended and all deadlines (e.g. for appeals etc) which have not yet expired will commence anew on 1 May 2020. This does not apply to remedies in procurement procedures where the deadlines commenced to run anew on 6 April 2020.

More generous rules for serving public documents apply (for example for invitations to court hearings).