This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.
In case of termination of employment relationships the question arises time and again whether employment of the employee in other group companies has to be considered. This question is not governed explicitly by statute. The Austrian Supreme Court has now stated more clearly several preconditions for group-wide employment.
Facts
The question of continued employment of an employee arises in particular in case of a challenge of a notice of termination before the labour court. In such law suits the employee regularly argues that the notice of termination is socially inadequate and that he should remain employed by the employer. The employer can justify a socially inadequate termination through business or personal reasons. However, even if such reasons exist, there must be a balancing of interests between the interest of the employee in ongoing employment and the interest of the employer in terminating the employment. Due to this balancing of interests, the obligation of the employer to organise the business socially has to be considered. The question then arises if this social obligation of the employer includes the obligation to offer an employee ongoing employment with another group company.
Previous opinions and case law
According to the prevailing opinion, generally, no obligation to employ an employee across a group exists. However, exemptions from this principle may apply. The Supreme Court1 has stated in a case concerning the challenge of a notice of termination that it must be verified from an economic perspective whether the employee may be employed in another unit of the group. However, the Supreme Court did not clarify the parameters for such group-wide employment. Thus, there was some legal uncertainty regarding the scope of the obligation of the employer to organise the business in order to provide group-wide employment.
New Supreme Court case law
Through the latest decision of the Supreme Court2 it has been clarified that in case of termination due to restructuring reasons, the employer is obliged to consider ongoing employment of the affected employee in another unit of the group. This obligation is subject to the social obligation of the employer towards its employees.
However, such obligation for group-wide employment exists only in the exceptional case of an existing groupwide employment relationship. Such a group-wide employment relationship must be assumed if the employee was employed to work for certain group companies, the employee actually works for certain group companies or the employer has reserved the right to employ the employee in more group companies.
Consequences
Employers are thus well advised to be cautious when employing an employee for more than one company of a group, in which case the protection against termination of the employee may be expanded.
If group-wide employment is not necessary, it is recommended to neither state in the employment contract that the employee may be employed in more than one group company nor reserve the right in the employment contract to employ the employee in other units of the group.
In exceptional cases the social obligation of the employer towards the employees obliges the employer to provide for continuous employment with other group companies.
This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.
Footnotes
1 OGH 10.12.1993, 9 ObA 310/93.
2 OGH 29.06.2009, 9 ObA 34/08b.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
