The non-uniform definitions of “employee”

1. March 2019

Anyone who thinks that the concept of “employee” is uniformly regulated in Austria would be mistaken. The regulations of the Austrian Commercial Code (Unternehmensgesetzbuch, UGB) relating to the size category and note and those of the Austrian Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung, GmbHG) relating to the supervisory board obligation differ significantly when it comes to determining the persons to be included in the calculation of employee numbers.

TPA auditor Manuela Ponesch-Urbanek discusses the main definitions of “employee”.

1. Note based on full-time equivalent

For the note relating to employees in the financial year, as required pursuant to § 237 UGB, the average number of employees is calculated on the basis of the employees on the last day of each month (not the first). In order to be able to relate this to personnel expenses per employee, the number of employees must be stated as full-time equivalents (FTEs), which means that part-time employees only count in proportion to their employment rate.

1.1 Apprentices & persons in marginal employment

The calculation also includes apprentices and senior executives, as well as persons in marginal employment, employees working at a permanent establishment abroad and employees whose contracts have been terminated (until the employment relationship ends).

1.2 Exceptions: employees on leave, employees performing civilian service, temporary workers

On the other hand, the calculation does not include employees on leave, employees performing military and civilian service, temporary workers, members of the executive board / board of directors, freelancers and employees in the vacation phase of the block partial retirement model. For interns, inclusion depends on satisfaction of the characteristics of an employment relationship.

2. Size category based on headcount

To classify the company within the size categories pursuant to § 221 UGB, the number of employees is calculated according to the headcount, on the basis of the annual average of the number of employees on the last day of each month. In contrast to the note, managing directors without  influence under company law are also included.

3. Supervisory board obligation and number of employees

The number of employees for calculating the obligation to set up a supervisory board in accordance with § 29 GmbHG is governed by the Employment Constitution Act (Arbeitsverfassungsgesetz). The calculation is based on the headcount using the annual average of the number of employees on the last day of each month.

Note! This calculation must also include temporary workers, employees performing military or civilian service and employees on leave. On the other hand, the executive board, senior executives with significant influence on the running of the business, freelancers, interns, suspended employment relationships and employees at permanent establishments abroad are not to be included.

4. Staff provisions

The holiday provision must include interns, apprentices, employees at permanent establishments abroad, senior executives, members of the board of directors / executive board (depending on their contract) and persons in marginal employment, but not freelancers or temporary workers. For employees on leave as well as for employees performing military or civilian service, it should be noted that they have a pro-rata entitlement for the year of employment that is reduced by such leave or military/civilian service.

As a rule, the provision for anniversary bonuses is to be established on the basis of a collective agreement for all those employees who will achieve the years of service required to accrue an anniversary bonus before the expected end of the employment relationship.

Are you still not totally sure which definition of employee applies? Contact our tax experts!