Contributed by Graf & Pitkowitz Rechtsanwälte GmbH

March 31 2010

The Working Time Act defines 'overtime' as a period of working hours that exceeds either the maximum daily amount (eight hours) or the maximum weekly amount (40 hours) of standard working hours. Unless otherwise provided by collective bargaining agreements, a 50% premium is added to the normal hourly wage for calculating overtime pay. Any overtime that the employee must work can also be compensated by a flat-rate overtime payment. However, if the number of overtime hours exceeds the number of hours covered by the flat-rate payment, the employee is entitled to receive an additional remuneration for any additional hours that he or she has worked. An all-inclusive clause is similar to a flat-rate overtime payment. The difference is that the all-inclusive clause establishes a total salary, whereas the flat-rate overtime payment incorporates the monthly salary and an additional overtime payment on a flat-rate basis. An all-inclusive agreement includes overtime, weekend and holiday work and travel time. However, the necessity of a base salary still applies even when an all-inclusive clause is used. If the respective employment contract does not include a base salary, the minimum salary of the applicable collective bargaining agreement will usually be regarded as the base salary. If no applicable collective bargaining agreement is in effect for the specific employment agreement, a comparison with co-workers is required. If the corresponding number of overtime hours exceeds the difference between the base salary and the all-inclusive salary, the employee is entitled to receive an additional remuneration for any additional hours that he or she has worked. The Working Time Act does not apply to managerial personnel (ie, employees with core management functions). Consequently, such employees are generally not entitled to receive an overtime premium. However, there is an exception to this exception: most collective bargaining agreements also include managerial employees in their provisions on overtime. Therefore, these employees are also entitled to an overtime premium by virtue of collective bargaining. Thus, an all-inclusive clause is most effective in connection with managerial employees with decisive management functions where no applicable collective bargaining agreement governs their employment. Generally, neither the flat-rate overtime payment nor the all-inclusive clause can be cancelled or reduced unilaterally (unless specifically agreed in the employment contract) because it constitutes an element of the agreed payment terms. Any unilateral reduction or cancellation by the employer would entitle the employee to terminate his or her employment prematurely (termination for cause), unless it was expressly agreed that the flat-rate payment or all-inclusive clause would apply for a limited time or was subject to cancellation. Thus, a flat-rate overtime payment or an all-inclusive clause cannot be cancelled unilaterally even if the employee works fewer hours, unless the employer has reserved the right to revoke the respective contract term unilaterally. If the employment contract includes no flat-rate overtime payment and no all-inclusive clause, the affected employee will usually be entitled to overtime pay. However, most collective bargaining agreements and (ideally) also employment contracts contain forfeiture clauses, according to which overtime pay entitlements are deemed forfeited if overtime worked is not formally claimed within a specific timeframe (usually between three and six months).

For further information on this topic please contact Jakob Widner at Graf & Pitkowitz Rechtsanwälte GmbH by telephone (+43 1 401 17 0), fax (+43 1 401 17 40) or email (widner@gmp.at). The Graf & Pitkowitz Rechtsanwälte GmbH website can be accessed at www.gmp.at.