Overview

The introduction of bonus schemes focusing on the individual performance of each employee has become increasingly attractive in recent years. But employers need to ensure that they fully understand when they need  to secure works council approval for such schemes, in order to avoid later complications.

In a landmark decision the Austrian Supreme Court in October 2008 determined that “performance-oriented bonus schemes” shall be invalid unless the works council expressly consents to such schemes in a plant agreement. Until then, the Supreme Court generally denied the legal necessity of implementing a plant agreement  for  such bonus schemes and employers usually introduced bonus schemes via individual agreements with the employees.

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