20.09.2019 #TodayInDispute: ECJ declares certain provisions of LSD-BG unlawful. The sanctions provided by Austrian anti wage and social dumping law (Lohn- und Sozialdumping-Bekämpfungsgesetz // LSD-BG) for not obtaining administrative approvals and keeping wage documents available in Austria infringe the EU freedom of services according to a recent ECJ judgement. In the case on hand the fines imposed on the managing directors of the Croatian and Austrian companies involved amounted to several million Euros or compensatory imprisonments of several years. The ECJ stated that administrative fines, which (1) provide for a minimum amount, (2) could be imposed cumulatively for each posted or hired out worker, (3) provide for a compensatory imprisonment and (4) provide for a cost risk in case of an appeal of additional 20% of the fine, violate European Union law. The judgment (in German) can be found here.
16.09.2019 #TodayInDispute: Pursuant to Art 5(5) of the Lugano Convention, a person domiciled in a Convention State may (inter alia) be sued in another Convention State if a dispute arises out of the operations of a branch of a company, in the courts for the place in which the branch is situated. The decisive factor differentiating a branch from an independent subsidiary is that a branch is under the direct control of its parent company, whereas a subsidiary acts independently from parent company’s directives. In a case recently decided by the Austrian Supreme Court, a company incorporated in Switzerland which had a subsidiary in Austria, was sued before an Austrian court. The Supreme Court held that while the Respondent’s Austrian subsidiary was – formally – indeed not a branch but a subsidiary, it still did not act for itself, but mainly for the parent company and was supervised and managed by the parent company. In its business relations with the Claimant, the Respondent had presented itself in a way that its subsidiary was under its full control (underlined by the Respondent’s GTCs). The Court therefore held that there were sufficient connecting factors to conduct the proceedings against the Swiss Respondent before the Austrian Court competent for the subsidiary. More (in German) here.
02.09.2019 #TodayInDispute: A termination of the employment for cause has to be issued without any delay as soon as the facts have been sufficiently clarified by the employer. This also applies in case the employee was put on garden leave. Thus, a termination of an employment for cause is null and void if facts are clarified three months after the employee was put on garden leave and the employment is only terminated nine months later. Even in such a situation the employer is obliged to terminate the employment immediately. Due to a belated termination the employee may not only be entitled to a compensation payment but also challenge the termination for example for being socially unfair. In the latter case, the misbehavior of the employee may not be taken into account by a court if the termination was not issued immediately. Thus, a belated termination may even lead to a reinstatement of the employee. The ruling (in German) can be found here.
07.08.2019 #TodayInDispute: “Unfair Competition: Summer Edition” The Austrian Supreme Court recently was confronted with an “ice-cream case”: The claimant sells and advertises a well-known oval ice-cream bar coated with two layers of chocolate and fillings in different flavors (“Magnum Double”). The (first) Respondent sells and markets ice-cream under the name “Gelatelli Double” which matches the Claimant’s product in structure and in offered flavors. The Claimant inter alia filed a cease-and-desist claim arguing that Respondent’s product is an Imitation and violates Austrian competition law due to deception of origin and by freeriding on Magnum’s popularity. However, the Supreme Court sided with the Respondent. It noted that in order to promote free competition, market participants are free to offer imitating products. Offering an imitation may, however, be unfair if the competitor fulfills certain additional criteria amounting to unfair conduct. This was not the case here: Magnum’s oval shape and multi-layered structure was not a characteristic feature that serves as an indication of the product’s origin to a specific company. The same applies to the term “Double”, which merely describes the structure of the ice-cream and is only secondary to the brand “Magnum”. Read more (in German) here.
30.07.2019 #TodayInDispute: Will there be a change in the ECJ case law on transfers of undertakings? The ECJ has currently to decide whether the transfer of a public bus service qualifies as transfer of undertaking and thus, triggers the TUPE provisions, if there is no significant transfer of tangible assets like buses but the majority of the personnel employed by the former operator were engaged by the new operator. In its previous case law, the ECJ ruled that bus transport is an asset-intensive business. Accordingly, the transfer of tangibles was considered to be decisive for the qualification of a transfer of undertaking. However, this case law could now be softened. According to the Advocate General, the question whether there is a transfer of undertaking or not – even in cases of asset-intensive businesses – cannot be reduced to determining whether the tangible assets are transferred from the old to the new operator but rather all facts and circumstances relating to the transaction have to be assessed. If the ECJ follows the Advocate General, this may have an impact on the future assessment of whether or not a transfer of undertaking is given. The Opinion of the Advocate General (in German) can be found here.
29.07.2019 #TodayInDispute: “Exceptions to an exclusive right” Volker Beck, a German politician, uploaded a text he had authored in the 80s to his website in order to distance himself from its questionable content. Spiegel Online then published an article containing hyperlinks to Mr. Beck’s text. Mr. Beck sued Spiegel Online and argued that making those documents available on the Spiegel Online website infringed his copyright. The case was brought before the German BGH, which requested a preliminary ruling from the CJEU. In its judgment, the CJEU inter alia noted that under the Copyright Directive 2001/29 Member States enjoy discretion in applying exceptions and limitations to the copyright holders’ exclusive right to reproduce their work or to communicate it to the public. The Court also held that the protection of intellectual property rights is not absolute and that it is necessary (where appropriate) to take into account the fact that the nature of a ‘speech’ or information is of particular importance, notably in political discourse and discourse concerning matters of public interest. If Member States allow the use of protected works in connection with the reporting of current events, Member States cannot subject the exception to the author’s prior consent. Read the full decision here.
19.07.2019 #TodayInDispute: Hired-out employees are not covered by the Austrian provisions on transfer of undertakings. Thus, their employment agreements do not transfer by operation of law, if the user enterprise is sold. Pursuant to the Austrian Supreme Court, this also holds true if the hiring-out takes place within a group and over a period of several years. In the case at hand, the employee, who was previously working for the employing company, was already hired-out to a group company for more than five years at the time the transfer of undertaking took place. As the employment relationship of the hired-out employee was not covered by the transfer, the employee’s claim for employment with the purchaser of the company was rejected by the Austrian Supreme Court. The ruling (in German) can be found here.
15.07.2019 #TodayInDispute: A different treatment of employees based on different working time models does not violate the principle of equal treatment pursuant to a recent Supreme Court ruling. Thus, employers may exclude employees on a flexitime model from an annual bonus regime, which is granted to employees on an annual working time scheme with an all-in remuneration. This especially holds true if the different working time models are applied to specific groups of employees. In the case at hand all project managers were on the working time scheme with a bonus and all system engineers, such as the plaintiff, on the flexitime scheme without a bonus. The plaintiff’s claim to a bonus based on an infringement of the principle of equal treatment was reject. The ruling (in German) can be found here.