Do Bonus Agreements Require A Shop Agreement?

With the amendment of the Austrian Labour Constitution Act (Arbeitsverfassungsrecht; ArbVG), put into force on 1 January 2011, the Austrian legislator reacted to a highly controversial decision of the Austrian Supreme Court (Oberster Gerichtshof; OGH)¹. But the amendment raises new questions.

The decision of the Supreme Court

The OGH had to answer whether a "performance-based bonus system" requires a shop agreement. According to the old version of the ArbVG, a shop agreement was needed to implement piece-work wages for wage plans that are similar to piece work and for miscellaneous performance- based bonuses and rewards.

The OGH ruled that a shop agreement is necessary if a bonus system regulates the payout of the bonus by reaching individualised performance goals. Furthermore, replicable criteria must be applied to measure the attainment of these goals and for third parties.