Classification as Corporate or Employee Recreational Institution

Jul 25, 2025 Benn-Ibler Rechtsanwälte

The issue before the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) concerns the establishment of criteria for recognizing an entity as a company welfare institution.

In the case at hand, the plaintiff (the company representative) sought an injunction against the defendant (the company) to refrain from closing an outdoor swimming facility pursuant to Section 95(3)(2) of the Austrian Labor Constitution Act (Arbeitsverfassungsgesetz, hereinafter ArbVG).

The defendant contended that the swimming facility did not constitute a recreational facility attributable to the business as defined by Sections 95 and 97(1)(19) of the ArbVG. Furthermore, the defendant asserted that the plaintiff lacked standing to initiate legal proceedings, as usage rights for the facility had been conferred upon the Austrian Trade Union Federation (ÖGB) rather than to the company’s employees.

Lawsuit dismissed by lower courts

Both lower courts rejected the claim, reasoning that the swimming facility did not constitute a recreational facility owned by the defendant’s business or company. Instead, it was characterised as a swimming area managed by the trade union. Consequently, the works council’s co-determination rights under Section 95(3) of the ArbVG were deemed inapplicable.

Lawmakers say ‘ownership’ counts; legal literature says it’s ‘a matter of control’

Pursuant to Section 95 (3) of the ArbVG, the works council generally holds the right to challenge the dissolution of a recreation facility belonging to the company or enterprise. It is uncontested that the swimming facility at issue constitutes a ‘recreational facility’ as defined by the ArbVG. Nevertheless, Section 95 (3) further stipulates that the recreational facility must be company-owned.

In legal literature, company recreational facilities are defined as assets owned by an employer. Pertinent sources even broaden this definition to include facilities over which the employer exercises significant control—either through legal entitlement or actual authority regarding their management and use.

Decision by the OGH

Based on the criteria outlined above, particularly the prevailing interpretation in legal literature regarding the necessity for the facility to be ‘owned’ by the business or company, the legal reasoning of the lower courts aligns with these standards. In this case, there is no evidence that the defendant was involved in management or exercised significant influence over the daily operations of the river beach facility.

OGH 8 ObA 14/25d (26.05.2025)