OGH: Employment-like Status for Brokerage Agents

Nov 25, 2022 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, OGH) has again reiterated case law on the employee-like nature of self-employed agents.

The defendant had concluded a business partner agreement with the original plaintiff, who sells insurance and financial products. It was agreed that the defendant would inform the plaintiff of prospective customers for insurance products and financial services and would receive a commission in the event of successful deals. According to the contract, the defendant would work independently and without being bound by any directives.

However, the defendant terminated the contract and then continued to work as an investment advisor and securities broker for a competing company (ostensibly in breach of the contractually agreed non-competition clause). The plaintiffs (all of which were companies under the control of the same natural person) then sought injunctive relief.

Initially, the composition of the court was in dispute. The defendant believed that her employment status was at least similar to that of an employee (section 51 (3) of the Labour and Social Court Act (Arbeits- und Sozialgerichtsgesetz) and that the court therefore would have to be compose of judges responsible for labour and social law cases.

The court of first instance agreed with the defendant, but the court of appeal sided with the plaintiffs. In particular, the court held that the business partner agreement did not create an employee-type commitment, and that the defendant only worked part-time and was not substantially dependent on this income due to the relatively small commission.

The Austrian Supreme Court followed the court of first instance, stating:

Of particular relevance in differentiating between employment and self-employment is the degree of personal dependence. ‘Economic dependence’, i.e. whether the ‘employee-like’ person is dependent on payment for their livelihood is not a valid criterion. The criteria applied by the appeals court, namely a lack of job duties, low commissions, and no financial dependence are not crucial factors in determining whether a person is self-employed. For instance, the defendant was so exclusively tied to the plaintiffs’ company that she was only allowed to sell their products in the contractual area of business and the sale of competing products would have constituted a reason to terminate their contractual relationship without notice. Likewise, the obligation to participate in continuing training events and the career tiers (which were reflected by increasing commissions) set by the plaintiffs spoke in favour of an employee-like relationship.

OGH 4 Ob 84/22i (18 October 2022)