OGH on the Recovery of Severance Pay

Oct 11, 2024 Benn-Ibler Rechtsanwälte

In the interest of legal certainty, Section 1486 of the Austrian Civil Code (Allgemeines bürgerliches Gesetzbuch, hereinafter ABGB) reduces the general 30-year limitation period to three years for certain claims, in particular those arising from daily life situations. However, Section 1486 also covers claims for larger sums of money and claims arising from infrequent business transactions.

In the case at hand, the plaintiff was a shareholder and managing director of A* GmbH. In 2012, the company was dissolved by transfer to the plaintiff as shareholder and deleted from the commercial register. The company continued to operate under the name A* e.U. (which, abbreviated, stands for Einzelunternehmen, or sole trader).

Until his retirement on 31 March 2003, the defendant had been employed as a managing director of A* GmbH. He again worked for the company for 20 hours a week from March 2004 until the end of 2012.

The plaintiff paid the defendant just over EUR 7,000 in 2012 and a further EUR 20,000 in 2013. In an action filed in 2020, the plaintiff had sued for this amount. The plaintiff had made the payments on the basis of fraudulent statements made by the defendant to the effect that he was still entitled to a severance payment. The defendant’s defence was that he was still entitled to a severance payment and that the plaintiff’s claim for repayment was time-barred.

The claim was dismissed by the court of first instance. The court of appeal then dismissed the plaintiff’s appeal. The existence of fraudulent intent was also denied by the lower courts. The Austrian Supreme Court (Oberster Gerichtshof, OGH) has now ruled as follows:

Severance claims are also claims by employees for remuneration under service contracts as defined in Section 1486(5) of the ABGB, which become statute-barred after three years. According to the established case law of the OGH, the claim for repayment of erroneously overpaid remuneration is also time-barred after three years by analogous application of the second half of Section 1486(5) of the ABGB, provided that there is no fraudulent misrepresentation.

As a result, the plaintiff is not entitled to a refund of the sums paid, as this is already time-barred.

OGH 8 Ob 49/24z (26 August 2024)