OGH: "Recruitment costs" for retention of employees via a third-party temporary employment agency are inadmissible

Oct 6, 2020 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, OGH) dealt with the permissibility of a clause providing for the replacement of "recruitment costs" in a contract for the leasing of temporary workers.

The plaintiff leased employees to the defendant. The contract included a clause stating that the minimum duration of the assignment was six months. If the leased employee is taken over into a contractual relationship with the defendant during this time, the plaintiff can charge an appropriate compensation for "recruitment costs" incurred in the amount of 18% of the gross annual salary. This also applies if the leased employee is employed in the company via a third-party temporary employment agency.

The defendant informed the workers provided by the plaintiff within the minimum transfer period that it would like to terminate the business relationship and return the plaintiff's workers. A further employment would be possible however in the context of a transfer over a third party. Thereupon seven workers terminated their employment relationship with the plaintiff and established a new employment relationship with another temporary employment agency, which in turn transferred them to the defendant.

The lower courts and the OGH rejected the claim for payment of the "recruitment costs":

According to Sec. 11 (2) (6) of the Austrian Temporary Employment Act (Arbeitskräfteüberlassungsgesetz, AÜG), contractual conditions that restrict the temporary worker's ability to work are prohibited for the period after the end of the contractual relationship with the temporary employment agency, in particular by means of contractual penalties or prohibitions on hiring. The aim is to ensure the full mobility of the leased employee on the labor market. If the defendant had to pay "recruitment costs" as a result of the (re-)employment of the workers transferred to a third party hirer, it is obvious that it would demand other workers from the new hirer, and not the former workers. This in turn would limit the probability that an employee of the plaintiff could establish an employment relationship with a new employment agency at all.

The clause in this contract was therefore unlawful and the action was rightly dismissed.

OGH 8 Ob 41/20t (29 June 2020)