OGH: Time Credits Are not Insolvency Claims

Oct 27, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has clarified that work time credited to an employee does not constitute an insolvency claim and therefore cannot be reduced by a restructuring plan.

The plaintiff had been employed by the defendant as a hairdresser for 10 weeks and had agreed to work compensatory time. Insolvency proceedings were opened against the employer’s assets. The plaintiff sought only to recover outstanding current remuneration, leaving the employment relationship unaffected. After a few months, the bankruptcy proceedings were suspended again following an agreed restructuring plan (23%).

When the insolvency proceedings were opened, the claimant’s time compensation account had a balance of 311.95 hours. She used 22.50 hours until the adoption of the reorganisation plan and a further 56.70 hours thereafter until termination of her employment. She was paid 92 hours on termination.

The plaintiff now claimed payment of 141.30 hours of overtime.

The court of first instance awarded her remuneration for 9.9 hours, resulting from the application of the 23% rate of the reorganisation plan to the time credit existing at the time of the opening of the insolvency proceedings and reduced by the compensatory time used during the insolvency proceedings.

The OGH, however, decided otherwise:

Pursuant to Section 19f(2) and (3) of the Austrian Working Time Act (Arbeitszeitgesetz, AZG), the following applies: If compensatory time has not been agreed in advance and is not used within six months of the end of the month in which it accrues, the employee may, after a further four weeks, unilaterally determine the use of the credit or demand compensation in cash. Only upon such demand will the time compensation entitlement be converted into cash. If the employee does not make a demand, there is no conversion into money and therefore no entitlement to remuneration. As a result, the time credit is not a claim under property law and is not subject to the effects of a reorganisation plan as an insolvency claim.

OGH 8 ObA 16/23w (29 August 2023)