Start Austria ECJ has overturned an Austrian regulation against social dumping

ECJ has overturned an Austrian regulation against social dumping


A security to be paid by the customer in Austria for foreign service providers violates a judgment (C-33/17) of the European Court of Justice of Tuesday against EU law.

In the specific legal dispute, the Slovenian company „Cepelnik“ has carried out construction work on a detached house in Carinthia worth 12,200 euros. The company demands from the Austrian client the outstanding residual wages.

The client claims that he has already paid the outstanding salary. He had this amount (5,200 euros) namely with debt-discharging effect as collateral for a fine that may have to pay the Slovenian construction company in Austria, must pay to the Austrian administration.

The latter instituted an investigation into the Slovenian construction company for possible non-declaration of posted workers and lack of availability of the salary documents in German. The reason given was the arrangement of the security deposit with the foreign head office. The competent district court Bleiburg has referred the case to the ECJ.

The regulation, which requires a domestic service recipient to stop paying and provide a security to secure a possible fine in another EU country, is „in breach of EU law“, the EU judges made clear. Such national measures would go beyond what is necessary to achieve the objectives of protection of workers and the fight against fraud, in particular social fraud, and the prevention of abuses.

The EU Services Directive is not applicable in this case. However, the Austrian legislation limits the freedom to provide services.