STA, 13 November 2018 - The EU Court of Justice has ruled in favour of a Slovenian company that filed a complaint against Austria over the system of bonds set down in the country's law on the prevention of payment and social dumping. According to lawyer Rudi Vouk, this is a landmark ruling that will have a positive effect on Slovenian companies doing business in Austria.
Čepelnik, a company based in Prevalje near the Austrian border, challenged the law after its client in Austria paid around EUR 5,000 to authorities in Völkermarkt in the company's place as a deposit for alleged violations instead of paying the company's invoice.
The EU court concluded that the legislation of a member state which allows the recipient of services to suspend payments to the contractor or to pay a security to guarantee the payment of a potential fine in place of the contractor "goes beyond what is necessary for attaining the objectives of protecting workers, combating fraud, in particular social security fraud, and preventing abuse".
The ruling is in line with the opinion of EU Advocate General Nils Wahl, who issued an opinion on the case in May. He said that measures like this system of bonds are in violation of the European directive on services and definitely exceed the scope of what is needed to enable national authorities to enforce national labour legislation.
Rudi Vouk, an Austrian lawyer of Slovenian descent, told the STA that the ruling was significant for Slovenian companies doing business in Austria.
Before the ruling, companies were in constant danger of their clients having to pay bonds for them in the event of the slightest alleged infringement of law. Additionally, potential clients were also aware of the possibility and potentially avoided Slovenian contractors.
"This danger has now been eliminated because the European court concluded that [the system of bonds] is not proportionate with the goals. Austrian legislators will have to annul the relevant provisions," Vouk said.
He added that other provisions, including those about minimum fines for infringements, "which are absurd", remain in place.
They have also been challenged at the EU court and given the latest ruling, there are reasons for optimism that the court would decide in a similar manner, Vouk added.
Čepelnik is one of the 121 Slovenian companies that complained with the European Commission over high fines and enhanced control of foreign companies providing services in Austria.
Other stories on the relationship between Slovenia and Austria can be found here
