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9 Dec, 2022

Insolvency of the employer and the effects on the Red-White Card

Alice is originally from Georgia. She graduated from the State University of Tbilisi with a Bachelor’s and a Master’s degree in Computer Science and after graduation worked as a programmer for a few years in Ukraine and then in Italy. During her stay in Italy, her employer informs Alice that he intends to expand his business to Austria and establish a subsidiary here. Alice is asked if she would like to help set up the Austrian branch and take up a job with the Austrian subsidiary. Alice loves new challenges and is enthusiastic about the idea and so the Austrian company applies for a Red-White-Red Card as another key worker for Alice, which is issued to her after a few weeks. Of course, she is not thinking about possible insolvency.

Insolvency of the employer

Unfortunately, business for Alice’s employer in Austria is not going as hoped. At first, the Italian parent company still promotes the development of the Austrian subsidiary, but increasingly loses interest in the business in Austria and finally stops all payments. As a result, payments due can no longer be paid on time by the Austrian subsidiary. For several months, Alice only receives a part of her salary, which is also only paid irregularly, and finally, she learns that insolvency proceedings have been initiated against her employer. What are the consequences for Alice?

The employment relationship remains in force

An employer’s insolvency does not mean that Alice’s employment relationship is automatically terminated. In principle, it continues unchanged. However, the employer’s duties are no longer performed by the company’s management, but by a court-appointed insolvency administrator. In principle, the insolvency administrator has the possibility to terminate the employment relationships of the employees of the insolvent company, whereby the termination options are not only based on labour law, but also on insolvency law regulations.

Withdrawal of the Red-White-Red – Card

Unfortunately, as part of the insolvency proceedings, the closure of the company is ordered and Alice is terminated by the insolvency administrator with due notice. What does this now mean for her Red-White-Red – Card?

As already examined in detail in this article, the loss of a job also means the loss of one of the conditions for the issuance of the Red-White-Red – Card. As a consequence, the competent immigration authority is obliged to initiate a procedure to withdraw the Red-White-Red – Card.

Outstanding remuneration claims in the event of employer insolvency

In the event of an employer’s insolvency, employees’ outstanding remuneration claims are secured by the Insolvency Remuneration Fund. Employees can register their outstanding claims in the insolvency proceedings and apply to IEF-Service-GmbH for payment of insolvency remuneration. Insolvency remuneration is paid for current remuneration, for claims upon termination of the employment relationship, claims for damages, other claims arising from the employment relationship (expenses, company pensions, mileage allowance, etc.), and possible legal costs. Payment is only made upon application, which must be submitted within 6 months of the opening of the insolvency proceedings. The outstanding claims must be proven as precisely as possible.

Consequences for Alice

For Alice, this means on the one hand that she must find new employment as soon as possible, on the basis of which she can apply again for a Red-White-Red card, and on the other hand that she must assert her outstanding claims against her employer. In any case, Alice should act as quickly as possible so that she does not lose any of the claims to which she is entitled and can also secure her right of residence in Austria.

Dr. Alexander Raidl, BA

Pramergasse 21, 1090 Wien

Pramergasse 21
1090 Wien

© Dr. Alexander Raidl. All rights reserved.
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