a. How to Properly Document the Relationship
As stated above, an independent contractor relationship does not require a written contract. However, to clearly define an employment relationship from the outset, an employer is generally obliged to provide the contractor with a written statement of terms and conditions (Dienstzettel). This statement must include basic information regarding the employment arrangement, including, at a minimum, the following elements:
- the names of the two parties,
- basic salary or wages,
- the nature of the proposed work,
- date on which the arrangement commences,
- duration of the notice period,
- any classification within the labor system.
If the independent contractor is supposed to work abroad for more than one month, the statement of terms and conditions must additionally include information about:
- the expected duration of the foreign operations,
- the currency in which salary or wages are to be paid,
- the conditions of the return to Austria and
- potential additional payments.
This written statement of terms and conditions is often required by the employee to register for social insurance, if they are seeking to do so independent from their employ-er. The employer is obliged to issue the statement in written form immediately following the start of the independent contractor relationship, at the latest however, within one month. In case of changes concerning the information included in the statement, the employer is obliged to give immediate notice to the independent contractor in writing.
However, a statement of terms and conditions is legally superfluous, if the independent contractor relationship is not supposed to last for more than one month or if the above-mentioned information is contained in a written contract.
b. Day-to-Day Management of the Relationship
As mentioned above, the classification as an independent contractor relationship or a standard contract of employment does not only depend on the arrangements of the written contract or the statement of terms and conditions. Rather, the classification is subject to the manner in which the employee’s services are effectively carried out on a day-to-day basis. Therefore, it is crucial that the employer remains cognizant of how the contractor is carrying out the indicia of their employment. In particular, the employer should be sensitive to whether the contractor’s scope of employment is bleeding into the employer’s basic organization structure. Recommended business practices dictate, at the very least, monthly written or oral evaluations or memoranda concerning the scope of the contracted party’s employment to maintain records that may be used to refute a claim for re-characterization of employment.