Mutual agreements and general settlement clauses

For mutual agreements, it is common to explicitly agree on outstanding payments to the employee and at the end agree on a general settlement clause (“Generalbereiningungsklausel”).

Most recently, the Supreme Court of Justice (“Oberster Gerichtshof”) has ruled that, although such a clause is agreed, it is legit to recourse wage tax from the former employee (OGH, 9 ObA 74/19a).

In this concrete ruling, the company had to make a back pay to the financial authorities, since too little tax has been withheld. The employer wanted to recourse this from the employee, who, however, has neglected arguing with the general settlement clause.

The Supreme Court of Justice did, however, not accept this argumentation, stating that it can not be assumed that with the corresponding general settlement clause, all reciprocal entitlements can be covered, especially, if these entitlements have resulted from the mutual agreement.

In case of this general settlement clause being formulated correctly, it is excluding a posteriori raised claims (based on legal entitlements from the working contract), however, not tax back payments, which arose with an audit.

As you can see, it is therefore essential to be precise in the wording of such kind of agreements. We are happy to assist you with setting up such type of clauses.

Do you have questions about this or similar topics? We are happy to be there for you! 

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