European Court of Human Rights

 

 

 

FOURTH SECTION

CASE OF PAGITSCH GMBH AND

COMINO UNTERNEHMENSBERATUNG ERWACHSENENBILDUNG GMBH v. AUSTRIA

(Applications nos. 56387/17 and 69808/17)

 

 

 

 

JUDGMENT

 

 

 

STRASBOURG

22 June 2021

This judgment is final but it may be subject to editorial revision.

In the case of Pagitsch GmbH and Comino Unternehmensberatung Erwachsenenbildung GmbH v. Austria,

The European Court of Human Rights (Fourth Section), sitting as a Committee composed of:

          Iulia Antoanella Motoc, President,
          Gabriele Kucsko-Stadlmayer,
          Pere Pastor Vilanova, judges,
and Ilse Freiwirth, Deputy Section Registrar,

Having regard to:

the applications (nos. 56387/17 and 69808/17) against the Republic of Austria lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Pagitsch GmbH (“the first applicant company”) and Comino Unternehmensberatung Erwachsenenbildung GmbH (“the second applicant company”), on 31 July 2017 and 19 September 2017 respectively;

the decision to give notice of the applications to the Austrian Government (“the Government”);

the parties’ observations;

Having deliberated in private on 1 June 2021,

Delivers the following judgment, which was adopted on that date:

INTRODUCTION

1.  The cases concern the lack of oral hearings in administrative proceedings regarding the legal classification of professional relations established between the applicant companies and third persons as employment contracts under social security law.

THE FACTS

2.  A list of the applicant companies and of their representatives is set out in the appendix.

3.  The Government were represented by their agent, Mr H. Tichy, Ambassador, Head of the International Law Department at the Federal Ministry for European and International Affairs.

4.  The facts of the case, as submitted by the parties, may be summarised as follows.

I.         Proceedings regarding the first applicant company

5.  The first applicant company is a limited liability company with its registered seat in Tamsweg, Austria. In 2014, the Salzburg Health Insurance Board (Gebietskrankenkasse) conducted a joint audit of all wage-related levies (gemeinsame Prüfung der lohnabhängigen Abgaben) regarding the first applicant company.

6.  On 28, 29 and 30 July 2015 the Health Insurance Board issued three decisions in which it found that three persons with whom the first applicant company had concluded service contracts had actually carried out their work as employees. They had therefore been subject to the social security system including the mandatory health-, accident and pension insurance as well as unemployment insurance.

7.  On 31 July 2015 the Health Insurance Board ordered the first applicant company to pay the outstanding contributions for the three employees plus surcharges.

8.  The first applicant company subsequently paid the amount but lodged appeals against all four decisions to the Federal Administrative Court (Bundesverwaltungsgericht), requesting an oral hearing. It raised questions of law but also contested the findings of fact by the Health Insurance Board regarding the manner and circumstances in which the three persons had carried out their work.

9.  On 1 December 2015 the Health Insurance Board forwarded its files to the Federal Administrative Court, accompanied by observations in reply to the first applicant company’s appeals which were not served on the first applicant company. On 6 June 2016 the Federal Administrative Court dismissed the appeals and the requests for an oral hearing in four decisions stating that an oral hearing would not have led to a further clarification of the relevant facts. It was only then that the first applicant company became aware of the fact that the Health Insurance Board had filed observations in reply to the appeals. The first applicant company lodged four complaints with the Constitutional Court (Verfassungsgerichtshof).

10.  On 23 September 2016 the Constitutional Court declined to deal with the complaints and transferred the case to the Administrative Court (Verwaltungsgerichtshof).

11.  On 24 January 2017 the Administrative Court rejected the appeals, finding that the first applicant company had failed to substantiate in its appeals in how far an oral hearing before the Federal Administrative Court would have been relevant for the outcome of the proceedings and had not raised legal questions of fundamental importance.

II.      proceedings regarding the second applicant company

12.  The second applicant company is a limited liability company with its registered seat in Bregenz, Austria. In 2010, the Vorarlberg Health Insurance Board conducted a joint audit of all wage-related levies regarding the second applicant company.

13.  On 23 February 2012, the Health Insurance Board issued eleven decisions, finding that eleven persons who had been working for the second applicant company as trainers were to be classified as its employees, who were therefore subject to the social security system including the mandatory health-, accident and pension insurance as well as unemployment insurance.

14.  The second applicant company filed objections (Einsprüche). It raised questions of law but also contested the findings of fact by the Health Insurance Board regarding the manner and circumstances in which the persons concerned had carried out their work. On 12 December 2012 the Regional Government (Amt der Vorarlberger Landesregierung) dismissed the objections.

15.  On 26 and 27 December 2012 the second applicant company filed eleven appeals disputing the findings of fact. In six out of eleven appeals it explicitly complained that the trainers concerned had not been heard. On 8 October 2013 the Ministry of Labour, Social Affairs and Consumer Protection (Bundesministerium für Arbeit, Soziales und Konsumentenschutz) dismissed the appeals.

16.  On 12 December 2013 the second applicant company filed a complaint with the Administrative Court disputing the findings of fact and raising questions of law. On 4 August 2014, the Administrative Court quashed the Ministry’s decision. Whilst it confirmed that the persons concerned had to be classified as the second applicant company’s employees, the lower instances had failed to assess the exact time periods in which they had carried out their work. Following the reform of the administrative jurisdiction in Austria (Verwaltungsgerichtsbarkeits-Novelle 2012, Federal Law Gazette (Bundesgesetzblatt) I No. 51/2012, which entered into force on 1 January 2014) the case was remitted to the newly established Federal Administrative Court.

17.  On 30 December 2016, 16 January and 7 February 2017 the Federal Administrative Court issued three judgments, determining the time periods in which the persons concerned had been subject to the compulsory insurance. It stated that an oral hearing would not have led to a further clarification of the relevant facts. In three complaints the second applicant company lodged appeals to the Constitutional Court.

18.  On 14 and 15 March 2017 the Constitutional Court declined to deal with the complaints and transferred the cases to the Administrative Court.

19.  On 7 September 2017 the Administrative Court rejected the appeals. It held that the Federal Administrative Court had determined the relevant time periods (see paragraph 17 above) according to a table submitted by the second applicant company itself and that an oral hearing hat not been required for this determination.

THE LAW

I.         JOINDER OF THE APPLICATIONS

20.  Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment.

II.      ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION ON account of the lack of an oral hearing

21.  The applicant companies complained that their right to a fair trial as provided in Article 6 § 1 of the Convention, has been violated as no oral hearing had been held. This provision reads as follows in its relevant parts:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”

A.    Admissibility

22.  The Court notes that the applications are neither manifestly ill-founded nor inadmissible on any other grounds listed in Article 35 of the Convention. They must therefore be declared admissible.

B.    Merits

23.  The first applicant company claimed that the lack of an oral hearing despite its explicit request thereof had violated its right to a fair hearing.

24.  The second applicant company complained that no oral hearing had been held at any stage of the proceedings, even though requests for the taking of additional evidence had been made and the facts had been disputed.

25.  The Government did not submit observations regarding the first applicant company’s complaint.

26.  In relation to the second applicant company, the Government submitted that the question whether the second applicant company should be regarded as employer had already been clarified when the case was brought before the Federal Administrative Court (see paragraphs 16-17 above). Therefore, there had not been a need for an oral hearing at that stage.

27.  The Court reiterates that the applicant companies were in principle entitled to a public oral hearing before the tribunal examining their case, unless there were exceptional circumstances which justified dispensing with such a hearing. The Court has accepted such exceptional circumstances in cases where proceedings concerned exclusively legal or highly technical questions (see Ramos Nunes de Carvalho e Sá v. Portugal [GC], nos. 55391/13 and 2 others, § 187 to 192, 6 November 2018).

28.  Turning to the circumstances of the present cases, the Court notes that the disputes, as presented by the applicant companies to the domestic courts, involved not only legal issues, but also questions of fact.

29.  In particular, the first applicant company contested the facts as established by the Health Insurance Board regarding the manner and circumstances under which work had been carried out and explicitly requested an oral hearing before the Federal Administrative Court (see paragraph 8 above).

30.  The second applicant company contested the facts as established by the domestic authorities regarding the manner and circumstances under which work had been carried out and complained that six out of eleven trainers had not been heard (see paragraphs 14-15 above).

31.  The Federal Administrative Court and the Administrative Court in both cases gave no reason why they considered a hearing to be unnecessary other than stating that such a hearing was not likely to contribute to the clarification of the case (see paragraphs 9, 11, 17 and 19 above). Nor have the Government identified any other exceptional circumstances that might have justified dispensing with a hearing. In this respect the Court notes that it has found violations of Article 6 § 1 of the Convention in a number of similar cases (see Gabriel v. Austria, no. 34821/06, § 31, 1 April 2010; Koottummel v. Austria, no. 49616/06, §§ 19‑21, 10 December 2009; Emmer-Reissig v. Austria, no. 11032/04, §§ 27‑31, 10 May 2007; Brugger v. Austria, no. 76293/01, §§ 22‑23, 26 January 2006; Schelling v. Austria, no. 55193/00, §§ 32‑33, 10 November 2005). It does not see any reason to come to a different conclusion in the present cases.

32.  There has accordingly been a violation of Article 6 § 1 of the Convention.

III.   OTHER ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION

33.  The first applicant company further complained that the principle of adversarial proceedings had been violated. It had neither been informed about the Health Insurance Board’s observations in reply to the appeals, nor given the chance to comment on these counterstatements (see paragraph 9 above). Since no oral hearing had been held, the first applicant company should at least have been given the possibility to comment on new observations in the complaint procedure.

34.  The Court notes that this complaint is closely linked to the complaint examined above. It must therefore be declared admissible as well. However, having regard to the facts of the case, the submissions of the parties and its findings under Article 6 § 1 of the Convention (see paragraphs 31-32 above), the Court does not find it necessary to examine this complaint separately.

IV.   APPLICATION OF ARTICLE 41 OF THE CONVENTION

35.  Article 41 of the Convention provides:

“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”

A.    Damage

36.  The first applicant company claimed a total sum of 59,349.03 euros (EUR) in respect of pecuniary damage and EUR 10,000 in respect of non-pecuniary damage.

37.  The second applicant company claimed EUR 144,641.01 in respect of pecuniary damage. It did not make a claim for non-pecuniary damages.

38.  The Government contested these claims arguing that there was no causal link between the violations alleged and the pecuniary or non-pecuniary damages claimed by the applicant companies. They contended that the finding of a violation constituted sufficient reparation in respect of any non-pecuniary damage suffered.

39.  The Court reiterates that it cannot speculate what the outcome of the proceedings would be if they were in conformity with the requirements of Article 6 § 1 of the Convention (see Osinger v. Austria, no. 54645/00, § 57, 24 March 2005 and the references cited therein). Accordingly, it dismisses the applicant companies’ claims for pecuniary damage.

40.  Further, the Court considers that the finding of a violation constitutes sufficient just satisfaction for any non-pecuniary damage the first applicant company may have sustained in the present case (see Bakker v. Austria, no. 43454/98, § 36, 10 April 2003; and Osinger, cited above, § 58, both with further references).

B.    Costs and expenses

41.  The first applicant company also claimed some of the costs of the domestic proceedings, namely EUR 3,384.79 in respect of costs and expenses incurred in the proceedings before the Constitutional Court and the Administrative Court. It further claimed EUR 5,590.08 for costs and expenses incurred before the Court.

42.  The second applicant claimed EUR 91,448.27 in respect of costs and expenses incurred in the domestic proceedings and a lump sum of EUR 5,000 for costs and expenses incurred before the Court.

43. The Government contested these claims. They submitted that only costs incurred for requesting an oral hearing would be recoverable. However, the applicant companies had not taken such isolated steps as the applications for an oral hearing to be held had been included in legal remedies concerning the substantive question of the existence of employment. Moreover, the amount claimed by the second applicant company for costs incurred before the Court was excessive.

44.  According to the Court’s case-law an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these were actually and necessarily incurred in order to prevent or obtain redress for the matter found to constitute a violation of the Convention and were reasonable as to quantum (see Bladet Tromsø and Stensaas v. Norway [GC], no. 21980/93, § 80, ECHR 1999‑III; Associated Society of Locomotive Engineers and Firemen (ASLEF) v. the United Kingdom, no. 11002/05, § 58, 27 February 2007).

45.  In the case of the first applicant company, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 2,000 for costs and expenses incurred in the domestic proceedings, and EUR 2,000 as regards the costs and expenses incurred before the Court, plus any tax that may be chargeable to the first applicant company.

46.  In the case of the second applicant company, the Court awards EUR 1,000 in respect of the domestic proceedings and EUR 2,000 as regards the costs and expenses incurred before the Court, plus any tax that may be chargeable to the second applicant company.

C.    Default interest

47.  The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1.      Decides to join the applications;

2.      Declares the applications admissible;

3.      Holds that there has been a violation of Article 6 § 1 of the Convention on account of the lack of an oral hearing in respect of both applicant companies;

4.      Holds that there is no need to examine the first applicant company’s further complaint under Article 6 § 1 of the Convention;

5.      Holds that the respondent State is to pay the applicant companies, within three months, the following amounts:

(a)  EUR 4,000 (four thousand euros) to the first applicant company, and EUR 3,000 (three thousand euros) to the second applicant company, plus any tax that may be chargeable to the applicant companies, respectively, in respect of costs and expenses;

(b)  and that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

6.      Dismisses the remainder of the applicant companies’ claims for just satisfaction.

Done in English, and notified in writing on 22 June 2021, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

 {signature_p_2}

    Ilse Freiwirth                                                               Iulia Antoanella Motoc
Deputy Registrar                                                                       President

List of applicants

 

No.	Application no.	Case name	Lodged on	Applicant Place of Residence	Represented by
1.	56387/17	Pagitsch GmbH v. Austria	31/07/2017	Pagitsch GmbH Tamsberg	Alois PIRKNER lawyer practicing in Tamsweg
2.	69808/17	Comino Unternehmensberatung Erwachsenenbildung GmbH v. Austria	19/09/2017	Comino Unternehmensberatung Erwachsenenbildung GmbH Bregenz	Ernst DENK lawyer practicing in Vienna