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Austria: Can you Recover Internal Investigation Costs from an Employee?

Austria: Can you Recover Internal Investigation Costs from an Employee?

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According to a recently published ruling, the German Federal Labour Court says you can. Here is how.

The claimant, a German company, had received several anonymous complaints regarding possible compliance violations by its procurement manager. After an internal assessment by its Independent Allegation Management Committee, the company decided to hire a specialised law firm to investigate the alleged violations. The investigation showed that the procurement manager had committed the reported (and various) other violations some of which constituted criminal acts. The investigation cost a total of EUR 210,000 and led to the dismissal of the procurement manager for good cause without notice.

The company then claimed reimbursement of the investigation costs on the basis of case law from the Federal Labour Court regarding the reimbursement of private investigator costs (Detektivkosten). The Federal Labour Court dismissed the claim. However, it made clear that an employer can demand full reimbursement of investigation costs, if:

  • the investigation was launched due to a concrete suspicion of serious, ie criminal, misconduct (erhebliche Verfehlung);
  • the investigation actually confirmed this suspicion;
  • considering the circumstances of the case, hiring a specialised law firm was not only appropriate but also necessary, ie due to complexity of the subject matter of the investigation;
  • the investigation prevented imminent and serious damage to the company. Thus, in practice only costs accrued prior to the termination of the suspicious employee are considered reimbursable; and
  • the employer can provide a substantiated explanation on which concrete investigative activities were carried out, when and to what extent in terms of time and due to which concrete suspicion against the employee.

In the case at hand the company failed to meet these requirements. In Austria, it is settled case law that an employer is entitled to claim for the reimbursement of private investigator costs provided that the employer had sufficient evidence (ie a concrete suspicion) of serious misconduct of an employee, the engagement of a private investigator was objectively necessary and only caused by the misconduct of the employee, the costs of a private investigator are not unreasonable and the private investigator actually confirmed the employee's misconduct.


It remains to be seen whether the Austrian Supreme Court will follow up on the ruling of the German Federal Labor Court and apply the principles on the reimbursement of private investigator costs to all kinds of internal investigations. In view of the similarities of the conditions for a claim for damages for private investigator costs under Austrian and German law, and in light of the upcoming implementation of the EU Whistleblowing Directive in December 2021, we recommend observing the following documentation requirements as set out by the German Federal Labour Court in its ruling 8 AZR 276/20 in any case:

  • objective cause, and the circumstances giving rise to the suspicion must be documented; and
  • each step of the investigation, in particular when and to what extent the suspicion gave rise to which investigative activity, must be set out.

By Klara Kiehl, Counsel, and Karin Pusch, Attorney at Law, Schoenherr

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