Effectiveness of employer's set-off against employee wage claims in insolvency proceedings

The Federal Labour Court reversed the lower courts' decisions in favor of the employee, ordering the employer to pay the outstanding wage claim of €1,284.26 plus 6% annual interest from January 1, 2003, and to bear the litigation costs. The dispute centered on whether an employer in insolvency could successfully offset the employee's wage claim with its own damages claim for breach of contractual duties, challenging the validity of such set-off under insolvency law. Relying on the insolvency standstill rules and the principle that set-off in insolvency requires a valid and enforceable counterclaim that is not barred by specific insolvency prohibitions, the court held that the employer's set-off was ineffective, thereby entitling the employee to the full recovery of the arrears.