Wage Underpayment Penalty Reduction in Collective Bargaining Dispute

In a dispute concerning the construction industry's collective bargaining agreement (LMV), an administrative review board imposed a contractual penalty on an employer for failing to pay the correct base wages to three employees, amounting to an underpayment of CHF 23,577.05, though the employer promptly corrected the arrears and argued the failure was unintentional. The lower court reduced the initially imposed penalty, and upon appeal, the higher court upheld the reduction, reasoning that the board's standard practice of setting the penalty at one-third of the withheld payments was insufficient as it failed to adequately weigh all specified mitigating and aggravating factors on a case-by-case basis, such as the employer's prompt rectification, the minor nature of the remaining issues, and the fact that it was a small family business, justifying the lower penalty amount to still serve the penalty's preventive purpose.