Hiring Talent And Managing Payroll In Austria

Hiring in Austria? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Austria.

Employment Norms in Austria

Austria is a nation with modern, professional, and liberal people. Excellent career opportunities for skilled employees and the best quality of life make Austria a perfect destination. Thus Austria naturally attracts skilled employees from across the world. However, due to many rules, managing employees in Austria is difficult for foreign employers. EOR services will address this gap and help you expand your business in Austria hassle-free. EOR services help you in ensuring legal compliance and help to manage employees effortlessly.

General Information:

The Austrian currency is the Euro (€).
Vienna is the capital of Austria.
German is the official language of Austria. Documentation can be in German and English.
As of 2022, the GDP of Austria was reported to be 480 billion US dollars.

You need a local office in Austria if you wish to hire and expand your business in Austria. Additionally, even if unknowingly the employees were misclassified, you have to pay substantial penalties in Austria.

Table of Contents

Select Section

Agreements
Onboarding Process
Visa
Minimum Wage
Payroll Cycle
Annual Bonus
Health Benefits
Working Hours and Overtime
Leaves
Social Security
Taxes for Employers
Taxes for Employees
Probation
Termination
Severance Pay
Employees or Contractors
Final Words

Agreements Onboarding Process Visa Minimum Wage Payroll Cycle Annual Bonus Health Benefits Working Hours and Overtime Leaves Social Security Taxes for Employers Taxes for Employees Probation Termination Severance Pay Employees or Contractors Final Words

Agreements

In Austria, written employment agreements are not mandatory and oral agreements will suffice. But, written agreements are advised before starting employment for legal reasons. The contracts are written both in German and English.
The collective agreements of both the employer and the employee in Austria are legally enforceable.
In Austria, the common practice is hiring on a fixed-term employment contract and then moving to a permanent one.
Employing independent contractors can help you save money on benefits, vacation time, and paid sick days. Yet, this process may lead to employee misclassification. If any such employee misclassifications are found in audits by the local government, you could face substantial financial penalties.

Onboarding Process

In Austria, the laws governing the onboarding of contractors are much simpler.
The onboarding takes just days, not months, and not even weeks.
The minimum time required for onboarding in Austria is four days.
For non-national employees, the right-to-work assessment, if it's applicable, adds extra three days to the onboarding process.
Employer-of-Record (EOR) services can help speed up onboarding foreign country employees.
Using an EOR can be the easier option. Yet, using an EOR in Austria is costly (typically USD 349 per month per person) and might result in lengthy onboarding processes.
Another critical point here is onboarding day, or the actual 1st day at work impacts the pay cut-off dates for employees.

Visa

Austria has three types of Visas:

Type A Visa is applicable for airport transit. Few country nationals require this Type A visa for transit via Austrian airports.
Type C Visa is applicable for a short stay. Nationals from Schengen countries require this standard tourist visa. They are issued for a total stay of 90 days within 180 days.
Type D Visa is a long-term visa. Applicable for extended stays for any period between 91 days and 6 months. In exceptional cases, a type D visa may also be issued with a validity period of up to 12 months.

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Minimum Wage

The current minimum wage in Austria is 1,500.00 EUR per month in 2023. It became valid on July 1, 2020.

Payroll Cycle

The payroll is monthly in Austria.
The employer must pay wages by the last working day of each month if stipulated in the collective employment contract.

Annual Bonus

It is customary to pay an annual salary in 14 equal payments. The 13th and 14th payments are made in June (summer) and November (Christmas).

Health Benefits

In Austria, healthcare is free for individuals with low or no income.
Others must pay a small sum in social contribution to be eligible for state-funded health insurance.
Expats who live and work in Austria get their contributions deducted from their pay.

Working Hours and Overtime

Work hours: The Act of Austrian Working Hours states 8 hours of daily work. Up to 12 hours daily is allowed including overtime. The average daily hours should exceed over 48 hours for 17 successive weeks.
Break: Generally, office hours in Austria are from 9 to 5. Workday is enforced with lunch breaks
Overtime: Overtime, holiday, and weekend pay differ for each contract. Generally, weekly hours are 40. Beyond that is overtime. Overtime is compensated with a 150% rate pay or with 1.5 times time-off.

Leaves

Employees can enjoy various types of leaves in Austria as below:

Sick leaves

Allocated sick leaves depend on the duration of employment.

1 year - 6 weeks
2-15 years - 8 weeks
16-25 years - 10 weeks
12 weeks are provided for 26+ years of employment

Beyond these are taken care of by social security with medical certification.

Parental leaves

In Austria, parents enjoy parental leave until the baby is 24 months. They are qualified for the Child Care Payment Act and get paid from social security. Fathers split maternity leave with mothers. And can swap leaves among themselves twice in the entire period.

Annual leaves

In Austria, paid annual leaves of 30-36 days are available for employees in the Monday- Saturday work-week.
For those Monday to Friday, 25 days of annual leaves are allocated.

Public Holidays (for the Calendar year 2024)

A few of the following dates may vary according to the traditional calendar.

January 1 - New Year's Day
January 6 - Epiphany
April 1 - Easter Monday
May 1 - Labour Day
May 9 - Ascension
June 10 - Whit Monday
May 30 - Corpus Christi
August 15 - Assumption Day
October 26 - National Day
November 1 - All Saint's Day
December 8 - Immaculate Conception
December 25 - Christmas Day

Public Holidays (for the Calendar year 2025)

A few of the following dates may vary according to the traditional calendar.

January 1 - New Year's Day
January 6 - Epiphany
April 21 - Easter Monday
May 1 - Labour Day
May 29 - Ascension
June 2 - Whit Monday
May 29 - Corpus Christi
August 15 - Assumption Day
October 26 - National Day
November 1 - All Saint's Day
December 8 - Immaculate Conception
December 25 - Christmas Day

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Taxes for Employers

There are many taxes paid by employers.

Rates of monthly taxes paid by employers and their proportions include Social security for:

Pension -12.55%
Sickness Health Insurance - 3.78%
Unemployment - 3.00%
Accident - 1.20%

Further, the employer must pay:

Family Burdens Equalisation Levy of 3.90%
Municipal payroll tax of 3.00%
A Surcharge on the above Family Allowance Fund of 0.42%
Tax towards Employer Provision Fund at 1.30%

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Taxes for Employees

Rates of personal taxation vary depending on the Employee income tax category. The first EUR 620 is tax-free. Beyond EUR 620 is taxed progressively from 6% to 55%.

The employees' earnings per tax to be paid are:

Up to 11,000 - 0%
11,001 - 18,000 - 25%
18,001 - 31,000 - 35%
31,001 - 60,000 - 42%
60,001 - 90,000 - 48%
Over and above 90,000 - 50%

Partnerships and sole merchants earning below 30,000 EUR annually are exempted. Instead, they must pay income tax between 23% to 50%. The sum owed each pay period is 15.3% of an individual's salary, equal shares from both the employee and the employer.

The Contributions to Employee Monthly Payroll Tax are:

Family Burdens Equalisation Levy of 3.90%
Municipal payroll tax of 3.00%
A Surcharge on the above Family Allowance Fund of 0.42%
Tax towards Employer Provision Fund at 1.30%

Probation

Typically, the Probation is for one month. Few mandatory collective agreements at workplaces have a shorter time. Apprentices require to complete three months of Probation.

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Termination

Termination in Austria can be done in several ways with mutual permission. It can be stated verbally or in writing, with the latter being preferred.
The employer may also fire the employee for a legitimate reason.
When an employee decides to resign, their employment is terminated immediately. There is no need to take any action if a fixed contract expires.
Employees may be eligible for severance pay upon termination, depending on the cause of termination.

Severance Pay

Employment contracts before 2003 follow the old severance payment scheme. It enforces severance pay for termination (if it's from the employer). Severance pay is obtained by multiplying monthly salary with years of service (and a 12-month payment after 25 service years).

Employment contracts in 2003 or later do not entitle such severance pay. But the employees get paid 1.53% of their monthly gross payment to a fund. Payment claims are settled between that fund and the employee.

Employees or Contractors

In Austria, there are three types of employment contracts:

Contracts of employment - regular
Contracts for service employment
Contract for freelance work

All conventional employment contracts follow the same set of criteria:

Workplace Stability
Control over working hours
Tight prohibition on extra work
Employer supervision, regulations, etc.

Freelance contractors are solely paid for their time to complete their projects.

If no formal agreement exists, they are not entitled to any fixed-rate remuneration at fixed rates.
But without a written contract, a few terms and conditions (Dienstzettel) apply.
They receive their salary monthly under a long-term contract.
Both freelancers and employers pay social security contributions.

Employers will incur a penalty for wrongly classifying an employee as a contractor and vice-versa.

Final Words

The immigration laws and rewarding careers make establishing your business in Austria attractive. Good EOR services help you establish your business in Austria with expertise and thorough knowledge of the country's laws and regulations.