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Austria

Employer of Record Austria

Global Expansion's Employer of Record services provide the ability to quickly grow, manage, and pay international teams, without the need for a local entity. Our award-winning tech platform plus integrated support services make hiring, managing and paying your global workforce a breeze.

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Hiring Employees in Austria

For companies that want to hire employees and run payroll in Austria without first establishing a business entity or subsidiary, Global Expansion provides Employer of Record services (EOR Canada).

Our EOR services streamline and simplify the global hiring process. We handle your outsourced core global HR tasks - compliance, contracts, payroll, global benefits, and more - so that you forgo hours of ongoing admin, human error, and risky compliance.

In Austria, companies would historically establish a subsidiary or branch office to legally hire in that country. With Global Expansion, this step is no longer necessary. We have subsidiaries all over the world and therefore can legally hire on your behalf. The employees are ours only on paper and report directly to managers within your company.

Need assistance hiring in Austria? Contact us about our International EOR  Service

Labor Law in Austria

Employment law in Austria is uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Find the details below.

Employment contracts in Austria

In Austria, a contract of employment is called Arbeitsvertrag or Dienstvertrag. The contract can be concluded:

  • in writing
  • orally
  • by demonstrating that an employment contract has been agreed upon e.g. performing the work

A written contract is not valid unless it has been signed by both parties. If either party is unsure about any aspect of the contract, The Austrian Chamber of Labour (Arbeiterkammer) will provide advice free of charge, and can verify that the contract is free of defects or potentially illegal clauses.

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Dienstzettel

If the employer doesn’t provide a written contract, they must instead provide a Dienstzettel. This is a document that contains all necessary information about the terms and conditions of the employment.

A Dienstzettel must contain the following:

    • Employer’s name and address
    • Employee’s name and address
    • Commencement date of employment
    • Business address where the employee works
    • Employee’s intended tasks
    • Basic compensation package and additional benefits
    • Date payable
    • Annual leaves
    • Daily and weekly working hours
    • Collective agreement or works agreement applicable
    • Period and term of notice

Employers cannot make changes to the contract that are less favorable to the employee than the intitial terms and provisions.

Employees can report illegal or unfavorable contract changes to the works council, the Chamber of Labour, or the trade union.

Types of Employment in Austria

  • Full-time worker
    • Full-time employees are permanently employed and enjoy full employment rights, including leave entitlement, protection against dismissal, and social insurance, among others.
  • Part-time worker
    • This type of employment is subject to the same labor laws as full-time employment and shares the same insurance protection.
  • Minimally employed worker
    • Minimally employed workers (monthly income not exceeding EUR 446.81 in 2019) are covered by accident insurance.
    • The employer must register this part-time employment with the health insurance provider.
    • The worker can apply for voluntary health and pension insurance but must pay for it with their own money.
    • Austrian labor laws protect minimally employed workers to ensure they are treated equally as full-time employees.
  • Independent contractor
    • Independent contractors are not entitled to collectively agreed wages and, unless expressly otherwise agreed, to special payments and leave.
  • Seasonal worker
    • This type of employment is common in industries that experience peak seasons, such as tourism and hotel and catering.
    • Seasonal workers are subject to special collective treaty provisions regarding their working time.
    • Employees are entitled to full social insurance protection.

Employee Probation Period

There is no mandatory probation period in Austria. However, if the parties consent to a probation period in the employment contract, it must not be greater than 1 month. The probationary period for apprenticeships should not be greater than 3 months.

An employment contract may be terminated by either party during the probationary period, or it may be extended and otherwise ended at any point.

Annual Leave in Austria

  • All employees in Austria are entitled to either 25 or 30 days paid leave a year, depending on whether their contract stipulates a five- or six-day workweek.
  • Young people under the age of 18 have a legal entitlement to at least 2 weeks' leave in the summer (defined as between June 15 and September 15).
  • After 25 years of service, this entitlement increases to 6 weeks.

Holidays in Austria

Here is the full list of public holidays in Austria:

New Year 1st January
Epiphany 6th January
Easter Monday no fixed date
Labour Day 1st May
Ascension no fixed date
Whit Monday no fixed date
Corpus Christi no fixed date
Assumption 15th August
National Holiday 26th October
All Saints 1st November
Immaculate Conception 8th December
Christmas 25th December
St Stephen’s Day 26th December

 

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Maternity Leave Austria

Normally, the protection period (Mutterschutz) for pregnant employees begins 8 weeks before birth and ends 8 weeks after birth. As a result, Austria’s maternity leave policy entitles citizens to 16 weeks of paid leave.

During the protection period, the employment relationship stays the same, and the worker gets a maternity allowance (Wochengeld) equal to the average pay during the 13 weeks before the absolute employment ban.

The amount of maternity allowance paid to employees who are still working will be consistent with their last three net salary payments before the period of maternity leave began. After 3 months of employment, insured employees qualify for 100% of their average pay during maternity.

Any one-time payments, such as holiday or Christmas bonuses, are subject to a supplement. Self-insured people on low incomes receive a fixed rate of 9.61 Euros per day (provided they are self-insured under Section 19a) (as of 2021). Since January 1, 2008, freelance contractors have also received maternity pay.

Paternity Leave in Austria

The Paternity Leave Act entitles Austrian workers to one month of unpaid leave. To take paternity leave, fathers must live in the same household as the child, but they’re not required to complete a minimum service period.

Fathers must submit a paternity leave request at least 3 months before the expected birth, and notify the employer about the final dates within a week of the child’s birth.

Employers are not obligated to pay salaries during the leave period, and they are not allowed to discriminate against employees for requesting and taking the leave.

Sick Leave in Austria

  • The principle of continued remuneration ensures that in the event of sickness, industrial accident, and occupational illness and during rest cure and convalescent leave, employees’ remuneration will continue to be paid.
  • After continued remuneration, one receives sick pay from the health insurance provider.
  • The amount of sick pay depends on the earnings in the last month before the illness and the amount of continued remuneration paid.
  • Sickness cash benefit amounts to 50% of an employee’s salary if the employee is sick for 42 days or fewer.
  • If employees are sick for a longer period, the sickness cash benefit rises to 60% from the 43rd day.

Working Hours in Austria

According to the Austrian Labor Law, a typical workweek in Austria consists of 8-hour working day (working hours within a 24-hour period). The standard working week is 40 hours (working hours from Monday to Sunday)

  • The Working Time Act (Arbeitszeitgesetz) applies to almost all private-sector employees over the age of 18.
  • Collective agreements in many industries have shortened the regular weekly working hours. For instance, employees in the iron and metalworking sector only work 38.5 hours per week.
  • To obtain a longer continuous period off work (e.g. long weekend), the normal working day can be extended from 8 hours to the maximum of 9 hours/day.
  • Under certain conditions, a 4-day week (4 x 10 hours) is possible.

Overtime in Austria

If the regular working hours are not met, overtime is accrued (8 hours per day or 40 hours per week).

Employees can only be forced to work overtime if it doesn't interfere with something important to them, like child care or an urgent doctor's appointment.

Overtime must be compensated with a 50% bonus in money or time balance.

Termination of Employment in Austria

Termination indemnities are to be paid in the case of the employer's termination of an employment contract. An employment relationship can come to an end in one of three ways:

  1. by expiration (of a fixed term employment contract)
  2. by a mutual agreement on the termination
  3. by unilateral termination

When the contract term expires, employment automatically terminates (Expiration). When an employee and an employer mutually agree to end an employment relationship, no notice period is required. It can be ended either verbally or in writing. Written termination is advised (Mutual Consent).

Notice can be given verbally, in writing, or in an implicit manner (handover of employment papers). There is no need to provide a reason for termination (Unilateral Termination).

A dismissal is an immediate termination of an employment relationship. Dismissal can be done orally, in writing, or implicitly. However, there must be an explanation for dismissal (e.g., persistent neglect of duties). Unjustified dismissal also results in the immediate termination of an employment relationship; you may file a complaint with the labor and social security courts.

Employee resignation terminates the employment relationship with immediate effect. Employees can do this if, for example, their employer has been very bad at their job.

Notice Period in Austria

  • The notice periods for employees are set out in section 20 of the Employees Act (Angestellten-gesetz).
  • The notice period that the employer must give to employees depends on the employee's length of service:

Length of Service

Required Notice Period

Less than 2 years 6 weeks
More than 2 years 2 months
More than 5 years 3 months
More than 15 years 4 months
More than 25 years 5 months
  • All employees who wish to terminate their employment must give at least one month's notice, regardless of their length of service.
  • The notice period can be increased up to 6 months subject to contractual agreement.

Severance in Austria

If the employment relationship lasts more than one month, employers in Austria must contribute 1.53% of the monthly pay into an employee provision fund known as Mitarbeitervorsorgekass from the start of the relationship.

Employees are entitled to a severance payment, unless the employment relationship is terminated by dismissal of the employee, lawful redundancy or unlawful withdrawal of the employee or less than 3 years have passed since the first payment into the fund.

Austria Salary and Wages

Average Salary in Austria

In Austria, the average income varies, with industry averages listed below:

Industry

Average Monthly Income (EUR)

Agriculture 2,041
Banking 2,983
Construction 2,215
Education 2,359
Transport 2,254
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Austria Minimum Wage

The Austrian government requested social partners in January 2017 to discuss a minimum wage that would apply to all sectors. This corresponded to a monthly minimum pay standard of €1,500.

Austria Salary Ranges

A worker in Austria earns an average income of 44,780 EUR a year. The lowest average salary earned is roughly 18,500 EUR and the highest average salary earned is 230,000 EUR.

Austria Salary Ranges Visualized

Lowest yearly wage
€18,500
Average yearly wage
€44,780
Maximum yearly wage
€230,000

Employee Benefits in Austria

Strategic bonuses and extra incentives demonstrate that the company values its personnel. These types of incentives improve performance and, ideally, colleague relations.

Flexible working hours (known as Flexitime rosters), remote work capabilities, 30 hour work weeks at full compensation, 4-day workweeks, public transportation subsidies, on-site childcare facilities, and other benefits are among the most popular extra incentives provided by Austrian enterprises.

13th Month Salary in Austria

There is no mandatory requirement to pay out a 13th or 14th month salary.

However, it is common for remuneration (salary) to be paid 14 times per year. The 13th and 14th payments come in the form of one bonus around Christmas time, and one bonus at the start of the summer holiday.

Though customary, these are at the full discretion of the employer and they may be revoked at any time.. Hence, employees will not be able to make a claim for said bonuses in court.

Income Tax in Austria

Income tax is known as Einkommensteuer in Austria. The tax system is pay-as-you-earn and is paid all year. Austria's individual income tax rates for 2020 and beyond are progressive, ranging from 0% to 55%. (7 tax bands).

Anyone residing in Austria is subject to an unlimited tax liability. Those who do not have a permanent address but work in Austria pay a reduced tax rate. They are only taxed on income earned in Austria and not elsewhere.

All Austrian residents are subject to Austrian income tax on their worldwide income, which includes income from trade or business, profession, employment, investments, and property. Non-residents are only taxed in Austria on income from specific sources. Non-residents must pay income tax on income earned in Austria at the standard rate (including a fictitious income increase of 9,000 EUR).

Personal Income Tax Rates

Income (EUR)

Tax Rate (%)

11,000 and below 0
11,001 to 18,000 25
18,001 to 31,000 35
31,001 to 60,000 42
60,001 to 90,000 48
90,001 to 1,000,000 50
Above 1,000,000 55
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Social Security in Austria

  • The social security system in Austria offers broad coverage. It includes provisions for:
    • prevention
    • sickness
    • incapacity for work/invalidity
    • maternity
    • unemployment
    • old age
    • death of a person liable to provide maintenance
    • survivors' pensions
    • nursing care
    • social need
  • Austrian social insurance is required for self-employed and salaried individuals, as well as their dependents.
  • Some groups, such as minimally employed workers, are only required to carry insurance in certain circumstances. Some, but not all, benefits are legally available to insured individuals. Contributions cover health, unemployment, old age, and disability insurance.
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Social security categories overview

The General Accident Insurance Institute provides accident insurance (Allgemeine Unfallversicherungsanstalt - AUVA) The Employment Service provides unemployment insurance (Arbeitsmarktservice - AMS) Pension insurance is provided by the Pension Insurance Office (Pensionsversicherungsanstalt - PVA).

In 2022, the following monthly rates of compulsory (pre-tax) social security contribution rates applied (employees’ and employers’ shares combined): are shown below for pensions, sickness, unemployment, and accident insurance:

Social Security Categories

Employer (%)

Employee (%)

Total (%)

Sickness 3.78 3.87 7.65
Unemployment 3 3 6
Pension 12.55 10.25 22.8
Accident 1.1 0 1.1
Miscellaneous 0.6 1 1.6
Total 21.03* 18.12* 39.35*

*On a maximum assessment basis (gross salary) of EUR 5,550 per month for current payments and is applied for both employer and employee. Special payments receive a tax favored treatment (employer at 20.73%, employee at 17.12%, for a total of 37.85%).

The maximum assessment basis (gross) amounts to EUR 11,100 per year.

Co-insurance of Family Members

Family members may co-insure without making any additional contribution, considering they live in the same household.

When the co-insured person (a spouse, registered partner, or person running the household) does not raise a child/children living in the common household, or has not done so for at least 4 years, an additional insurance contribution of 3.4% is collected.

In addition, the employer must pay a 3.9% Family Burdens Equalisation Levy, a 3% municipal payroll tax on monthly gross salaries and wages, and a EUR 2 per week per employee public transportation levy in Vienna.

In addition, the monthly gross salaries paid are taxed at a rate of roughly 0.38% (between 0.34% and 0.42%) as a contribution to the Chamber of Commerce (depending on the province). Moreover, a contribution to the mandatory employee pension fund at the rate of 1.53% on monthly gross salaries is payable for employment subject to Austrian employment law.

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Deductible Expenses in Austria

Employment Expenses

The costs of "acquiring, securing, and maintaining" income are deducted from the taxable income at the source. For all employees, the standard allowance is EUR 132. Overage charges will be accepted if accompanied by receipts (e.g., office at home, continuing education).

Tax deductions are available for employee contributions to Austrian and/or foreign social security obligations. You can usually deduct expenses related to making and receiving money when calculating income from a job.

These expenses include the following:

  • Membership fees to certain organizations (e.g. Chamber of Labor, workers’ council)
  • Compulsory social and pension insurance contributions
  • Commuting expenses between residence and place of work where a standard deduction can be claimed per month; the deductible amount depends on the distance and the possibility of using public transport
  • Work equipment and special work clothes
  • Business-related travel expenses and per diems
  • Technical literature
  • Training costs

Personal Deductions

If one earns less than EUR 60,000 per year, they may be eligible for certain tax breaks. These allowances include:

  • Sickness, life, and accident insurance premiums.
  • Voluntary contributions to employer pension plans and/or state social security.
  • Expenses for the construction of a new house/apartment or renovation of housing space in Austria.

Please notice that due to the Austrian tax reform 2015/16 these allowances are only available against taxable income if the contract with the insurance company in connection with the payments was closed before January 1, 2016 and only for a duration of 5 years (until 2020).

For these types of expenses, a standard allowance of EUR 60 per year is granted, unless higher payments have been made. In the latter case, the deductible amount is limited to 25% of expenses up to EUR 2,920 per year for single taxpayers and 25% of expenses up to EUR 5,840 are tax deductible under the following conditions:

  • the individual is eligible for a sole earner or a single parent tax credit
  • the individual is not eligible for a sole earner or a single parent tax credit but
  • the individual is married more than 6 months during the calendar year or living more than 6 months in a registered partnership and is not permanently separated from one's married/registered partner whose income is less than EUR 6,000 per year

For taxpayers who earn between EUR 36,400 and EUR 60,000 per year, the maximum deductible amount is reduced step-by-step on a ratable basis.

The standard deduction of EUR 60 remains in any case tax deductible. Church tax is deductible up to EUR 400, and charitable contributions to certain institutions are deductible up to 10% of the current year’s taxable income. Austrian tax adviser fees are fully deductible.

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Extraordinary expenses

Individuals who incur extraordinary expenses can obtain some tax relief. This relief applies to resident individuals who are subject to unlimited tax liability and incur unavoidable expenses (e.g. funeral costs or medical expenses for special treatments not reimbursed by health insurance).

Depending on income and family status, the taxpayer may be able to deduct an amount that exceeds a certain percentage of one's income.

The retention rates are as follows:

Annual Income

Retention Rate (%)

Over

Not Over

 

0 7,300 6
7,300 14,600 8
14,600 36,400