Employer of Record in Austria

Hiring in Austria for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Austria in the following three ways:

• Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Austria.
• Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Austria’s labor laws and tax regulations.
• Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Businesses can only operate smoothly in Austria if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Austria below, to avoid any compliance issues.

Employment Contract Requirements

Hiring in Austria involves adherence to the country's labor regulations, emphasizing transparency and detailed employment documentation.

• The date of employment commencement
• The employee's ordinary working days and hours
• The employee's wage rate and the method of wage calculation
• The company's disciplinary codes

Onboarding Process

We can help you get a new employee started in Austria quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Austria

The Austrian Working Hours Act, the Working Hours Rest Act, and collective bargaining agreements govern working hours in Austria. The typical workweek comprises 8 hours per day and 40 hours per week, with a maximum limit of 12 hours per day, inclusive of overtime.

Overtime in Austria

Overtime exceeding 40 hours per week is compensated at 150% of the regular pay. Alternatively, employees may receive time off in lieu at a ratio of 1.5 days for each overtime day worked. It's important to note that collective bargaining agreements may stipulate higher rates for overtime pay or time off in lieu.

Probation Period in Austria

The standard probation period in Austria must not exceed one month

Fiscal Year in Austria

1 January- 31 December is the 12-month accounting period that businesses in Austria use for financial and tax reporting purposes.

Payroll Cycle in Austria

The payroll cycle in Austria is usually monthly, with employees being paid by the last working day of each month.

Minimum Wage in Austria

The minimum wage for employees in Austria is typically 10.625 EUR per hour, amounting to ~1,700 EUR per month for a typical 40 hour work week.

Bonus Payments in Austria

In Austria, the practice is to provide 13th and 14th salaries, distributed evenly throughout the year. The additional payments are typically made in June and November.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 0% - 55% on top of the employee salary in Austria.

Employee Payroll Tax Contributions

In Austria , the typical estimation for employee payroll contributions cost is around 17.12%.

Individual Income Tax Contributions

Income tax in Austria is 'Pay As You Earn'. The individual income tax ranges from 0% to 55%. Income tax is calculated according to progressive rates.

Pension in Austria

Employees and employers contribute to the social insurance system, which includes pension contributions. This ensures that individuals receive pension benefits when they retire.

Mandatory Leave Entitlement in Austria

The annual leave entitlement in Austria is 25 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Austria

Austria has 13 mandatory national public holidays in a year.

Paid Time Off in Austria

Employees in Austria are entitled to a statutory holiday allowance of five weeks (equivalent to 25 working days) per year once they have completed six months of employment.

• Employees with less than six months of service in Austria accrue two working days of holiday entitlement per month. After completing 25 years or more with the same employer, the entitlement increases to six weeks, equivalent to 30 working days.
• An employee in Austria can credit up to 12 years of prior employment in other jobs and periods of education. This reduces the required number of years of service with the same employer to 13 years.

Maternity Leave In Austria

Maternity leave in Austria is 16 weeks. Expectant mothers are prohibited from working eight weeks before the childs expected due date and for eight weeks (12 weeks in the case of a Caesarean section or high-risk delivery) after the childs birth.

Paternity Leave In Austria

Unpaid paternity leave is permitted in Austria

• Fathers in Austria are eligible for one month of unpaid paternity leave, commonly known as 'Daddy Month,' which can be taken any time within the child's first two years. To avail of this leave, the new father must inform his employer three months before the estimated date of birth.

Sick Leave In Austria

Sick leave entitlement varies based on the length of employment:

• One year of employment: Six weeks at full pay and four weeks at half pay covered by the employer
• Two-15 years of employment: Eight weeks at full pay and four weeks at half pay covered by the employer
• 16-25 years of employment: 10 weeks and four weeks at half pay covered by the employer
• 26+ years of employment: 12 weeks and four weeks at half pay covered by the employer

Parental Leave In Austria

In Austria, parental leave starts when maternity leave finishes.Parents can take parental leave until the child reaches the age of 24 months and are entitled to payment under the Child Care Payment Act from social security during their parental leave.

Childcare Leave

Two weeks of paid leave to care for a sick child under the age of 12

Leave To Care For Family Member

An employee can also request up to six months of unpaid leave to care for an immediate family member

Termination Process in Austria

Indefinite contracts in Austria can be terminated without cause, provided that the stipulated notice periods are observed. However, fixed-term contracts are subject to additional restrictions and conditions.

• Voluntarily by the employee
• By mutual agreement
• Incapacity to carry out job responsibilities
• Operates an independent commercial business or carries out commercial transactions within the employers business on their own account or that of a third party

Notice Period in Austria

The notice period varies based on the length of employment:

• Up to 2 years of employment: 6 weeks notice
• 2-5 years of employment: 2 months notice
• 5-15 years of employment: 3 months notice
• 15-25 years of employment: 4 months notice
• 25+ years of employment: 5 months notice

Severance in Austria

The severance pay system in Austria mandates employers to contribute 1.53% of the monthly salary to an employee severance fund. Upon the conclusion of the employment term, the employee has the option to either withdraw the accumulated amount or retain it in the fund for potential investment.