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Austria – Employer of Record
AVASO provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in Austria. Your candidate is hired via AVASOs’ Austria PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Table of Contents
- Basic Facts About Hiring in Austria
- Employment Contracts in Austria
- Working Hours in Austria
- Employee Bonus Payments in Austria
- Vacation Benefits in Austria
- Public Holidays in Austria
- Sick Leave in Austria
- Maternity/Paternity Leave in Austria
- Termination of Employment and Severance in Austria
- Employer and Employee Taxes in Austria
- Health Insurance Benefits in Austria
- Additional Benefits in Austria
- Bottom Line: Statutory Benefits Costs in Austria
Our solution enables customers to run payroll in Austria while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Austria.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. AVASO allows you to harness the talent of the brightest people in more than 185 countries around the world, quickly and painlessly.
Basic Facts About Hiring in Austria
Companies that employ five or more employees in Austria must set up a work council. The council size is dependent on the number of employees in the company. The employer must provide at least one week notice to the work council before giving an employee notice of dismissal. If the work council requests, the employer must consult the council before the dismissal can take place.
Employees in Austria have free access to government and labor support in the event that they believe they have been treated unfairly, and filing complaints with the labor tribunal are common. We highly recommend taking professional advice when hiring employees in Austria, whether through our services, or via one of your own companies.
When negotiating terms of an employment contract with an employee in Austria, it may be useful to keep the following standard benefits in Austria in mind:
Employment Contracts in Austria
Best practice is to put a strong employment contract in place in Austria which spells out the terms of the employee’s compensation, benefits, and termination requirements. An employment contract in Austria should always state the salary and any compensation amounts in Euro rather than a foreign currency. All employees engaged via Globalization Partners are of course provided a comprehensive employment contract at the outset of employment.
Working Hours in Austria
Austrians generally work an eight-hour day and a 40-hour week although many industries have collective agreements which set the work week at 38 hours.
Overtime is compensated by additional time off or paid at an additional 50% rate. This rate is increasing to 100% for night and weekend shifts, and many CBAs grant higher supplements in general.
Employee Bonus Payments in Austria
A 13th month or 14th month bonus in Austria, equal to one month’s salary, is a market-norm benefit typically paid at Christmas and upon the employee’s vacation time (in the summer).
This is not legally required and is only owed to the employee if included in the employment contract or collective bargaining agreement. When negotiating terms of employment with a candidate in Austria, we strongly recommend clarifying the monthly payment amount as well as whether the annualized salary will be paid over 12, 13, or 14 month salary payments.
Vacation Benefits in Austria
Statutory minimum and market norm is 5 weeks/25 days (for a 5-day week) of vacation per year in Austria, for all employees that have worked 6 continuous months.
Starting with the 26th year of employment, the vacation entitlement increases to 30 working days/6 weeks of paid vacation per year.
Public Holidays in Austria
The following public holidays or bank holidays are days when employees in Austria are not obligated to work:
- New Year’s Day
- Easter Monday
- Labor Day
- Ascension Day
- Whit Monday
- Corpus Christi
- Assumption Day
- Austrian National Day
- All Saints Day
- Immaculate Conception Day
- Christmas Day
- Boxing Day / St. Stephen’s Day
Legal holidays which fall on a weekend do not automatically result in the following Monday being designated an official holiday.
Sick Leave in Austria
Austrians are generally entitled to pay when unable to work due to sickness, industrial accident or occupational illness. The length of time for which an employee will receive pay depends on seniority and type of employment. A medical certificate may be required.
Maternity/Paternity Leave in Austria
Generally, pregnant employees are prohibited from working during a protection period of sixteen weeks of leave, split evenly before and after birth. During this time, the employee is also entitled to wages equal to the average of her salary over the 13 weeks prior to her leave.
Both mothers and fathers are entitled to parental leave until the child reaches 2 years old, as long as the parent lives in the same household as the child. The minimum period of the parental leave is two months and wages/salary are suspended during the leave. The parent’s job is protected until four weeks after the end of the parental leave period.
Subject to conditions, parents may draw a childcare allowance based either on income or a monthly lump sum.
Termination of Employment and Severance in Austria
A probation period of up to 1 month may generally be agreed to in the employment contract in Austria, during which either party can terminate the employment contract without explanation.
The termination of employment in Austria by an employer requires advance notification. For salaried employees, the legal term of notice amounts are based on the years of service provided by the employee to the employer:
|Years of Service||Period of notice to terminate employment|
|Less than 2 years||6 weeks|
|3 – 5 years||2 months|
|6 – 15 years||3 months|
|26+ years||5 months|
In addition to the notice period required to terminate an employment contract in Austria, employers are required to pay severance pay. Provided that the employment relationship lasts longer than 1 month, the employer is required to pay 1.53% of the employee’s monthly salary into an employee provision fund. When terminated, the employee can choose to either have the amount paid out as severance pay (given a minimum of 3 years of service and the employee did not give notice or was dismissed by cause) or left in the employee provision fund, in which a subsequent employer continuous to contribute.
It’s worth noting that this information is provided as a guideline only. Legal opinion is advisable when terminating an employee in Austria.
Employer and Employee Taxes in Austria
The Austrian social security system covers:
- incapacity for work/invalidity
- old age
- death of a person liable to provide maintenance
- survivors’ pensions
- nursing care
- social need
Insurance is compulsory for persons who are either self-employed or in paid employment and contributions have to be paid by both employees and employers at the following rates (employees’ and employers’ shares combined):
- Pension insurance: 22.80% (employer contribution: 12.55%; employee contribution: 10.25%)
- Accident insurance: 1.20%, to be paid by the employer
- Health insurance: 7.65% (employer contribution: 3.78%; employee contribution: 3.87%)
- Unemployment insurance: 6.00%, to be split equally between the employer and the employee
- Others: 1.7% (employer contribution: 0.7%; employee contribution: 1%)
Where applicable, employees pay trade union contributions and contributions to religious communities (e.g. church tax), which are deducted directly from pay.
Health Insurance Benefits in Austria
Adequate insurance coverage is generally provided through the national system which is paid via social insurances by both employers and employees. Supplementary coverage may be provided to the employee as an additional benefit but is not as oft-negotiated as it is in the US. If individuals are required to travel for work outside Europe, we strongly recommend ensuring that the employee is covered under a travel insurance plan. All employees engaged via AVASOs’ Global PEO are covered under a travel insurance program to ensure that they can safely visit the US and other countries on business.
Additional Benefits in Austria
Some companies provide senior-level executives with company cars. AVASO is not able to lease company cars on behalf of its customers. Should this benefit be required, we recommend providing an employee with an allowance to cover his/her own car expenses.
Bottom Line: Statutory Benefits Costs in Austria
In general, social security adds approximately 32% on top of the total cost of employment for an employer hiring an employee in Austria. This allocation accounts for statutory benefits for salaried employees and does not account for collective bargaining agreements or other benefits in Austria.