Looking for an Employer of Record in Austria? Here’s what you need to know

Knowing how best to hire and pay employees in Austria can be complex. To stay aligned with local labor laws, you need to understand your obligations and keep up with changing legislation.

While many global enterprises use Employers of Record to engage local talent, EORs in Austria may not be an applicable model. Instead, companies can use a workforce management platform, like Payoneer Workforce Management, to help simplify the process.

Find out more about Payoneer Workforce Management, or keep reading to discover more about engaging talent in Austria.

How to hire employees in Austria

There are three options for companies looking to engage and pay employees in Austria.

1. Set up a local entity: Businesses can register a local subsidiary to employ Austrian workers, but this takes significant time and effort.

2. Hire independent contractors: Hiring contractors offers flexibility and reduces employment obligations. However, you risk misclassification and penalties if the role looks like an employee-employer relationship.

3. Partner with a workforce management platform: Typically, companies may use an Employer of Record; In Austria, however, as the EOR model may not be applicable, companies can use a workforce management platform for support with onboarding, management, payroll, and benefits administration.

Payoneer Workforce Management is a trusted workforce management platform option for companies looking to engage Austrian talent. We assist you in mitigating risks related to contractor misclassification and help you set up localized benefits as per local laws and requirements.

How to onboard employees in Austria

A well‑defined onboarding process is crucial for ensuring a smooth and successful integration of a new candidate into the company.

The employee onboarding workflow typically involves the following key stages:

• Payroll and benefits enrollment :
  Register the new candidate in the local payroll system and complete all mandatory statutory benefits to maintain compliance with regional employment requirements.
• Equipment provisioning and workspace preparation:
  Supply all essential devices, tools, and system credentials so the employee can begin work smoothly and without operational hurdles.
• First week orientation program:
  Conduct a structured orientation during the initial week to introduce the employee to company policies, core procedures, organizational culture, and the expectations associated with their role.
• Team and cross‑functional introductions:
  Facilitate meetings with their immediate team and relevant departments across the organization to support strong working relationships and help the employee integrate effectively.

Payoneer Workforce Management enables companies to compliantly engage talent across borders through its technology platform.

Pay employees in Austria

You must pay employees in Austria in euros (EUR) on the last working day of the month. 

While Austria doesn’t have a statutory minimum wage nor mandatory bonuses, the majority of employees are regulated by collective agreements (CBAs) negotiated by the social partnership.

As per the IT sector agreement, employees must be paid EUR 2,102 or more per month for entry-level positions.

Also, offering employees a Weihnachtsremuneration (Christmas bonus) is standard practice under most CBAs. It’s usually equivalent to 1 month’s salary and paid in November or December.

Relevant taxes in Austria

In Austria, progressive personal income tax ranges from 0% to 55% depending on the level of income. Employees benefit from a range of deductions and allowances, and social security contributions are also deducted from their gross income.

Employer payroll contributions amount to approximately 30% of the gross salary, while social insurance contributions are approximately 21% and cover health, accident, pension, unemployment insurance, and more.

Navigate Austria’s payroll with Payoneer Workforce Management. Our unified, all-in-one platform gives you a single dashboard to manage a global workforce and pay contractors in just a few clicks.

Employment laws in Austria

Compliance with all local laws and regulations when managing your Austria payroll is essential, so here are some key considerations of what to expect when engaging employees in Austria.

• Working hours: A standard working week is 40 hours. However, many collective agreements provide for a reduced standard working time (for example, 38.5 hours per week).
• Overtime: Overtime is permitted if there’s increased work demand, but the employee can refuse if the weekly working hours exceed the 50-hour limit.
• Overtime surcharge: Overtime must be paid at a surcharge of at least 50% for every hour.
• Probation period: While there is no minimum probation length, probation cannot exceed 1 month.

Stay compliant with local labor laws using Payoneer Workforce Management’s infrastructure. 

Minimum wage in Austria

There’s no statutory minimum wage in Austria. Instead, wages are determined through collective agreements covering most industries. For example, under the IT sector agreement, entry-level roles require a minimum monthly salary of EUR 2,102.

Employment contracts in Austria

Employment contracts in Austria may be concluded in writing, verbally, or implicitly. Apprenticeship agreements must be in writing. There’s a distinction between an employment contract (Arbeitsvertrag), a freelance contract (freier Dienstvertrag), and a contract for works (Werkvertrag).

Employees and independent contractors receive a statement of terms and conditions, known as a Dienstzettel, at the start of the employment relationship.

A Dienstzettel must contain:

• Name and address of the employer and employee
• Date on which employment began
• Normal place of work
• Any classification in a general system
• Intended assignment
• Basic salary or wages
• Any additional emoluments (e.g., bonuses)
• Date payable
• Vacation leave entitlement
• Daily or weekly working hours
• Indication of the collective agreement or works agreement applicable
• Period and term of notice
• Date employment ends (if employment is for a defined period)

Onboard talent quickly and securely with localized contracts and payroll from Payoneer Workforce Management.

Leave policy in Austria

Austria sets a minimum leave that employers must provide for their employees, including vacation time, public holidays, sick leave, and parental leave.

Vacation leave and public holidays

Employees in Austria are entitled to 25 working days paid vacation per year, increasing to 30 days after 25 years of service (for a 5-day working week). This leave can be carried over but expires 2 years from the end of the year in which it arose.

Employees are also entitled to 14 public holidays per year.

Maternity leave

Maternity leave begins 8 weeks before birth and ends 8 weeks after birth, though it can be extended to 12 weeks post-birth in case of premature birth, multiple births, or a C-section. 

The total maternity leave can also be extended up to 16 weeks if the pre-birth leave is shortened. 

During this time, the employer does not pay the employee’s salary. Instead, employees receive a Wochengeld (weekly allowance) from the Austrian Health Insurance (ÖGK) based on their average net income.

Parental leave

Parental leave is available to both parents after the maternity period, until the child is 22 months old. Although this can be extended to 24 months if both parents share the leave, or the employee is a single parent. The minimum leave per parent is 2 months.

Employees are protected from dismissal from the notification of leave until 4 weeks after it ends.

Childcare leave

Parents can take up to 2 years of leave per child. The parental leave allowance (Elternzeitgeld) is paid by the government for a defined period, up to 14 months, depending on the selected payment model and whether leave is shared.

Other types of leave

Employees in Austria are also entitled to sick leave (up to 26 weeks), compassionate leave (typically 1 to 2 weeks), and wedding leave (1 to 3 days). 

Work permit in Austria

Rules relating to work permits vary depending on the country of origin, but EEA citizens and Swiss citizens may typically enter, live, and work in Austria without a permit, as long as they meet the necessary requirements.

Other country nationals will require a permit for either temporary residency or fixed-term employment. As the rules for work permits vary depending on the country of origin, it’s important to check the government website for details.

Background check in Austria

Background checks may be carried out before engaging an employee and can include a criminal check, employment and education history, and social media usage. You’ll likely need consent from the employee and will have to disclose what you’re checking.

Employment termination in Austria

Employment relationships in Austria may be terminated by either the employer or the employee, subject to statutory or contractual notice periods, in the following circumstances:

Termination by employer (dismissal)

The employer can dismiss an employee immediately (Fristlose Entlassung) and without notice in cases of serious misconduct, including fraud, criminal activity, or gross breach of duty.

Otherwise, employers must provide notice and adhere to the statutory or contractual notice periods based on the employee’s length of service. The notice period generally ranges from 6 weeks to 5 months, depending on the length of service, as follows

Termination by the employee (resignation)

The statutory notice period for resignation is normally 1 month, but may be extended depending on the employment contract or collective agreement.

Severance pay

Employers do not make severance payments to employees. 

Instead, they transfer 1.53% of the employee’s monthly gross salary (including special payments) to one of the occupational pension funds, which are supervised by the Financial Market Authority. 

The employee is entitled to withdraw or roll over the amount after 3 years of contributions (only if the employee does not resign voluntarily or after retirement or death).

Company registration in Austria

If you choose to register a company in Austria, details on how to do this can be found on the government website. However, it’s generally easier to use a workforce management platform to engage local talent.

Payoneer Workforce Management enables compliant onboarding of talent in 160+ countries without having to set up a legal entity.

PEO in Austria

A PEO is designed to help you with HR and admin tasks for employees you already employ through your local entity.

While some countries allow the use of EORs, in Austria, companies should use compliant workforce management solutions. These platforms help manage HR and compliance processes for companies without a local entity. This is invaluable for international companies seeking global talent.

Explore Payoneer Workforce Management services in Austria

Working with a partner like Payoneer Workforce Management helps support global operations and access local talent. 

Our unified platform can offer assistance with:

• Onboarding and offboarding
• Payroll and taxes
• Compliance support
• Benefits administration
• Timesheets and more

Book a demo to find out more.

FAQs

1) Are EORs legal in Austria?

EORs in Austria may not be an applicable model. However, employers can use a workforce management platform. Payoneer Workforce Management enables compliant onboarding of talent in 160+ countries without having to set up a legal entity, and can assist you in mitigating compliance risks.

2) How much does it cost to hire Austrian talent?

Employer costs are approximately 30% of gross salary and vary based on CBAs and benefits. You can use our cost calculator tool for a detailed breakdown of employment costs.

3) Why hire Austrian talent through a workforce management platform?

A workforce management platform, like Payoneer Workforce Management, enables you to engage and pay employees across the globe in 70+ currencies. We offer a transparent pricing structure. Contact us for more details.