Your guide to payroll in Austria

Paying employees in Austria runs on its own set of rules. For instance, employer-side payroll costs land at roughly 30% above gross. Personal income tax (Lohnsteuer) climbs progressively from 0% to 55%. There’s no statutory national minimum wage in Austria. Sectoral collective agreements set pay floors instead. And paydays include 13th- and 14th-month salaries, paid in June and November, respectively. 

All Austrian payroll processing flows through Elektronischer Datenaustausch (ELDA), the central electronic transmission system. The monthly contribution filings are made to the Austrian Social Insurance (ÖGK) and tax remittances to the Finanzamt. Salary is deposited into the employee’s account by the last day of the calendar month.

The rest of this guide covers how Austria payroll actually runs in practice: Wages, withholdings, contributions, reporting deadlines, and the service options if you would rather not build the payroll team in-house. 

Moreover, Payoneer Workforce Management supports onboarding, payroll and more for companies engaging talent in Austria and 160+ other countries.

Austria payroll: Wages and other payments

Setting up payroll in Austria starts with knowing how wages are structured, when paydays land, and what extra payments are implicit in most contracts.

Payroll cycle in Austria

Salary is paid in EUR on a monthly schedule. The typical deadline is the last day of the calendar month. 

Minimum wage in Austria

There’s no statutory national minimum. Pay baselines come from Kollektivverträge (CBAs), the sector-specific collective agreements negotiated between trade unions and employer chambers. 

Coverage runs unusually deep here, as the majority of employees fall under at least one CBA. 

As one concrete example, the IT industry’s 2024 collective agreement put the entry-level baseline at €2,102 a month.

The Denmark payroll guide walks through a parallel framework where collective agreements do all the wage-setting work.

Overtime pay

The Arbeitszeitgesetz (Working Hours Act) sets the standard workweek at 40 hours. Many CBAs trim this to 38.5. Any pay for work beyond it is classified as overtime pay. 

Overtime carries at least a 50% surcharge above the regular rate for every hour worked. In practice, CBAs could award more for night work (200%), Sundays (150%), and public holidays (200%). 

If anything would take the weekly total beyond 50 hours, the employee has the legal right to decline.

Sick pay

Sick leave coverage in Austria can extend up to 26 weeks. The employer continues paying full salary for an initial period that scales with the employee’s length of service, typically six weeks at full pay in the first year. Longer fully-paid windows accrue as tenure grows. 

Your employer-paid full-salary window scales with tenure:

Maternity and parental pay

Mutterschutz (maternity protection) covers 16 weeks in total: eight weeks before the due date and eight weeks after birth. The employer doesn’t pay a salary during this window. 

Wochengeld (maternity allowance) comes directly from ÖGK, calculated against the employee’s average net income from the months before the protection period.

Elternkarenz (parental leave) follows the maternity window and is available until the child reaches 22 months. Moreover, it’s unpaid at the employer level. 

State-funded Elternzeitgeld (childcare allowance) covers income through the chosen payment scheme, with flexible options running up to 14 months at variable rates.

Severance pay

Rather than paying out a lump-sum severance at termination, employers contribute 1.53% of monthly gross into a Betriebliche Vorsorgekasse (severance fund) supervised by the Financial Market Authority. 

The fund accrues per employee and travels with them across jobs. After three years of contributions, an employee can withdraw or roll over the balance, provided they didn’t resign voluntarily. 

For employers, this means severance is built into regular Austrian payroll rather than appearing as a termination cost.

The 13th and 14th salaries

The Sonderzahlungen sit on top of regular monthly pay. There are two of them: 

1. Urlaubsgeld (vacation pay) lands alongside the June salary. 
2. Weihnachtsremuneration (the Christmas payment) follows in November. 

Each typically equals one month of gross. 

Payroll in Austria: Contributions and deductions

Two main streams flow through the Austrian payroll on the deduction side: social insurance contributions and income tax withholding (Lohnsteuer). Both employer and employee carry a share. Here’s what each side pays:

Employer taxes in Austria

Employment costs in Austria land at roughly 30% on top of gross salary. The breakdown:

• Social insurance contributions: about 21% of gross. Covers health, pension, unemployment, accident, plus housing subsidy and insolvency protection lines.
• Family Burden Equalization Fund (DB): 3.9%
• Supplement to DB (DZ): around 0.36%, varying slightly by federal state
• Municipality tax (Kommunalsteuer): 3% of gross
• Severance fund (Betriebliche Vorsorgekasse): 1.53% paid into the employee’s chosen fund

On the employee side, the social security contributions in Austria are deducted at roughly 18.12% of gross. The employer manages the deduction and remits it to ÖGK alongside its own contributions.

Income tax in Austria (Lohnsteuer)

Austria’s wage tax (Lohnsteuer) follows a progressive schedule running from 0% to 55%. Salary tax in Austria is withheld at source by the employer rather than self-assessed by employees. The employer withholds at source and remits to the Finanzamt. 

The employee cost calculator gives a quick gross-to-cost preview before you draft offers.

Other employee benefits

Two statutory benefits sit alongside cash compensation in every payroll compliance in Austria. It includes public health insurance through ÖGK and paid leave under the Urlaubsgesetz.

Health insurance

Public health insurance covers every Austrian employee through ÖGK (Österreichische Gesundheitskasse). The system funds general practitioner and specialist visits, public hospital stays, prescription drugs (with a small co-pay), maternity care, mental health support, and routine preventive screenings.

Private supplementary insurance is widely offered as an employer benefit. 

Annual leave

Statutory paid leave starts at 25 working days a year, rising to 30 after 25 years of service on the same payroll. Unused leave generally rolls into the following accrual year, but statutory vacation expires two years after the year in which it was accrued.

Austria observes 14 public holidays under the Arbeitsruhegesetz (Rest from Work Act), including New Year’s Day, Epiphany, Easter Monday, the State Holiday, Christmas Day, and Stefanitag (St. Stephen’s Day). 

Austria payroll compliance best practices

Payroll compliance in Austria hinges on four moving parts: payslips, monthly reporting, annual filing, and record retention.

1. Payslips (Lohnzettel): Every employee receives a written or electronic payslip each cycle. Payslip requirements in Austria are relatively detailed, as they must itemize each deduction separately. The slip itemizes gross, all deductions, employer contributions, and net. 
2. Monthly contribution reporting (mBGM): Employers file the Monatliche Beitragsgrundlagenmeldung, a contribution basis report, to ÖGK every month via ELDA. Lohnsteuer (income tax withholdings) is remitted to the Finanzamt on the same schedule, so the two filings tend to run in parallel.
3. Annual reporting (L16): By the end of February, employers electronically file an annual payslip (Lohnzettel L16) for each employee with both the tax authorities and ÖGK. The L16 consolidates the year’s gross, deductions, and net for tax assessment purposes. 
4. Record retention: Payroll records, including contracts, payslips, and time records, must be kept for seven years under the Bundesabgabenordnung (Federal Tax Code). Working time records are required even where employees set their own schedules.

Furthermore, companies with five or more employees may have a Works Council (Betriebsrat) elected, with co-determination rights on payroll-relevant matters like overtime, bonuses, and shift schedules. 

Your options for payroll services in Austria

Three setups help when global firms, like U.S. companies, look at engaging talent and payroll management in Austria.

1. In-house, with local payroll software: If you have a local entity, you can pay employees in Austria internally using local Lohnverrechnung software. This puts you in control. However, it also adds a dedicated function, such as payroll specialists, country-specific software, and ongoing rule-update work.
2. Outsourced to a Steuerberater or payroll bureau: Local tax advisors and payroll bureaus handle calculations, ÖGK and Finanzamt filings, and reporting on your behalf. A solid fit if you have an entity but don’t want to staff payroll internally.
3. Workforce management platform: In most countries outside the EU, an Employer of Record (EOR) is how companies engage and pay employees abroad when registering a local entity isn’t practical. Austria’s labor framework sits outside that model. 

Companies pursuing the same outcome typically work with a workforce management platform such as Payoneer Workforce Management. It supports contracts, monthly EUR payroll, taxes, and statutory benefits administration.

Even if you are engaging contractors rather than full-time staff, the Agent of Record (AOR) service handles cross-border engagement work. The contractor management system helps manage invoicing and contractor payments in EUR. 

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