Hire employees in Austria

Given its strategic position right in the centre of Europe with close links to both Western and Eastern European states, Austria not only attracts many highly skilled young professionals from all over Europe and thus offers international employers a huge talent pool to choose from, but the country also provides foreign companies looking to enter the European market with great business opportunities.

In addition, Austria itself impresses with a high number of qualified employees who come straight out of its excellent universities. Affordable employment costs, an extremely good telecommunications infrastructure and a high quality of life translating into outstanding employee performance make Austria a very promising job market to find your next remote team member.

Unless stated otherwise, employment contracts in Austria are considered to be indefinite. Although Austrian labour law does not explicitly require a written employment contract – it is also legitimate to provide the employee with a brief written statement outlining the general rights and obligations linked to the employment – it is common practice for companies to set up a proper employment contract – of course, in German – which usually contains the following standard information:

• Identification of both parties

• Date of commencement (and employment duration for temporary contracts)

• Place(s) of work

• Accurate job description

• Salary as well as other compensation or benefits (in Euros)

• Working hours

• Total number of holidays

• Notice periods for employment termination

• Reference to collective agreements

Fixed-term contracts are possible in Austria but are subject to restrictions when it comes to pension schemes: It is only after four years of employment via a temporary employment contract that the employee is eligible for a pension plan.

Probation Period

Probation periods in Austria usually last one month. However, the exact terms must be outlined in the employment contract.

Working Hours and Breaks

A normal work week in Austria is 40 hours divided into five working days, i.e. eight daily hours. In some industries, weekly working time can be reduced to as little as 38 hours due to collective agreements.

After five consecutive hours of work, employees are entitled to a 60-minute break which is usually unpaid.

Overtime

Any time worked after having completed the standard 40-hour week is considered overtime and must be paid. Overtime pay rate is 150% of the employee’s usual salary. Since September 2018, the maximum weekly working time permitted by law is 60 hours – before it was only 50. Daily working time cannot exceed twelve hours.

Employees in Austria usually receive their wages at the end of each month.

Minimum Wage

The Austrian Government does not define a national minimum wage. Instead, minimum remuneration rates are determined by collective agreements for each individual industry.

Sick Pay

When employees in Austria are absent from work due to injury or sickness, the employer is obliged to provide sick pay. Sick pay as well as the actual sick leave length are proportionate to the employee’s years of service.

During the additional four weeks of sick leave which are granted in case of a long and serious illness, the payment of the remaining 50 per cent of the employee’s normal wage is covered by Social Security. In cases where an employee’s sick leave period exceeds the above stated limits, sick pay is provided entirely by Social Security.

Bonuses

It is not mandatory in Austria to issue a yearly bonus payment. However, most employers pay their workers the equivalent of a 13th, sometimes even a 14th salary.

Employees and employers in Austria are subject to the following tax and social security contribution rates (last review February 2023):

Taxes

Employers

24%

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24%* corporate tax (standard rate)

20% VAT (standard rate)

Employees

up to 55%

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• 0% (up to EUR 11,693)

• 20% (up to EUR 19,134)

• 30% (up to EUR 32,075)

• 42%** (up to EUR 62,080)

• 48% (up to EUR 93,120)

• 50% (up to EUR 1 million)

• 55% (over EUR 1 million)

Social security

Employers

21.03%

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• Health care: 3.78%

• Accident insurance: 1.1%

• Pension scheme: 12.55%

• Unemployment insurance: 3%

• Various: 0.6%

Employees

18.12%

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• Health care: 3.87%

• Pension scheme: 10.25%

• Unemployment insurance: 3%

• Various: 1%

* In 2024, the CIT rate will drop to 23%.

** From July 2023, the third personal income tax bracket will be reduced from 42% to 40%.

Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).

Annual Leave

In Austria, employees receive a total of five weeks – including Saturdays – of paid leave per year. However, before they are entitled to claim annual leave, employees first have to complete six months of work at the company.

In addition, the country observes 13 public holidays over the course of the year. After 25 years of consecutive work for the same company, the employee’s annual leave entitlement increases to six weeks.

Maternity Leave and Paternity Leave

Austrian labour law provides for 16 weeks of maternity leave, starting eight weeks prior to birth – even earlier if there is a risk for either mother or child. In case of multiple or premature births, maternity leave is extended by at least another four weeks.

During this time, employees are paid by social security. Maternity benefits are calculated based on the employee’s average earnings of the three months previous to maternity. Since March 2017, employers have to grant paternity leave to their employees which is one month.

Parental Leave

Parents are entitled to take unpaid parental leave until their child is two years old. Although it is only possible for one parent at the time to claim their right to parental leave, mother and father can take turns in order to care for their new-born child. In no case, the length of the claimed parental leave can be shorter than two months.

In addition, parents who have been working for the same company for at least three consecutive years have the right to work only part-time instead of full-time until their child’s seventh birthday.

Additional Leave and Benefits

Additional benefits employees in Austria are entitled to include:

• four weeks of paid leave in case of the death of a direct family member

• three days of paid marriage leave

• two to twelve months of unpaid education leave over the course of four years

In addition to voluntary termination by the employee and employment termination by either mutual agreement or default – i.e. in case of a fixed-term contract, Austrian labour law provides for the following reasons for employee dismissal:

• staff reduction due to the company’s economic situation

• company liquidation

• redundancy

• summary dismissal, e.g. because of employee’s underperformance, disobedience etc.

Except in case of a summary dismissal which enters into effect immediately, the length of the notice period ranges from six weeks to five months, depending on the employee’s years of service. Furthermore, employment may only be terminated at the end of each calendar quarter.

• during the first two years of service: six weeks

• after two years of service: two months

• after five years of service: three months

• after 15 years of service: four months

• after 25 years of service: five months

During his or her remaining time at the company, the employee is entitled to extra time off equaling 20% of the weekly working time in order to find a new position. Pregnant women, parents on parental leave, disabled persons and apprentices are generally protected from dismissal.

Unless the employee has been dismissed due to gross misconduct or has terminated the employment voluntarily, he or she is entitled to severance pay – this regulation applies to all employment contracts issued after 2003. In Austria, severance pay is covered by an employee provision fund. After the employee’s probation period is over, the employer is obligated to start to contribute 1.53% of the employee’s monthly salary to this provision fund. The accumulated amount is what the employee receives as severance pay.