Austria PEO & Employer of Record

Globalization Partners provides employer of record services for clients that want to hire employees and run payroll without first establishing a branch office or subsidiary in Austria. Your candidate is hired via Globalization Partners’ 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.

Our Global Employer of Record Platform™ and Global PEO service enables clients 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. Globalization Partners allows you to harness the talent of the brightest people in 150 countries around the world, quickly and painlessly.

When negotiating terms of an employment contract and offer letter with an employee in Austria, it may be useful to keep the following standard benefits in Austria in mind:

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 and offer letter with an employee in Austria, it may be useful to keep the following standard benefits in Austria in mind:

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
  • Epiphany
  • 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.

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.

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 paid at an additional 50% rate or by compensatory time.

Vacation Benefits in Austria

Statutory minimum and market norm is 5 weeks/30 days (Saturday counting as a work day) 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 36 working days/6 weeks of paid vacation per year.

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. 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
16-25 4 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 in the following amounts:

Length of Service Severance Pay Owed
3 years employment 2x final month’s pay
5 years employment 3x final month’s pay
10 years employment 4x final month’s pay
15 years employment 6x final month’s pay
20 years employment 9x final month’s pay
25 years employment 12x final month’s pay

No social insurance contributions are applied to severance pay in Austria. Severance pay is not owed when the employee terminates the contract or there are qualifying reasons relating to the fault of the employee.

It’s worth noting that other rules may apply to severance pay and termination in Austria; these estimates are 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:

  • prevention
  • sickness
  • incapacity for work/invalidity
  • maternity
  • unemployment
  • 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):

  • sickness insurance: manual workers, white collar workers, freelance workers, new self-employed (GSVG): 7.65%
  • accident insurance: manual workers, white collar workers, freelance workers: 1.3%
  • unemployment insurance: manual workers, white collar workers, freelance workers: 6%
  • pension insurance: manual workers, white collar workers, freelance workers: 22.8%, new self-employed (GSVG): 18.5%

In addition, employees and freelance workers pay 0.5% of their gross income as a Chamber of Labour contribution and 1.00% as the housing construction promotion levy (freelance workers do not pay any housing construction promotion levy).

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 Globalization Partners’ 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.  Globalization Partners is not able to lease company cars on behalf of its’ clients.  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.

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 offer letter and 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.

Why Globalization Partners

Establishing a branch office or subsidiary in Austria to engage a small team is time consuming, expensive and complex. Austrian labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners makes it painless and easy to expand into Austria. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Austria PEO and Global Employer of Record Platform provides you piece of mind so that you can focus on running your business.

If you would like to discuss how Globalization Partners can provide a seamless employee leasing or PEO solution for hiring employees in Austria, please contact us.