Employer of Record (EOR) Austria
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With Mercans as your Employer of Record in Austria, you can count on us to:
- Ensure precise compliance with Austrian employment regulations.
- Efficiently manage the complexities of local payroll processes.
- Expertly handle tax filings and employment-related documentation.
- Provide timely payslips for employees.
- Guarantee prompt disbursement of salary payments.
Our Global PEO services in Austria offer a streamlined solution for your international expansion, eliminating the need to establish a legal entity. As your trusted Employer of Record in Austria, we ensure compliance with local regulations, establish a strong local presence, and protect your Intellectual Property (IP). This allows your business to stay focused on its core objectives. Leverage our expertise for seamless global mobility, effective work visa management, and building a diverse and productive global team.
Employment Contracts in Austria
Employment contracts in Austria are essential for establishing clear, legally compliant terms between employers and employees. As your Employer of Record (EOR) in Austria, Mercans provides comprehensive support in drafting, managing, and ensuring compliance with these contracts under Austrian labor law. Serving as a Global Professional Employer Organization (Global PEO), we handle all aspects of employment contracts to support your business expansion seamlessly and compliantly.
Key Aspects of Employment Contracts in Austria
In Austria, an employment contract does not require a specific legal form and does not necessarily need to be in writing. However, the contract is defined by the personal dependency of the employee on the employer. This dependency means the employer has decision-making authority, the employee is economically dependent, has a continuous obligation to work for a certain period, and typically uses the employer’s equipment.
There are various types of employment contracts, including temporary, fixed-term, and unspecified-duration contracts. Austrian law also distinguishes between lifetime and permanent employment, as well as contracts for trainee or apprenticeship relationships.
The Dienstzettel must include the following information:
This written statement ensures that both parties understand the terms of employment and helps to protect the rights of the employee in the absence of a formal written contract.
Working Hours
In Austria, the typical working hours are regulated under the Austrian Working Time Act (Arbeitszeitgesetz, AZG), which sets a maximum of 10 hours per day and 50 hours per week. Furthermore, the law stipulates that an employee’s average weekly working time should not exceed 48 hours over a 17-week period. However, collective agreements can extend this reference period, allowing for a 26-week or even a 52-week period in some circumstances. Any changes to the standard working hours can only occur within the specific boundaries established by the AZG and require a collective or works agreement.
There are certain scenarios in which working hours may exceed the usual limits without the need for additional agreements by social partners, as outlined by the Austrian Labour Inspectorate:
Redistribution of Weekly Hours
Employees can work more hours in a single day (up to 9 hours) if the hours are redistributed throughout the week to allow for extra time off, such as before weekends.
Sales Staff
Sales employees can work up to 44 hours over a four-week period, provided their weekly average does not exceed 40 hours, and their daily working hours do not surpass 9 hours.
Flexible Working Time
In flexible work schedules, employees can extend their daily hours to 10 hours as part of an agreement to accommodate personal needs or peak workloads.
Public Holidays and Time Off
If working hours are averaged over a 13-week period, employees can work up to 10 hours per day to allow for longer periods of rest before public holidays.
These exceptions demonstrate the flexibility in Austria’s working hours framework, allowing for some variation depending on the nature of the work and the specific agreement between employer and employee. However, any adjustments to the standard working hours must comply with the AZG and other relevant labour regulations.
13th Month Salary
In Austria, employees receive an additional 13th and 14th monthly salary each year, providing extra financial support for the holiday season and summer vacation. These payments are a well-established tradition in Austria and are intended to help employees manage the increased expenses typically associated with these times of the year.
These biannual payments play an essential role in supporting Austrian employees during peak spending periods, offering both a seasonal financial cushion and enhanced quality of life.
Termination of Employment in Austria
Employment contracts in Austria can come to an end in several ways, including mutual agreement, termination with notice by either the employer or the employee, resignation without notice for serious cause, immediate dismissal for cause, the expiration of a fixed-term contract, or termination during the probation period. While dismissals or resignations without notice must be based on justifiable cause, terminations with notice do not require a specific reason. However, employers must adhere to the legally prescribed notice periods (Kündigungsfristen) and termination dates (Kündigungstermine), which may be outlined in laws, collective agreements, or individual contracts. Moreover, if a works council is in place, the employer is obligated to notify it in advance of any planned termination.
Notice Periods
The notice period an employer must provide depends on the employee’s length of service:
- Up to 2 years of service: 6 weeks’ notice.
- More than 2 years of service: 2 months’ notice.
- More than 5 years of service: 3 months’ notice.
- More than 15 years of service: 4 months’ notice.
- More than 25 years of service: 5 months’ notice.
Employees must provide at least 1 month’s notice, regardless of their service duration. This period can be extended up to 6 months if agreed upon contractually. For workers governed by the Industrial Code of 1859 (Gewerbeordnung 1859 or GewO 1859), a 14-day notice period is required from both the employer and employee.
Severance Payments
Employees hired after January 1, 2003, are entitled to severance pay, contingent upon the employment relationship’s termination. Employers must contribute 1.53% of each employee’s gross monthly salary to a severance fund. Employees become eligible to receive severance unless the employment ends due to resignation, lawful redundancy, or unlawful withdrawal by the employee, or if less than three years have passed since the first contribution to the fund.
Employment Types – Employees, Independent Contractors, and more
In Austria, the structure of employment is diverse, offering various types of work arrangements that cater to different roles, industries, and levels of flexibility. Each employment type carries its own set of rights, protections, and obligations, outlined as follows:
Social Security in Austria
Austria’s social security system requires both employers and employees to contribute to various insurance categories, covering pensions, sickness, unemployment, accident insurance, and other smaller contributions. The rates are divided as follows:
Cost Category | Amount (BYN) |
---|---|
Gross Annual Salary | 100,000.00 |
Employer Costs | 35,100.00 |
Total Annual Cost | 135,100.00 |
*These percentages apply up to a maximum monthly gross salary assessment base of EUR 6,060 for regular payments for both employer and employee contributions. Special payments, such as holiday bonuses, are subject to a reduced rate (employer: 20.48%, employee: 17.07%, totaling 37.55%) with a maximum annual assessment base of EUR 12,120.
Additional Social Security Provisions
- Family Member Co-Insurance: Family members may be co-insured without additional costs. However, a 3.4% supplementary contribution is charged when a co-insured family member (such as a spouse, registered partner, or household manager) does not care for children in the household or did so for fewer than four years.
Employer-Specific Levies
Employers in Austria also pay additional levies on payroll:
- Family Burdens Equalization Levy: 3.9% of the monthly gross salary.
- Municipal Payroll Tax: 3% of monthly gross salaries and wages.
- Public Transportation Levy: EUR 2 per employee per week, applicable in Vienna.
- Chamber of Commerce Contribution: Between 0.32% and 0.40% of monthly gross salaries, depending on the province.
- Employee Pension Fund Contribution: 1.53% of monthly gross salaries for employment under Austrian law.
These contributions support Austria’s robust social welfare system, ensuring comprehensive social security coverage for employees and their families while providing important financial contributions to the public and regional services.
Payroll in Austria
Minimum Wages
The minimum wage in Austria is €1,500.00 per month, a rate that has been in effect since July 1, 2020, and remains valid as of November 2024.
Overtime Pay
Overtime in Austria is defined as work beyond the standard eight hours per day or 40 hours per week. However, certain exceptions may apply under collective or work agreements, potentially allowing for flexibility in work distribution.
Payroll Cycle
In Austria, the payroll cycle is typically monthly, with employees receiving their wages on the last working day of each month. Employers may opt to pay on an alternative date if this is agreed upon in the employment contract or stipulated in a collective bargaining agreement.
Personal Income Tax in Austria
In Austria, residents are taxed on their worldwide income, which includes earnings from employment, business activities, investments, and property. Non-residents, however, are only taxed on income derived from Austrian sources. Non-residents are subject to the same tax rates as residents on Austrian-source income, with an additional fictitious income increase of €10,199.
Personal Income Tax Rates
Austria applies a progressive income tax system, with the following rates:
Tax Rate | Taxable Income Threshold |
---|---|
13% | Flat rate on all taxable income |
Payroll Withholding Tax (WHT) Examples
For individuals subject to Austrian social security, wage tax and social security contributions are withheld from the salary. Here’s an example of how tax withholding is calculated for the year 2024:
Tax Rate | Taxable Income Threshold |
---|---|
13% | Flat rate on all taxable income |
Filing Requirements
For employees whose only source of income is employment subject to wage tax, there is no obligation to file an income tax return. However, individuals may choose to file for a partial tax refund if they have deductible expenses or irregular income patterns, such as variable salary amounts.
Sole Earner Tax Credit
The sole earner credit applies to married couples with a single income and children who qualify for family allowance. The tax withheld each month is reduced as follows:
- One child: EUR 47.67
- Two children: EUR 64.50
- Three children: EUR 85.75
Couples without children are not eligible for this credit.
Local Income Taxes
Austria does not impose any local income taxes. All taxes are managed at the federal level.
Austria Employee Hiring Cost
Let’s consider an employee with a gross annual salary of EUR 100,000. While the gross salary is the amount the employee earns before deductions, the total cost to the employer includes additional expenses such as social security contributions, taxes, and other employer liabilities. This breakdown helps to understand the full financial commitment an employer has when hiring an employee in Austria.
For this example, the gross annual salary is EUR 100,000. The employer’s additional costs, which include mandatory employer contributions to social security, pension, and other benefits, amount to EUR 24,926. Therefore, the total annual cost to the employer for this employee would be EUR 124,926.
Social Security Category | Employee Contribution | Employer Contribution | Total Contribution |
---|---|---|---|
Health Insurance | 0% | 28% | 28% |
Pension Insurance | 0% | 6% | 6% |
Social Insurance | 1% | 0% | 1% |
Total | 1% | 34% | 35% |
This table illustrates how the employer’s total annual cost consists not only of the employee’s gross salary but also the additional employer costs required by Austrian labor laws.
Employee Benefits in Austria
Austria provides a robust system of employee benefits that combines statutory protections with supplementary employer-provided perks. These benefits ensure workers are covered in areas such as health, retirement, accident protection, and unemployment, while also offering additional support for their well-being and work-life balance.
- Health Insurance: Health insurance in Austria is mandatory for all employees and is an integral part of the country’s social insurance system. Managed by institutions like the Austrian Health Insurance Fund (ÖGK) and the Social Insurance Institution for Self-Employed Persons (SVS), it covers a wide range of medical services, including doctor visits, hospital stays, medications, and rehabilitation. Contributions are deducted from salaries, and employees must register with an insurance provider.
- Accident Insurance: Workplace and non-workplace accidents are covered under Austria’s mandatory accident insurance. Administered by the General Accident Insurance Institution (AUVA) and other relevant bodies, accident insurance protects employees from financial loss due to work-related injuries or occupational diseases. Employers are legally required to insure their employees against such risks, with contributions based on industry risk classifications.
- Pension Insurance: Austria’s pension system consists of three pillars to ensure a stable income post-retirement:
- First Pillar (State Pension): A basic state pension, funded through employee and employer contributions.
- Second Pillar (Occupational Pension): Voluntary employer-provided pensions to supplement the state pension.
- Third Pillar (Private Pension): Private pension savings that employees can choose to invest in, often with tax benefits to encourage long-term saving.
- Unemployment Insurance: Unemployment insurance is designed to support employees who lose their jobs involuntarily. It offers financial assistance and job placement services. Contributions to this insurance are shared between employees and employers, and benefits are paid based on prior earnings and the duration of insurance coverage.
- Parental Leave: Austrian law provides generous parental leave benefits, allowing parents to take time off until their child is three years old. Both parents are eligible, with benefits paid from the Family Allowance Fund based on a percentage of their previous salary. Employees on parental leave have job protection, ensuring they can return to their position or an equivalent role after the leave period ends.
- Health Insurance Perks: Employers often provide group health insurance plans that cover more services or offer discounted premiums, ensuring employees have access to high-quality medical care beyond the statutory coverage.
- Life and Accident Insurance: Life insurance policies help provide financial support to an employee’s family in case of death. Similarly, accident insurance helps protect employees from the financial burden of accidental injury, covering medical treatments, rehabilitation, and even disability compensation.
- Occupational Disability Insurance: This insurance is particularly important for employees who are at risk of losing their ability to work due to illness or injury. It provides income replacement to ensure financial stability if an employee becomes unable to perform their job.
- Retirement Savings Plans: Employers in Austria often offer additional retirement benefits through company pension plans or direct insurance schemes. These plans allow employees to save for retirement, with potential tax benefits for both the employer and employee.
- Severance Pay: Under Austrian labor law, employees who are terminated without cause are entitled to severance pay. Employers may outsource these obligations to insurance providers, which can help manage liquidity and reduce balance sheet impact.
- Flexible Work Arrangements: Flexible working hours and home office options are becoming increasingly popular in Austria, allowing employees to manage their professional and personal commitments more effectively.
- Wellness and Mental Health Support: Employers often offer wellness programs, including access to employee assistance programs (EAP), mental health support, and fitness memberships, to promote the physical and mental well-being of their employees.
- Transportation Benefits: Subsidized public transport passes, commuter benefits, or parking discounts are commonly offered to employees, making daily commutes more affordable and convenient.
- Educational Assistance: Many Austrian companies support the professional development of their employees by offering financial assistance for continuing education or job-relevant certifications.
- Childcare and Family Support: Childcare allowances or on-site childcare facilities are provided by some employers to assist working parents. Additionally, some companies offer family-friendly policies, including sabbaticals and parental support initiatives.
- Employee Discounts and Perks: Employees can often access discounts or special offers for products and services from partner companies. These perks help employees save money on a range of goods and services, enhancing their overall benefits package.
- Health Insurance: Health insurance in Austria is mandatory for all employees and is an integral part of the country’s social insurance system. Managed by institutions like the Austrian Health Insurance Fund (ÖGK) and the Social Insurance Institution for Self-Employed Persons (SVS), it covers a wide range of medical services, including doctor visits, hospital stays, medications, and rehabilitation. Contributions are deducted from salaries, and employees must register with an insurance provider.
- Accident Insurance: Workplace and non-workplace accidents are covered under Austria’s mandatory accident insurance. Administered by the General Accident Insurance Institution (AUVA) and other relevant bodies, accident insurance protects employees from financial loss due to work-related injuries or occupational diseases. Employers are legally required to insure their employees against such risks, with contributions based on industry risk classifications.
- Pension Insurance: Austria’s pension system consists of three pillars to ensure a stable income post-retirement:
- First Pillar (State Pension): A basic state pension, funded through employee and employer contributions.
- Second Pillar (Occupational Pension): Voluntary employer-provided pensions to supplement the state pension.
- Third Pillar (Private Pension): Private pension savings that employees can choose to invest in, often with tax benefits to encourage long-term saving.
- Unemployment Insurance: Unemployment insurance is designed to support employees who lose their jobs involuntarily. It offers financial assistance and job placement services. Contributions to this insurance are shared between employees and employers, and benefits are paid based on prior earnings and the duration of insurance coverage.
- Parental Leave: Austrian law provides generous parental leave benefits, allowing parents to take time off until their child is three years old. Both parents are eligible, with benefits paid from the Family Allowance Fund based on a percentage of their previous salary. Employees on parental leave have job protection, ensuring they can return to their position or an equivalent role after the leave period ends.
- Health Insurance Perks: Employers often provide group health insurance plans that cover more services or offer discounted premiums, ensuring employees have access to high-quality medical care beyond the statutory coverage.
- Life and Accident Insurance: Life insurance policies help provide financial support to an employee’s family in case of death. Similarly, accident insurance helps protect employees from the financial burden of accidental injury, covering medical treatments, rehabilitation, and even disability compensation.
- Occupational Disability Insurance: This insurance is particularly important for employees who are at risk of losing their ability to work due to illness or injury. It provides income replacement to ensure financial stability if an employee becomes unable to perform their job.
- Retirement Savings Plans: Employers in Austria often offer additional retirement benefits through company pension plans or direct insurance schemes. These plans allow employees to save for retirement, with potential tax benefits for both the employer and employee.
- Severance Pay: Under Austrian labor law, employees who are terminated without cause are entitled to severance pay. Employers may outsource these obligations to insurance providers, which can help manage liquidity and reduce balance sheet impact.
- Flexible Work Arrangements: Flexible working hours and home office options are becoming increasingly popular in Austria, allowing employees to manage their professional and personal commitments more effectively.
- Wellness and Mental Health Support: Employers often offer wellness programs, including access to employee assistance programs (EAP), mental health support, and fitness memberships, to promote the physical and mental well-being of their employees.
- Transportation Benefits: Subsidized public transport passes, commuter benefits, or parking discounts are commonly offered to employees, making daily commutes more affordable and convenient.
- Educational Assistance: Many Austrian companies support the professional development of their employees by offering financial assistance for continuing education or job-relevant certifications.
- Childcare and Family Support: Childcare allowances or on-site childcare facilities are provided by some employers to assist working parents. Additionally, some companies offer family-friendly policies, including sabbaticals and parental support initiatives.
- Employee Discounts and Perks: Employees can often access discounts or special offers for products and services from partner companies. These perks help employees save money on a range of goods and services, enhancing their overall benefits package.
Work Permit in Austria
Austria is an appealing destination for international professionals, ranging from students to renowned researchers, due to its high quality of life and strong labor market. However, navigating Austria’s work permit and visa regulations can be complex. If your company is expanding into Austria and planning to hire foreign employees, understanding the different visa and work permit options is crucial to remain compliant with local laws and ensure smooth operations.
Types of Work Visas in Austria
Austria distinguishes between European Union (EU)/European Economic Area (EEA) nationals and non-EU/EEA nationals when it comes to visa and work permit requirements. EU/EEA citizens do not require a visa to work in Austria, while non-EU nationals must apply for a work visa or residence permit to enter and work in the country. For non-EU nationals, there are several types of work visas depending on the applicant’s circumstances:
Red-White-Red Card
The Red-White-Red Card is the most common work permit for non-EU nationals. It is typically valid for 24 months and allows the holder to live and work in Austria for a specified employer. To apply for this card, applicants must fall into specific categories such as highly qualified workers, skilled workers in shortage occupations, and start-up founders. Applicants can apply for a Red-White-Red Card to work in Austria in a designated role, but they are only allowed to work for the employer listed in their application.
Jobseeker Visa
This visa allows highly qualified workers to enter Austria for up to six months to search for a job. Applicants must meet specific criteria based on their skills and experience, and once they find employment, they can transition to a Red-White-Red Card.
EU Blue Card
The EU Blue Card is similar to the Red-White-Red Card but offers additional benefits for skilled workers from outside the EU. It grants the holder the same work rights as Austrian citizens and is typically available to highly skilled professionals in sectors where Austria faces labor shortages.
Six-Month Residence Visa
This is an option for individuals looking to temporarily reside in Austria and search for employment. It is ideal for those who need time to settle before starting work.
Students’ Residence Permit
Foreign students who have completed their studies or relevant training in Austria can apply for a residence permit that allows them to stay for up to 12 months while they search for a job or establish a business in the country.
Business Visa
For individuals visiting Austria for short-term business activities (less than six months), a business visa is necessary. Citizens from countries with agreements for visits of up to 90 days do not need a visa for short stays.
Requirements for Austria Work Visas
Austria uses a points-based system to determine eligibility for work permits. Applicants’ qualifications, work experience, salary level, language skills, and other criteria are evaluated to determine the appropriate visa or work permit category.
- A valid passport and a recent photo
- Proof of accommodation in Austria
- Proof of financial independence (such as salary documentation)
- Health insurance coverage
- Proof of qualifications, such as a university or higher education degree
- Work experience, including testimonials, certificates, and references
- Language skills may be required depending on the job
- Biometric data
Highly qualified workers or those applying for specialized positions may also need to provide evidence of their accomplishments, such as research or innovation contributions, awards, or research publications.
Process of applying
To apply for a work visa in Austria, applicants must submit their documentation to the Austrian embassy or consulate in their home country. Fees may vary depending on the type of visa being applied for; for example, the Red-White-Red Card costs around 120 EUR for jobseekers.
After submitting the required documents, the Austrian immigration authorities will process the application. If successful, applicants will receive a visa or work permit that allows them to live and work in Austria. In most cases, work permits are issued for a limited time (such as two years), and workers must apply for renewal or permanent residence after this period.
It’s important to note that a work permit in Austria does not automatically grant residency. Applicants will need a separate residency permit to live in Austria. Additionally, those holding temporary work permits may apply for permanent residency after legally living and working in Austria for five years.
Additional considerations
- Temporary Residence: Employees who hold a work permit will need to apply for a temporary residence permit, which requires additional documents such as proof of income and a letter from their employer.
- Permanent Residency: After living and working in Austria for five continuous years, foreign nationals can apply for a long-term residence certificate, which provides the right to stay and work in Austria indefinitely.
- Family Reunification: Work permit holders can also apply to bring their family members to Austria. The family reunification process typically involves demonstrating sufficient income and living space.
- Professional Support: The process for obtaining a work visa and residence permit can be complex. For companies hiring foreign workers, it may be beneficial to consult with a local immigration expert or employ a Global PEO (Professional Employer Organization) to ensure the visa process runs smoothly.
EOR Solutions in Austria
Best Employer of Record Austria
Conclusion
In conclusion, Mercans offers comprehensive and compliant Employer of Record (EOR) solutions tailored for businesses operating in Austria. With a deep understanding of Austrian labor laws, including compliance with the Labour Inspectorate, Mercans ensures that companies can hire, manage, and pay employees with full confidence in their legal and regulatory obligations. Whether you’re expanding your operations in Austria, managing a diverse workforce, or looking for a streamlined payroll and benefits solution, Mercans provides the expertise and infrastructure to support your business. From visa sponsorship to multi-currency payroll and full data security certifications, Mercans is your trusted partner for navigating the complexities of employment in Austria, allowing you to focus on growth while we handle the administrative and compliance challenges.
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