An Employer of Record (EOR) in Austria offers a comprehensive solution for companies looking to expand their operations without establishing a legal entity. The EOR acts as the official employer, handling all employment-related tasks, including payroll, tax compliance, benefits administration, and HR management. By partnering with an EOR in Austria, companies can tap into the local talent pool while minimizing administrative burdens and compliance risks. The EOR handles employment contracts and statutory benefits and ensures compliance with Austrian labor laws. It provides seamless onboarding, payroll processing, and ongoing HR support. With an in-depth understanding of the local regulations and practices, the EOR helps businesses navigate the complexities of the Austrian employment landscape, allowing them to focus on their core operations and achieve their global expansion goals efficiently.

EORs/PEOs enable you to hire a skilled Austrian workforce, without a local entity and the expertise to navigate complex labor laws. This enables businesses to focus on core operations, maintain legal compliance, and unlock their growth potential in the Austrian market.

Foreign employers, while hiring from this highly skilled talent pool, must ensure full compliance with local employment laws. Austria ranks no.1 for labor rights and has a robust social security policy that has earned the country the 1st and 4th spot  for pension coverage and social protection. Moreover, Sozialpartnerschaft, Austria’s systematic social partnership system enables labor unions to constantly engage with employers to represent and communicate employee needs with changing socio-economic conditions. 

This means that employers have to deal with changes in labor laws every now and then. For foreign employers, this means you’d have to hire legal experts and payroll specialists to ensure employees are compliantly hired and paid.

Partnering with Gloroots’ Austria EOR helps ensure compliance with these employment regulations. We help you navigate the intricacies of hiring employees, contractors, and migrant workers, minimizing legal risks and enabling you to better focus on growing your team  in Austria.

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The cost of Austria EOR/PEO services in  Austria may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. Gloroots offers a fixed fee for EOR services. The pricing for Austria EOR/PEO services is a monthly fee per employee. 

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Key Metrics For Foreign Employers

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Austria ranks 17th globally in the Talent Competitiveness Index (GTCI) owing to highly skilled workforce supported by futuristic educational policies and governmental initiatives. For instance, Austria ranks 7th in the GTCI index for R&D expenditure. 

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The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Austria.

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Source: The Global Talent Competitiveness Index 2023

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Through the Gloroots’ Recrew platform, you can discover amazing talent in Austria.

The term "misclassification of employees" refers to the inaccurate classification of workers by their employers. Misclassification occurs when an employer categorizes a worker as an independent contractor to exempt them from certain employment laws and benefits, even if the worker’s employment relationship is similar to that of a full-time employee. 

Utilizing a PEO/EOR in Austria helps mitigate the risks associated with misclassification by crafting compliant employment contracts, ensuring compliance with labor laws,, accurate payroll processing, and access to comprehensive benefits.

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Employment Contract

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In Austria, unless specified otherwise, employment contracts are typically considered to be indefinite in duration.  Although written employment contracts are not required by law, it is common practice for companies to prepare a written contract in German. This contract typically includes: 

•  Identification of both parties
•  Start date of employment (and duration for temporary contracts)
• Work locations
• Clear job description
• Salary and other compensation in Euros
• Working hours
• Total number of holidays
• Notice periods for termination
• Reference to collective agreements

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Fixed-term contracts are also valid. However, such employees will face limitations concerning pension schemes. Employees will be eligible for a pension plan only after four years of employment under a temporary contract.

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Overtime

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In Austria, any hours worked beyond the standard 40-hour week is considered overtime. Employers must pay 150% of the employee's regular salary for each hour worked overtime. In September 2018, the maximum weekly working time allowed by law was increased from 50 to 60 hours. However, the daily working time, including overtime hours, must not exceed twelve hours.

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Minimum Wage

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Austria does not have a nationally defined minimum wage set by the government. Instead, minimum compensation rates are established through collective agreements and vary with each industry.

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Annual leaves

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In Austria, employees are granted a total of five weeks of paid leave per year, which includes Saturdays. However, eligibility for annual leave requires employees to have completed a minimum of six months of work with the company.

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Maternity Leave and Paternity Leave

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In Austria, labor laws stipulate a maternity leave period of 16 weeks. This leave period begins eight weeks prior to the expected birth date. In situations where there is a risk to the mother or child, maternity leave can commence even earlier. If there are multiple or premature births, the duration of maternity leave is extended by at least an additional four weeks.

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During this period, employees receive payment through social security. Maternity benefits are calculated based on the average earnings of the employee during the three months preceding the maternity leave. 

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Since March 2017, employers are also required to grant one month of paternity leave to their employees.

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Sick Leaves

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When employees in Austria are absent from work due to illness or injury, employers are required to provide paid sick leaves . The duration of sick leave and the corresponding sick pay amount depend on the employee's years of service. 

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The following table illustrates the sick leave duration and the percentage of normal wages provided:

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If an employee has a long and serious illness, they may be granted an additional four weeks of sick leave. During this time, if the employee is unable to work, Social Security will cover 50% of their regular wage. If the employee's sick leave goes beyond the specified duration, Social Security will cover the entire amount of sick pay.

Income tax and other tax

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Please note that the corporate tax rate is 24% of the corporate tax base, and the income tax rates for employees are progressive, increasing as the income level rises. The 42% rate applies up to EUR 1 million for incomes earned in 2021.

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Social Security contribution

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Termination Process

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In Austria, employers typically have several choices when it comes to terminating an employment agreement:

1. Termination by mutual agreement: Employers and employees can mutually agree to terminate the employment contract.

2. Unilateral termination: Employers have the authority to unilaterally terminate the employment agreement without the agreement of the employee.

3. Resignation by the employee: Employees can voluntarily resign and terminate the employment agreement at the end of their contract.

4. Urgent dismissal of the employee: Employers may choose to dismiss an employee urgently, typically in cases of serious misconduct such as theft or other significant violations.

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Notice Period

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The length of notice varies based on the employee's length of service. For employees with up to two years of service, the statutory notice period is six weeks. However, for employees with over 25 years of service, the notice period can extend up to five months.

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Severance Pay

In Austria, unless an employee is dismissed for gross misconduct or voluntarily terminates their employment, they are entitled to receive severance pay. This regulation applies to all employment contracts issued after 2003. 

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Severance pay in Austria is managed through an employee provision fund. Once the employee's probation period ends, the employer is required to contribute 1.53% of the employee's monthly salary to this fund. The accumulated amount in the fund is then disbursed to the employee as severance pay.

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Probation Periods

In Austria, a one-month probationary period is common in Austria. During this period, either the employer or the employee can terminate the contract without providing an explanation.

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Additionally, before giving an employee a notice of dismissal, the employer is required to give at least one week's notice to the work council. If requested by the work council, the employer must engage in consultation with them before proceeding with the dismissal.

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When it comes to global hiring, ensuring compliance can be a complex undertaking. Employers must navigate through employment laws, payroll procedures, DE&I compliance, data protection regulations, and other legal requirements to ensure a smooth and legally compliant onboarding process. Setting up the necessary infrastructure and staying updated with the ever-evolving compliance landscape can add significant complexity to the hiring process.

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At Gloroots, we are here to simplify this journey for you. Our comprehensive solutions offer a centralized platform to efficiently manage all aspects of hiring in Austria. With our in-house experts, you can confidently navigate cross-border employment and payroll compliance risks. We provide support in generating employment contracts, ensuring timely payments, and offering compliant benefits, enabling you to focus on screening and selecting the right talent.

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Our promise is to provide you and your employees with a seamless global employment experience.

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Contact our experts today to kickstart your global hiring campaign in Austria.

Employers in Austria must have a local legal organization and utilize local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Austria makes compliance with employment laws demanding.

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With Gloroots' global Employer of Record (EoR) service, you can let Gloroots handle the heavy lifting of payroll, tax, benefits, and compliance, allowing you to concentrate on what matters most: your employees and company growth.