Austria
The Republic of Austria is a landlocked nation in the southern region of Central Europe that is well-known for its Austrian Alps and the Blue Danube. The two World Wars that defined Austria's high-income parliamentary democracy and its illustrious past gave rise to the country as we know it today. Austria enjoys a higher level of living than other countries and has a very high Gross Domestic Product (GDP) per capita.
Austria, with its strategic location in the heart of Europe and close relations to both Western and Eastern European states, not only attracts many highly skilled young people from all over Europe, providing international employers with a large talent pool to pick from, but the country also gives significant business prospects for foreign enterprises wishing to enter the European market.
Additionally, Austria is impressive due to the large number of highly skilled workers who graduate from its top colleges. Austria is a very promising labor market to recruit your next remote team member due to low employment expenses, a good telecommunications infrastructure, and a high quality of life translating into outstanding employee performance.
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Why work in
Austria
?
The employment prospects in Austria are both alluring and rewarding. Despite the high cost of living in the nation, well-paying salaries are enough to cover living expenses.
Due to a chronic shortage of skilled personnel in various fields, jobs in the healthcare sector are likewise in high demand. Foreign-born residents from nearby nations like Germany, Romania, Poland, Turkey, Bosnia, and Serbia make up about 15% of the population.
The tourist, construction, and automobile industries as well as, to a lesser extent, the food, transportation, and electronics industries, are the main drivers of Austria's labor market. There are many career prospects in Austria's well-capitalized banking industry, which five banking organizations control. It's interesting that the nation is home to a number of international organizations and has therefore grown into a hub for summits and conferences around the world.
Through the Gloroots’ Recrew platform, you can discover amazing talent in Austria.
Grow your team 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.
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.
Risks of misclassification
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.
Employing in
Austria
In Austria, employment law is regulated by various federal laws that encompass statutory regulations. These laws include statutes on white-collar workers (Angestelltengesetz), working times (Arbeitszeitgesetz), paid vacation (Urlaubsgesetz), and labor protection (Arbeitnehmerschutzgesetz). Collective agreements govern employment contracts, and nearly all employment agreements are covered by such agreements.
Austria has robust labor conditions and protections for employees, making the employment of individuals a significant investment and commitment. It is advisable to seek professional EOR services when employing in Austria.
Legal aspects of employing in
Austria
Working hours
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Payroll
Employment Contract
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
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.
Overtime
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.
Minimum Wage
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.
Annual leaves
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.
Maternity Leave and Paternity Leave
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.
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.
Since March 2017, employers are also required to grant one month of paternity leave to their employees.
Sick Leaves
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.
The following table illustrates the sick leave duration and the percentage of normal wages provided:
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.
Tax
Income tax and other tax
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.
Social Security contribution
Separation
Termination Process
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.
Notice Period
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.
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.
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.
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.
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.
