How to Hire Employees in Austria

Hiring in Austria requires compliance with the Austrian Labor Constitution Act and the collective bargaining agreement (Kollektivvertrag) that applies to your employee's sector.

The key compliance steps are identifying the correct Kollektivvertrag, registering the employee with the Austrian Health Insurance Fund (ÖGK) via ELDA before their first day, and managing work permit requirements for third-country nationals.

This guide covers employment contracts, payroll, statutory benefits, work permits, onboarding steps, and termination rules for Austrian hires.

Gloroots operates as a licensed Employer of Record and manages ÖGK registration, payroll processing, and ongoing compliance on behalf of clients, so companies can employ workers in Austria without setting up a local entity.

Job Market and Hiring Trends in Austria

Austria's tech and engineering sectors are driving the strongest hiring demand, with IT and green energy roles among the fastest-growing categories as of 2023 and 2024.

The AMS Mangelberufsliste (shortage occupation list) identifies IT specialists, healthcare workers, and skilled tradespeople as persistently hard-to-fill roles. Positions on this list qualify for expedited Red-White-Red Card processing, which shortens the timeline for hiring third-country nationals.

• Austrian unemployment fell by 1.5 percentage points in 2022, reflecting a tight labor market. (Eurostat)
• Youth unemployment dropped by 1.7 percentage points in 2022, indicating improving conditions for younger workers. (Eurostat)
• Austria's workforce is projected to reach 4.45 million by 2024. (Statista)
• Austria ranks 23rd on the Global Remote Work Index, reflecting strong digital infrastructure and legal frameworks for distributed work. (NordLayer, 2023)
• AMS Mangelberufsliste roles in IT, healthcare, and skilled trades qualify for accelerated Red-White-Red Card processing, reducing permit lead times for employers.

Companies hiring into shortage occupations gain a practical advantage: faster permit approvals reduce time-to-start for international candidates and lower the risk of losing offers to slower-moving competitors.

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Your Options for Hiring in Austria: Entity vs. EOR vs. Contractor

Companies hiring in Austria have three main paths: establishing a GmbH or AG, engaging independent contractors, or working with a licensed Employer of Record. Each path differs in setup time, cost, and compliance burden.

Entity setup requires registration with the Austrian Commercial Register, a UID number for tax purposes, and full HR and payroll infrastructure. This route suits long-term, large-scale operations where direct employment control is a priority.

Contractor engagement offers flexibility for project-based work, but Austrian social insurance law strictly enforces worker classification rules. Misclassification carries real financial and legal consequences, so this path requires careful assessment before use.

An EOR provides entity-free employment, meaning you can employ workers in Austria without incorporating locally. To understand the model in detail, see how does EOR work. If you are evaluating providers, a comparison of the best employer of record options can help narrow your decision. EOR providers operating in Austria must hold an AMS Arbeitnehmerüberlassung licence. Verify this before engaging any provider.

Employees vs. Contractors in Austria

Misclassifying an employee as a contractor in Austria triggers back-payment of social insurance contributions, financial penalties, and potential criminal liability for the engaging company.

Austrian classification turns on economic dependence and organisational integration. If a worker uses employer-provided tools, cannot subcontract their work, and operates within the employer's structure, Austrian authorities will likely treat them as an employee regardless of the contract label used.

Three contract types govern working relationships in Austria:

• Arbeitsvertrag (employment contract): full labour law protections and social insurance apply.
• Freier Dienstvertrag (freelance service contract): full social insurance contributions apply, but most labour law protections do not.
• Werkvertrag (project or output contract): no employment protections; the worker delivers a defined result.

Where no written contract exists, the employer must immediately provide a Dienstzettel, a written statement of employment terms. Failure to do so is a separate compliance breach.

Cost to Hire an Employee in Austria

Total employment cost in Austria exceeds gross salary. Employer contributions add approximately 30.37% on top of wages, making accurate payroll budgeting essential before you hire.

These contributions cover social insurance, the Family Burden Equalisation Fund (FLAF), municipal payroll tax, the employee provident fund (Abfertigung Neu), and the disability levy. Each component has a fixed statutory rate, and most apply from the first day of employment. For a broader view of how these costs compare across markets, see our guide on employer of record cost.

The total estimated employer contribution burden is approximately 30.37% of gross salary. Budget this figure into every offer before extending a contract in Austria.

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Compliance Risks While Hiring in Austria

Non-compliance in Austria carries administrative fines, back-payment orders, and in serious cases criminal liability for the employer.

Austria's enforcement framework is active across payroll, registration, and labour classification. The risks below apply to any employer hiring in the country, whether through a local entity or a third-party arrangement.

• Worker misclassification: Reclassifying a contractor as an employee triggers retroactive social insurance contributions plus penalties. Austrian authorities apply a substance-over-form test, not the label in the contract.
• Failure to register with OeGK via ELDA before work starts: Employers must register each employee with the Austrian Health Insurance Fund (OeGK) through the ELDA portal before the first day of work. Late registration results in additional contribution charges and administrative fines.
• Incorrect collective bargaining agreement (CBA) application: Austria has sector-specific CBAs. Applying the wrong CBA means underpaid wages, which triggers back-pay claims and regulatory fines.
• Payroll contribution errors: Incorrect rates for FLAF, municipal payroll tax, or Abfertigung Neu result in underpayment penalties. These are audited regularly by Austrian tax authorities.
• Termination without correct notice or cause: Dismissals must follow the notice periods and grounds set out in the Angestelltengesetz or the applicable CBA. Wrongful dismissal claims are common and costly.
• Engaging an EOR without an AMS Arbeitnehmeruberlassung licence: Unlicensed labour leasing is a criminal offence in Austria under the Arbeitskrafteuberlassungsgesetz. Any EOR operating in Austria must hold a valid licence from the Public Employment Service Austria (AMS).

Each of these risks is avoidable with correct setup. Gloroots operates with full statutory compliance in Austria, covering registration, payroll contributions, CBA mapping, and licensed employment governance.

Key Labor Laws in Austria

Austrian employment is governed primarily by the Labor Constitution Act (Arbeitsverfassungsgesetz), individual employment statutes, and the Austrian Civil Code.

These laws set binding standards for working hours, overtime, minimum pay, leave entitlements, and termination procedures. Collective bargaining agreements (Kollektivverträge) extend these standards across most industries and often set pay floors above the statutory baseline.

Key rules employers must follow include:

• Working hours: Standard hours are 8 per day and 40 per week. Some sectors operate on a 38-hour week.
• Overtime: Hours beyond 40 per week are paid at 150% of the normal wage. A 2018 amendment raised the weekly cap to 60 hours, but daily hours including overtime cannot exceed 12.
• Minimum pay: Austria has no government-set national minimum wage. Sector-specific minimums are set through collective agreements.
• Termination: Notice periods and grounds for dismissal are regulated by statute and, where applicable, by the relevant collective agreement.

Employers who fall under a collective agreement must apply its terms in full. Most private-sector workers in Austria are covered by at least one such agreement.

Employment Contracts

Austrian employment contracts are open-ended by default. While the law does not require a written contract, a German-language or bilingual written agreement is strongly recommended for dispute resolution.

If no written contract is issued, the employer must provide a Dienstzettel, a written statement of the key employment terms, within one month of the start date.

Austria recognises three main contract types:

• Arbeitsvertrag: A standard employment contract creating a full employment relationship with all statutory protections.
• Freier Dienstvertrag: A free service contract for workers with some independence. Fewer statutory protections apply, but social security contributions are still required.
• Werkvertrag: A contract for a specific deliverable or project outcome. The worker is treated as self-employed and is responsible for their own tax and social security.

Probation periods follow fixed rules. Standard employees may serve up to one month; apprentices may serve up to three months. During probation, either party may terminate verbally without stating a reason, and no notice period is required.

Working Hours and Overtime

Standard working hours in Austria are 8 hours per day and 40 hours per week. Overtime above 40 hours is paid at 150% of the normal wage.

Austria permits a four-day work week. Under a written agreement, daily hours can extend to 10 without triggering an overtime premium, provided the 40-hour weekly limit is not exceeded.

Employers must maintain written working time records, known as Arbeitszeitaufzeichnungen. The Arbeitsinspektion (Labour Inspectorate) audits these records and imposes penalties for violations.

Minimum Wage

Austria has no statutory national minimum wage. Sector-specific collective bargaining agreements (CBAs) set minimums ranging from approximately USD 1,647.35 to USD 2,266.64 per month, depending on industry and seniority. For EOR engagements, the applicable CBA minimum is USD 2,287.64 per month, or USD 32,012.23 annually including the 13th and 14th salary payments.

Most CBAs provide 14 monthly salary payments: 12 regular payments plus a Christmas bonus (Weihnachtsgeld) and a holiday allowance (Urlaubsgeld).

Special payments up to USD 671 are tax-exempt. Lower tax rates apply to additional payments that do not exceed one-sixth of total annual income.

Leave Entitlements

Full leave entitlements, including annual leave, sick leave, maternity, paternity, and parental leave, are covered in the Employment Benefits section below.

What to Include in an Employment Contract or Offer Letter in Austria

A well-drafted Austrian employment contract, or Dienstzettel, protects both parties and satisfies statutory disclosure requirements under Austrian law.

• Full legal names and addresses of both employer and employee.
• Employment start date and, if fixed-term, the end date.
• Place of work, including any remote work arrangements.
• Job title and a detailed role description.
• Gross salary in euros, payment frequency (monthly), and reference to the applicable collective bargaining agreement (CBA).
• Normal working hours per day and per week.
• Annual leave entitlement and the public holiday schedule.
• Probation period (up to one month) and termination conditions during probation.
• Notice period for termination, per the Angestelltengesetz or the applicable CBA.
• Confidentiality, IP assignment, and non-compete clauses where applicable and enforceable.
• Governing law: Austrian law.
• Reference to the applicable Kollektivvertrag (CBA).

Payroll and Taxes in Austria

Austrian payroll runs monthly in euros. Employers withhold income tax (Lohnsteuer) and remit it to the tax authority by the 15th of the following month.

A foreign employer without a permanent establishment must register with the local tax authority within one month of starting business activities in Austria. The alternative is to engage a licensed pricing-transparent EOR to manage payroll obligations on your behalf.

Employers must also register with the social security authority online before an employee's start date. This registration generates a social security ID and opens an individual payroll account for each worker.

Payroll setup steps for foreign entities

1. Register with the local tax authority within one month of starting business activities.
2. Register with the social security authority online to obtain a social security ID.
3. Set up an individual payroll account for each employee before their start date.

Austria income tax brackets (2024/2025)

Employer and employee contribution rates are detailed in the Cost to Hire section of this guide.

Employment Benefits in Austria

Austrian employment benefits divide into two categories: statutory entitlements set by law or collective bargaining agreement, and supplemental benefits that employers may offer to attract talent in competitive sectors.

Statutory entitlements cover annual leave, sick leave, maternity and paternity leave, parental leave, and public holidays. The table below sets out the key details for each leave type.

Leave entitlements in Austria

Supplemental benefits such as meal vouchers, transport allowances, and private health cover are common in technology and professional services sectors, where competition for skilled workers is high.

Paid Time Off and Public Holidays

Employees in Austria are entitled to 25 working days (5 weeks) of paid annual leave per year after completing 6 months of service. For employees with fewer than 6 months of service, leave accrues at 2 days per month. After 25 years with the same employer, entitlement increases to 30 working days (6 weeks). Austria also observes 14 national public holidays each year. Collective agreements may set different terms, so employers should verify the applicable agreement for each role.

Sick Leave

Austrian employers must provide paid sick leave to employees who cannot work due to illness or injury. The amount of pay and the duration of leave depend on the employee's length of service, as shown in the table below.

For prolonged or severe illness, an employee may receive up to an additional 4 weeks of sick leave, during which Social Security contributes 50% of the usual salary. If sick leave extends beyond these periods, Social Security takes over full sick pay responsibility.

Maternity and Paternity Leave

Austria provides 16 weeks of maternity leave, split equally before and after birth. The pre-birth period extends to 12 weeks for Cesarean sections or complicated deliveries. Social Security pays a weekly benefit calculated from the average income of the three months before leave begins.

Beyond the initial 16 weeks, parents can take parental leave (Elternkarenz) until the child turns two. One parent may take up to 22 months of parental leave. If both parents alternate, the total extends to 24 months, or 23 months when one month overlaps. Each parental leave period must last at least two months.

During parental leave, parents receive childcare allowance (Kinderbetreuungsgeld) from Social Security. Marginal employment, earning up to €551.10 per month in 2025, is permitted while on parental leave. Parents also retain the right to parental part-time working arrangements until the child turns eight.

Fathers have the right to one month of unpaid leave, known as the Daddy Month, at any point from birth until the child reaches two years of age. Employers must be notified at least three months before the child's expected birth date.

Public Health Insurance

All employees in Austria are automatically enrolled in public health insurance (ÖGK) upon employment registration. No separate application is required from the employee or employer.

Employees earning below €551.10 per month in 2025 are classified as marginally employed. Marginal employment covers accident insurance only. Health and pension insurance do not apply at this threshold, though voluntary coverage is available at the employee's own cost. Employers must still register marginally employed workers with ÖGK.

The ÖGK covers general and specialist visits, hospitalizations, and prescriptions. Contributions are income-based and shared between employer and employee, supporting equitable access to medical care across Austria.

Work Permits and Visas in Austria

EU, EEA, and Swiss nationals have free movement rights and need no work permit. Third-country nationals must hold either a Red-White-Red Card or an EU Blue Card before starting work.

Employers sponsoring a Red-White-Red Card must notify the Public Employment Service Austria (AMS) within three days of the employee's start date. Copies of all permits must be retained on-site and made available for inspection at any time.

The table below summarises the main permit types applicable to employers hiring in Austria.

Hiring someone already in Austria with valid work authorisation differs from hiring from abroad. The latter requires the candidate to apply through an Austrian embassy before entering the country.

Most third-country nationals must also demonstrate A1 German proficiency (CEFR level) via an OIF certificate to obtain a residence and work permit.

Onboarding New Hires in Austria

Onboarding in Austria is a compliance sequence. Registration with the Austrian Health Insurance Fund (OeGK) must be completed before the employee's first day of work.

The steps below follow the required sequence from pre-hire through the probation period.

Before Day One

• Register the employee with OeGK via the ELDA electronic system before work begins. On-the-spot registration is permitted, with a seven-day electronic submission deadline.
• Verify right-to-work documentation. For third-country nationals, confirm the permit is valid and retain a copy on-site.
• Obtain written candidate consent before conducting any background checks, including a Strafregisterbescheinigung (criminal record certificate), employment history, or education verification.
• Issue a written employment contract or Dienstzettel before the employee starts.

Day One

• Provide the employee with a copy of the applicable collective bargaining agreement (CBA) or a clear reference to it.
• Confirm that a working time recording system (Arbeitszeitaufzeichnungen) is in place and operational.

First Week

• Set up the individual payroll account and confirm the employee's social security ID.
• Confirm that the Abfertigung Neu contribution is activated at 1.53% of gross wages.

Beyond the First Week

• Conduct a probation review before the end of the one-month probation period.
• Ensure working time records are maintained and accessible for Arbeitsinspektion audit at any time.

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NDAs, Confidentiality and IP Protection in Austria

NDAs and confidentiality clauses are enforceable in Austria under the Austrian Civil Code (ABGB) and the Unfair Competition Act (UWG).

IP created by an employee during the course of their employment belongs to the employer by default under Austrian copyright law. Employment contracts should explicitly confirm this ownership to avoid disputes later.

Non-compete clauses are enforceable under Austrian law, subject to three conditions: the restriction must not exceed one year, the geographic scope must be reasonable, and the clause must apply only to roles where the employee had access to sensitive business information. Non-competes are also valid only for employees earning above a statutory salary threshold.

Termination and Offboarding in Austria

Austrian law recognises four termination types: Kündigung (termination by notice, no reason required), Entlassung (immediate dismissal for cause), Austritt (employee resignation due to gross employer negligence), and einvernehmliche Auflösung (mutual consent, no notice period required).

Notice periods are governed by the Angestelltengesetz, the applicable collective bargaining agreement, or the ABGB. For white-collar employees, notice periods typically range from six weeks to five months depending on length of service.

When offboarding an employee in Austria, employers must complete the following steps:

• Issue a settlement of account (Abrechnung), a certificate of employment (Dienstzeugnis), an L16 payslip, and an employment reference on the date of termination.
• Confirm that the final Abfertigung Neu contribution has been paid to the employee provident fund (Mitarbeitervorsorgekasse).
• Deregister the employee with the ÖGK promptly after their last working day.
• For third-country nationals, notify the AMS of the employment end within three days.

Business Culture in Austria

• Titles matter. Address colleagues and clients as "Herr" or "Frau" followed by their professional title (Doktor, Ingenieur) until explicitly invited to use first names.
• Punctuality is non-negotiable. Arriving late to meetings signals disrespect. Build in buffer time and confirm meeting details in advance.
• Decisions flow from senior management. Avoid bypassing the hierarchy in written or verbal communications. Route proposals through the appropriate level.
• Communication is direct and detail-oriented. Vague proposals are poorly received. Come with data, documentation, and clear positions.
• Meetings are agenda-driven. Structured preparation is expected. Improvised or open-ended discussions are not the norm.
• Work-life balance is a cultural norm. Contacting employees outside working hours is considered inappropriate and can damage professional relationships.
• Relationship-building is valued but kept professional. Austrians distinguish clearly between professional and personal life. Do not expect social familiarity to develop quickly.

Top Sectors to Hire From in Austria

Austria's labor market is concentrated in several high-demand sectors. Each presents distinct hiring opportunities for international employers.

• Technology and IT. Vienna is a regional hub for software engineering, cybersecurity, and AI roles. IT specialists appear on the AMS Mangelberufsliste (shortage occupation list), reflecting persistent demand that outpaces local supply.
• Renewable energy and engineering. Austria generates over 70% of its electricity from renewable sources. Mechanical and electrical engineers are in consistent demand to support infrastructure and energy transition projects.
• Financial services. Vienna hosts major international financial institutions. Compliance officers, risk analysts, and fintech professionals are among the most sought-after roles in this sector.
• Tourism and hospitality. The sector accounts for approximately 15% of GDP. Both seasonal and permanent roles exist in operations and management, particularly in alpine and urban destinations.
• Healthcare. Doctors, nurses, and allied health professionals face persistent shortages. Healthcare workers appear on the Mangelberufsliste, making this sector a priority for targeted recruitment.

Employers hiring across these sectors in neighboring markets can also review guidance on how to hire employees in Germany for a comparable Central European hiring context.

Top Cities to Hire From in Austria

Austria's talent is concentrated in five cities, each with a distinct specialisation that shapes what roles you can fill and how quickly.

Vienna is the largest talent pool in the country. It hosts UN agencies, major international banks, and a dense cluster of IT, legal, and financial services professionals. Most senior hires in Austria originate here.

Graz is Austria's second-largest city and the centre of its automotive industry. AVL and Magna both operate significant facilities there, and the city has strong environmental technology research output.

Linz is the industrial heartland of Upper Austria. Manufacturing and chemical engineering roles are well-supplied, and a growing startup ecosystem has added demand for product and software talent.

Salzburg supports tourism and hospitality hiring year-round. Its creative and media sector has expanded steadily, making it a practical source for marketing and content roles.

Innsbruck is a university city with a strong pipeline in health sciences and sports technology. Companies hiring in those fields will find concentrated, specialist talent there.

For companies comparing talent costs and availability across Central Europe, it is also worth reviewing options to hire employees in Poland alongside an Austrian hiring plan.

Hire Compliantly in Austria with Gloroots

Gloroots operates as a licensed Employer of Record in Austria, holding the required Arbeitnehmerüberlassung licence. This allows companies to employ Austrian workers without registering a GmbH or AG.

This route suits companies testing the Austrian market, hiring one to five employees, or needing to get workers on payroll quickly.

• No local entity required. Hire legally from day one without forming a GmbH or AG.
• Fast onboarding. Employees are registered with ÖGK and payroll is activated within days of contract signing.
• Full local compliance. The correct collective bargaining agreement is applied, contributions are calculated accurately, and Arbeitszeitaufzeichnungen are maintained.
• Predictable pricing. A flat monthly fee covers payroll, statutory contributions, and compliance management. See pricing for details.
• Dedicated support. Local HR and legal expertise is available for contract drafting, work permit queries, and termination procedures.

Gloroots is best suited for companies employing up to 20 people in Austria. For larger headcounts or a long-term strategic presence, entity setup may offer better cost efficiency over time.

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Frequently Asked Questions About Hiring in Austria

Can a foreign company hire employees in Austria without a local entity?

Yes. A foreign company can employ workers in Austria through a Global Employer of Record (EOR). The EOR becomes the legal employer on record, handling contracts, payroll, and ÖGK registration.

This approach removes the need to register a GmbH or AG before hiring. It suits companies testing the Austrian market or managing a small headcount without committing to a permanent legal structure.

What is the fastest way to hire an employee in Austria?

Partnering with an EOR is the fastest route. The EOR already holds the legal infrastructure, collective bargaining agreement (CBA) mappings, and ÖGK enrollment processes needed to onboard an employee compliantly.

Entity setup in Austria typically takes several weeks and requires Commercial Register filing and a UID number. An EOR can execute employment contracts and begin payroll within days of candidate confirmation.

How are employees and contractors classified differently in Austria?

Austrian law distinguishes employees from contractors based on economic dependence, integration into the employer's organization, and personal obligation to perform work. Misclassification carries back-tax liability and social insurance penalties.

Contractors operate under the Arbeitnehmerüberlassung framework when supplied through a staffing agency, which requires a specific licence. Direct contractors engaged for project work must still meet classification criteria to avoid reclassification as employees by Austrian authorities.

What are the payroll and tax obligations for employers in Austria?

Austrian payroll runs monthly. Employers contribute approximately 29.70% to 29.78% of gross wages toward health, pension, and unemployment insurance, among other statutory charges.

Employees contribute around 17.07% of gross wages. Income tax is withheld at source under a progressive scale, starting at 0% for annual income up to USD 13,870 and rising to 55% above USD 1,082,001. All filings go through the Austrian tax authority (Finanzamt).

What work permits does Austria require for non-EU employees?

Non-EU nationals generally need a Red-White-Red Card, which is a points-based permit tied to qualifications, salary, and job offer. Certain shortage occupations qualify for an accelerated process.

The employer must register the role and support the application. EU Blue Card eligibility applies to highly qualified workers meeting a minimum salary threshold. An EOR can coordinate permit documentation, though the employee must meet statutory criteria independently.

Which collective bargaining agreements apply when hiring in Austria?

Austria has one of the highest CBA coverage rates in Europe. Most employees fall under a sector-specific Kollektivvertrag that sets minimum wages, working hours, and leave entitlements above the statutory floor.

Employers must identify the correct CBA for each role before drafting a contract. Failure to apply the right CBA exposes the company to back-pay claims and regulatory scrutiny. An EOR with Austria-specific expertise maintains current CBA mappings across sectors.

How does ÖGK registration work for new hires in Austria?

The Österreichische Gesundheitskasse (ÖGK) is Austria's primary public health insurance fund. Employers must register each new employee with ÖGK before the employee's first working day, not after.

Registration triggers automatic enrollment in health, pension, and accident insurance. Contributions are split between employer and employee and remitted monthly. Late or missing registration results in penalties and potential liability for uncovered medical costs during the gap period.