Employer of Record (EOR) in Austria

Employment Laws and Regulations in Austria

Employment Contracts

Austrian employment relationships are governed primarily by the Salaried Employees Act (Angestelltengesetz, AngG) for white-collar workers and the General Civil Code (ABGB) for blue-collar workers, supplemented by the Working Constitution Act (Arbeitsverfassungsgesetz, ArbVG) and applicable collective bargaining agreements (Kollektivverträge). Since October 2021, blue-collar and white-collar notice periods have been harmonized under federal law (USP.gv.at).

Written employment contracts are not strictly required by statute, but employers must provide a written statement of key employment terms (Dienstzettel) on or before the first working day. This document must include the job title, salary, working hours, leave entitlement, notice period, and the applicable collective bargaining agreement. Fixed-term contracts are permissible for a single term, but consecutive renewals are heavily restricted and may be reclassified as indefinite employment if no objective justification exists (CMS Law).

Working Hours and Overtime

The standard workweek under the Working Hours Act (Arbeitszeitgesetz, AZG) is 40 hours, arranged as 8 hours per day over 5 days. Many collective bargaining agreements reduce this to 38 or 38.5 hours. The absolute maximum is 12 hours per day and 60 hours per week, with an average cap of 48 hours over a 17-week reference period (Migration.gv.at).

Overtime attracts a minimum 50% premium on the regular hourly rate. Collective agreements may set higher premiums or allow compensatory time off at a ratio of 1:1.5. Employees are entitled to refuse overtime that would push their daily hours above 10 or weekly hours above 50. A minimum daily rest period of 11 consecutive hours and a 30-minute break for shifts exceeding 6 hours are mandatory.

Austrian working time is regulated by the Arbeitszeitgesetz (AZG), which sets the standard workweek at 40 hours (8 hours per day) and caps absolute maximum working time at 12 hours per day and 60 hours per week, including overtime. Under AZG §10, overtime (Überstunden) carries a statutory 50% surcharge, and night, Sunday, and public holiday work typically trigger higher premiums under the applicable collective agreement (Kollektivvertrag or KV). Employees cannot be required to work beyond 10 hours per day or 50 hours per week without their consent. Managerial staff (leitende Angestellte) who set their own hours are exempt from AZG hours limits under AZG §1.

Minimum Wage

Austria does not have a statutory national minimum wage set by government legislation. Instead, minimum pay rates are established through collective bargaining agreements that cover approximately 98% of all employees. The effective minimum across most sectors is approximately €1,850 per month gross (approximately $2,165 at current rates), though this varies by industry and role. The metalworking and electronics sector, Austria’s largest industrial CBA, sets entry-level wages above €2,100 per month (Work in Austria).

Probation Period

The maximum probation period under Austrian law is one month from the first working day. During this period, either party may terminate the employment relationship at any time without notice, without providing a reason, and without severance obligations. The probation period must be explicitly agreed in the employment contract or Dienstzettel; it does not apply by default (Oesterreich.gv.at).

Leave Entitlements

Austrian labor law provides a comprehensive framework of statutory leave entitlements covering annual leave, sick leave, maternity and paternity protection, and parental leave. The following sections detail each category.

Annual Leave

All employees are entitled to 25 working days (5 weeks) of paid annual leave per year under the Annual Leave Act (Urlaubsgesetz). After 25 years of service, this increases to 30 working days (6 weeks). During the first six months of employment, leave accrues proportionally; from the seventh month onward, the full annual entitlement becomes available. Unused leave can be carried forward and remains valid for two years (Migration.gv.at).

Sick Leave

Employers must continue paying full salary during sick leave for a period that depends on length of service: 6 weeks at full pay for the first year, extending to 12 weeks at full pay after 26 years. An additional 4 weeks at half pay follows each tier. Once employer-funded sick pay is exhausted, the social security system provides sickness benefit (Krankengeld) for up to 52 weeks, extendable to 78 weeks. A medical certificate is required from the first day of absence if the employer requests it, or from the fourth day otherwise.

Maternity Leave

Under the Maternity Protection Act (Mutterschutzgesetz, MSchG), pregnant employees are entitled to an absolute employment prohibition (Beschäftigungsverbot) of 8 weeks before and 8 weeks after the birth, totaling 16 weeks. During this period, the employee receives a maternity allowance (Wochengeld) from the social security system equal to the average net earnings of the previous 13 weeks. The employment relationship is fully protected; termination during pregnancy and up to 4 months after birth is prohibited (USP.gv.at).

Paternity Leave

Fathers are entitled to a one-month “Papamonat” (daddy month) of 28 to 31 calendar days, which must be taken within 91 days of the child’s birth. This leave is unpaid by the employer, but the father receives a family time bonus (Familienzeitbonus) of approximately €24.88 per day from the social security system. The father must live in the same household as the child and the other parent during this period.

Other Statutory Leave

Austrian law grants paid special leave for several life events. Employees receive up to 3 days for the death of a spouse or child, 1 day for the death of a parent or sibling, 3 days for marriage, and 1 day for a residential move. Collective bargaining agreements frequently expand these entitlements. Parental leave (Elternkarenz) allows either parent to take unpaid leave until the child reaches 22 months (single parent) or 24 months (if both parents share the leave), with various childcare allowance models available through the social security system.

Statutory Employee Benefits

Beyond leave entitlements and social security contributions, Austrian employers must provide several mandatory benefits. Health insurance coverage is automatic through registration with OEGK, funded by employer and employee contributions at 3.78% and 3.87% respectively. The public pension system provides retirement benefits funded by combined employer-employee contributions totaling 22.80% of gross salary. Accident insurance, funded entirely by the employer at 1.10%, covers workplace injuries and occupational diseases through AUVA (Allgemeine Unfallversicherungsanstalt).

Employers must also pay into the severance fund (Mitarbeitervorsorgekasse) at 1.53% of gross salary from the second month of employment, building a portable severance entitlement for each employee. The 13th and 14th month salaries, mandated by virtually all collective bargaining agreements, provide two additional monthly payments per year, typically paid in June and November. These Sonderzahlungen receive favorable tax treatment at a flat 6% rate on the first €620, making them a significant component of total compensation in Austria (Schulmeister Consulting).

Recent Regulatory Updates (2026)

Austria’s income tax brackets were adjusted upward by 1.73% for 2026 to offset inflation, raising the tax-free threshold to €13,539 annually. The social security contribution ceiling increased from €6,450 to €6,930 per month, affecting higher earners (USP.gv.at).

The Austrian government announced plans to fully digitalize the Red-White-Red Card application process, with a single digital platform expected to launch in the second half of 2026. This reform aims to reduce processing times to a consistent eight weeks and broaden eligible job categories. The 55% top marginal tax rate on income above €1,000,000, originally temporary, has been extended through 2029 (VisaHQ).

Work Permits and Visas in Austria

Work Permit Requirements

Who Needs a Work Permit

Citizens of EU and EEA member states, plus Swiss nationals, have unrestricted access to the Austrian labor market and do not need a work permit or residence permit to work in Austria. Third-country nationals (all other nationalities) require a combined residence and work permit before they can begin employment. The primary permit for skilled workers is the Red-White-Red Card (Rot-Weiß-Rot-Karte), issued by the Austrian immigration authority (MA 35 in Vienna or the respective provincial authority) (Migration.gv.at).

Eligibility and Required Documents

Red-White-Red Card applicants must meet a minimum points threshold based on qualifications, work experience, language skills, and age. The required documents typically include a valid passport, a signed employment contract or binding job offer, proof of qualifications (diplomas, certificates), evidence of relevant work experience, proof of accommodation in Austria, health insurance confirmation, and a clean criminal record certificate. For “Other Key Workers,” the employer must pay a minimum gross monthly salary of €3,465 (2026), and the Austrian Public Employment Service (AMS) must confirm that no equally qualified local candidate is available (Work in Austria).

Processing Time and Validity

The standard processing time is 8 weeks from submission of a complete application, though shortage occupations often process faster because the labor market test is waived. The Red-White-Red Card is valid for 24 months and ties the holder to the sponsoring employer during this initial period. Delays commonly result from incomplete documentation, the AMS labor market test, or backlogs at provincial immigration offices.

Renewal Process

After 24 months, holders can apply for the Red-White-Red Card Plus, which grants unrestricted labor market access (no longer tied to one employer). The renewal application should be submitted at least 3 months before the initial card expires. Employees may continue working while the renewal is pending, provided the application was filed on time.

Common Visa Types for Foreign Workers

Austria’s work permit framework centers on the Red-White-Red (RWR) Card, a points-based system with sub-categories for very highly qualified workers, shortage occupations, other key workers, and graduates of Austrian universities. Alongside the RWR Card, the EU Blue Card serves university-educated professionals meeting a salary threshold, and the Intra-Corporate Transfer (ICT) permit covers managers, specialists, and trainees moving within a multinational group. After 24 months on a qualifying permit, holders can apply for the Red-White-Red Card Plus, which unlocks unrestricted labor market access and starts the clock toward Daueraufenthalt-EU (EU long-term residency) after 5 continuous years. The table below summarizes the main 2026 categories foreign workers use to take up employment in Austria.

How an EOR Handles Work Permits

Your EOR acts as the sponsoring employer on the Red-White-Red Card application, providing the required employment contract, salary confirmation, and company registration documents. Because the EOR is already an established legal entity in Austria, it can sponsor work permits without the client company needing its own Austrian registration.

On the operational side, the provider coordinates with the employee on document preparation, manages the AMS labor market test process, and tracks permit expiration dates to initiate renewals on time. Work permit processing adds 6 to 12 weeks to the standard onboarding timeline.

Payroll, Taxes, and Social Security in Austria

Employer Contributions

Employers hiring in Austria owe mandatory contributions on top of gross salary, funding social security, health, pensions, and other statutory schemes (PwC Tax Summaries). The table below lists the employer-side contribution rates so you can calculate the true all-in cost of each hire.

Austrian employers bear a total mandatory contribution burden of approximately 29.59% of gross salary. The five core social security contributions (pension, health, unemployment, accident, and housing subsidy) total 20.88% and apply up to a monthly ceiling of €6,930 ($8,108) in 2026. The additional levies, including the FLAF family fund at 3.70%, municipal tax at 3.00%, and the severance fund at 1.53%, apply without a contribution ceiling on most items.

Employee Contributions

Alongside income tax, employees in Austria pay statutory payroll deductions that fund social security, health cover, and other state schemes (PwC Tax Summaries). The table below summarises the employee-side contribution rates payroll must withhold from gross pay each month.

Employees contribute 18.07% of gross salary to social security, covering pension (10.25%), health (3.87%), unemployment (2.95%), housing subsidy (0.50%), and the Chamber of Labor levy (0.50%). These deductions are capped at the same monthly ceiling of €6,930. For employees earning below specific thresholds, the unemployment insurance rate is reduced: 0% for monthly earnings below €1,985, 1% for earnings between €1,985 and €2,161, and 2% for earnings between €2,161 and €2,338.

Income Tax

Personal income tax in Austria is levied on a progressive basis, with the rate rising as taxable income crosses statutory thresholds (Austrian Federal Ministry of Finance). The table below sets out the current income-tax brackets that apply to resident employees so you can model net-of-tax compensation before making an offer.

Austria applies a progressive income tax system with seven brackets ranging from 0% to 55%. The 2026 brackets were adjusted upward by 1.73% from 2025 levels to account for inflation. The tax-free threshold is €13,539 ($15,841) annually.

The 55% top rate on income above €1,000,000 ($1,170,000) was originally temporary but has been extended through 2029. All USD amounts are approximate conversions at $1 = €0.855 (April 2026 rate).

Payroll Cycle

Austrian payroll runs monthly, with salaries typically paid on the last working day of the month or the first working day of the following month. Payment must be made by bank transfer; cash payments are legally permissible but uncommon in practice. Employers must issue a monthly pay slip (Lohnzettel) detailing gross salary, all deductions, and net pay.

Wage tax (Lohnsteuer) and social security contributions must be remitted to the tax office and OEGK by the 15th of the following month. Annual wage tax reconciliation (Lohnzettel L16) must be filed by the end of February for the preceding tax year.

13th Month Salary and Bonus Pay

The 13th and 14th month salaries (Sonderzahlungen) are mandatory under virtually all Austrian collective bargaining agreements. The 13th salary (Urlaubszuschuss) is typically paid in June before the summer holiday period, and the 14th salary (Weihnachtsremuneration) is paid in November or December. Each payment equals one month’s regular gross salary. Pro-rata calculations apply for employees who join or leave mid-year.

The Sonderzahlungen receive favorable tax treatment: the first €620 is fully tax-exempt, and the remaining amount is taxed at a flat 6% rate (rather than the progressive income tax rates), provided the total Sonderzahlungen do not exceed one-sixth of annual regular earnings. Social security contributions on Sonderzahlungen are also reduced, with employer and employee rates of 20.48% and 17.07% respectively, applied to a maximum annual base of €13,860 (PwC Tax Summaries).

Cost of Hiring Through an EOR in Austria

EOR Service Fees

EOR service fees in Austria typically range from $300 to $600 per employee per month. This fee covers employment contract management, monthly payroll processing, social security and tax filings, benefits administration including the 13th and 14th month salary calculations, leave tracking, and ongoing compliance monitoring. The exact fee depends on the provider, the complexity of the role, and whether additional services like work permit support are included. RemotePeople’s pricing is transparent, with no hidden setup fees.

Total Employment Cost Breakdown

The all-in cost of employing someone in Austria goes well beyond gross salary. The table below walks through a realistic cost build-up for a typical hire, layering mandatory employer social contributions, statutory benefits, and payroll taxes on top of base pay so finance teams can budget accurately before an offer goes out.

For an employee earning $5,000 per month gross in Austria, the total employer cost including all mandatory contributions and an EOR service fee comes to approximately $6,881 per month, or about 37.6% above the gross salary. The mandatory employer contributions alone total $1,481 (29.59% of gross), covering social security, the family fund, municipal tax, and the severance fund. The EOR fee of $400 covers full compliance management, payroll processing, and benefits administration. All USD amounts are approximate conversions at $1 = €0.855 (April 2026 rate).

Ready to hire in Austria? Get started with RemotePeople. We handle employment contracts, payroll, tax withholding, and full Austrian compliance, with no local entity needed.

Benefits of Using an EOR in Austria

Establishing a GmbH in Austria requires a minimum share capital of €35,000, several months of commercial register filings, and ongoing corporate governance obligations. An EOR eliminates all of this, allowing companies to hire their first Austrian employee within one to two weeks while the EOR handles entity-level compliance. This speed advantage is particularly valuable when competing for talent in Austria’s tight labor market, where skilled workers in technology, engineering, and finance often have multiple offers.

Austria’s employment law is complex, with collective bargaining agreements layered on top of federal statutes. An EOR provides built-in compliance assurance across all of these requirements: correct CBA classification, accurate 13th and 14th salary calculations, proper social security fund allocation, and compliant termination procedures. The EOR absorbs the compliance risk, shielding the client company from penalties that Austrian labor courts impose for misclassification or incorrect contribution calculations.

For companies building distributed European teams, an EOR in Austria fits into a broader multi-country strategy without the cost of maintaining separate entities. The model offers full flexibility to scale up or wind down the Austrian team based on business needs, without the legal complexity and cost of dissolving a local entity. Employees hired through an EOR receive the same statutory protections, benefits, and employee benefits in Austria as those employed directly by a local company.

Termination and Offboarding in Austria

Notice Periods

Employer-initiated notice periods in Austria depend on the employee’s length of service. For employment up to 2 years, the minimum notice period is 6 weeks. This increases to 2 months for 2 to 5 years of service, 3 months for 5 to 15 years, 4 months for 15 to 25 years, and 5 months for employment exceeding 25 years. Termination by the employer must generally take effect at the end of a calendar quarter, though individual agreements or collective bargaining agreements may allow termination at the end of any month (USP.gv.at).

Employees terminating their own employment must give one month’s notice, effective at the end of the calendar month. These periods apply uniformly to both white-collar and blue-collar workers since the harmonization that took effect in October 2021.

Notice periods in Austria are governed primarily by the Angestelltengesetz (AngG) §20, which has applied uniformly to both white–collar (Angestellte) and blue–collar (Arbeiter) employees since October 2021 (following the harmonization reform of 2017). Employer–initiated notice scales with tenure and must be served so that the employment ends at the end of a calendar quarter by default, although the contract or collective agreement may specify the 15th or last day of any calendar month. Employees themselves owe 1 month’s notice to the end of a calendar month unless the contract provides otherwise.

Severance Pay

Calculation Method

Under the Abfertigung Neu system (applicable to all employment relationships starting from January 1, 2003), employers contribute 1.53% of the employee’s gross monthly salary to a mandatory severance fund (Mitarbeitervorsorgekasse) starting from the second month of employment. This contribution builds a portable severance entitlement that follows the employee throughout their career, regardless of employer changes (USP.gv.at).

Caps and Exceptions

The employee can withdraw the accumulated severance fund balance (contributions plus investment returns) after at least 3 years of contributions, provided the employment ends through employer dismissal (except for justified summary dismissal), mutual agreement, expiry of a fixed-term contract, or retirement. If the employee resigns voluntarily before 3 years of contributions, the funds remain in the MV-Kasse and transfer to the next employer’s contributions. There is no cap on the accumulated amount; the fund grows continuously throughout the employment relationship.

Austria does not use a direct statutory severance formula for employees hired on or after 1 January 2003. Instead, the Betriebliches Mitarbeiter- und Selbstaendigenvorsorgegesetz (BMSVG) requires employers to pay 1.53% of gross monthly salary into an employee severance fund (Betriebliche Vorsorgekasse or BV–Kasse) from the second month of employment (the first month is exempt under BMSVG §6(1)). This system is called Abfertigung Neu. Employees hired before 2003 remain under the legacy Abfertigung Alt regime, which pays a lump sum scaling from 2 months’ salary at 3 years of service up to 12 months at 25 years. The worked examples below use a reference gross monthly salary of €3,500 under Abfertigung Neu.

Grounds for Termination

Austrian law distinguishes between ordinary termination (Kündigung), summary dismissal for cause (Entlassung), and mutual termination (einvernehmliche Auflösung). Ordinary termination does not require a specific reason but must respect notice periods and termination dates. Summary dismissal is justified only for serious breaches such as persistent refusal to work, theft, or gross insubordination. Termination of employees who are members of the works council, pregnant employees, employees on parental leave, and disabled employees requires prior approval from the labor court or relevant authority.

EOR vs. Other Hiring Models in Austria

EOR vs. Setting Up a Local Entity

Choosing between an Employer of Record and setting up your own legal entity in Austria comes down to timeline, upfront cost, ongoing administrative burden, and how quickly you can scale up or wind down. The table below lays out both paths side by side across setup time, cost, compliance risk, and flexibility so you can match the right model to the size and duration of your Austria hiring plan.

Setting up a GmbH in Austria involves notarial certification, commercial register filing, and a minimum share capital deposit of €35,000 (half payable upfront). The entire process takes 3 to 6 months including tax registration and social security setup. An EOR bypasses all of this, making it the clear choice for companies hiring fewer than 15 employees or testing the Austrian market before committing to a permanent presence.

The ongoing cost comparison favors the EOR for smaller teams. A local entity requires annual accounting, corporate tax filings, statutory audits (for larger companies), and ongoing commercial register maintenance, typically costing $15,000 to $30,000 per year before any employee-related expenses. An EOR consolidates all of this into a single monthly fee per employee.

The main advantage of a local entity is eligibility for Austrian government contracts and procurement processes, which generally require a registered local business. For companies whose strategy in Austria centers on government or public-sector clients, entity setup may be necessary regardless of team size.

EOR vs. Hiring Independent Contractors

Classifying a Austria-based worker as an independent contractor rather than an employee can expose you to back-taxes, unpaid social contributions, and reclassification penalties if the working relationship looks like employment in practice. The table below contrasts EOR employment with contractor engagement across legal relationship, tax and benefits treatment, IP ownership, and misclassification risk so you can pick the right model role by role.

Austrian authorities examine the substance of the working relationship, not just the contract label. If a contractor works exclusively for one client, follows fixed schedules, uses company equipment, and receives regular monthly payments, the relationship may be reclassified as dependent employment (Scheinselbstständigkeit). The consequences include retroactive social security contributions, back taxes with interest, and potential penalties for the engaging company.

The risk of misclassification means hiring independent contractors is only appropriate in some cases, such as short-term project work, specialized consulting engagements, and roles with genuine autonomy over how and when work is performed. For ongoing, core-team roles, an EOR provides the compliant employment structure that eliminates reclassification risk entirely.

RemotePeople also offers a contractor management solution that handles compliant contractor payments, contracts, and classification risk assessment for companies that do need independent contractors in Austria.

EOR vs. PEO (Professional Employer Organization)

EORs and PEOs both simplify international hiring, but only an EOR becomes the legal employer of record in Austria — a critical distinction when you don’t have a local entity of your own. The table below maps the practical differences across legal employer status, entity requirement, liability allocation, and scope of coverage.

Austria does not have a dedicated PEO regulatory framework. Arrangements that resemble PEO services fall under the Temporary Agency Work Act (Arbeitskräfteüberlassungsgesetz, AÜG), which governs labor leasing and temporary staffing. Under this framework, the provider becomes the legal employer for tax and social security purposes, which makes it functionally similar to an EOR rather than a traditional co-employment PEO model.

The practical difference is simple: an EOR is the right model when you do not have (and do not want to establish) a local entity in Austria. A PEO or HR outsourcing arrangement is appropriate when you already have an Austrian GmbH and want to outsource payroll, benefits administration, and compliance management while retaining the employer-of-record status yourself.

For companies entering Austria without an existing legal presence, the EOR model provides full compliance coverage from day one without the upfront investment and ongoing overhead of entity formation. Companies that later grow beyond 15 employees may find it cost-effective to transition from an EOR to their own entity, at which point a PEO arrangement could support the ongoing HR operations.

Public Holidays in Austria

Austria observes a defined set of official public holidays on which most private-sector employers must give staff a paid day off (Austrian Federal Ministry for European and International Affairs). The table below lists the statutory holidays employers need to build into payroll calendars and leave planning for the year, along with the date rule for each.

Austria has 13 public holidays that apply uniformly across all nine federal states. Unlike neighboring Germany, there are no regional variations. Employees who work on a public holiday are entitled to double pay or compensatory time off as specified by their collective bargaining agreement. May is particularly notable for payroll planning, with three public holidays (Labour Day, Ascension Day, and Whit Monday) falling within a four-week span.

How to Get Started with an EOR in Austria

• First, contact RemotePeople with details about the role, compensation, and desired start date. We assess your needs and confirm the applicable collective bargaining agreement for the position.
• Second, we draft a compliant Austrian employment contract incorporating all statutory requirements and CBA provisions. Both parties review and sign the agreement.
• Third, we register the employee with OEGK for social security, set up wage tax withholding with the local tax office, and enroll the employee in the mandatory severance fund.
• Fourth, payroll is configured with all contribution rates, 13th and 14th salary schedules, and leave balances. Benefits administration begins on the employee’s first working day.
• Fifth, the employee starts work. We handle ongoing monthly payroll, tax filings, leave tracking, and compliance monitoring for the duration of the employment.

Contact RemotePeople to hire your first employee in Austria. No local entity required, full compliance from day one, and onboarding in as little as one to two weeks.

Where companies hiring in Austria expand next

Teams hiring in Austria often extend across Central Europe, capitalizing on shared DACH employment norms and overlapping supplier networks. Many companies add operations in Germany for DACH region alignment and engineering talent. Switzerland often follows, complementing DACH compliance expertise. Hiring in the Czech Republic provides nearshoring scale with competitive cost structure, and an EOR partner in Slovakia typically closes the regional footprint through CEE cost efficiency.