Austria can be a strategic hiring location if you want reliable operations in the EU and access to strong technical and multilingual talent. The challenge is that the employment framework is highly standardized, which means small setup mistakes can turn into avoidable cost overruns or compliance issues.

Before you hire, you need to account for four built-in requirements that directly affect budgeting and risk. Kollektivverträge (collective bargaining agreements) set binding minimum pay and role classifications, payroll commonly includes mandatory 13th and 14th salaries, ÖGK registration creates immediate social insurance obligations, and Abfertigung Neu adds an ongoing severance contribution from day one. This guide breaks down how these rules work in practice and how an Employer of Record can help you hire in Austria quickly and compliantly without setting up a local entity.

How to Hire Employees in Austria

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Set Up a Local Entity

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Working with an Employer of Record (EOR)

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

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Hiring Independent Contractors

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

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Start hiring with an Austria EOR

Collective agreements cover nearly every sector, plus works council rights, strict termination protection, and 13th/14th month salary obligations.

We handle employment contracts, payroll, social contributions, and full Austrian compliance.

No local entity needed. Your team can start in days.

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Austria Employer Of Record (EOR) vs Legal Entity in Austria

Companies must consider both their organizational goals and budget requirements when choosing between engaging an EOR and establishing a legal entity in Austria.

An EOR can support companies by relieving them of their administrative duties. By simplifying payroll management, hiring local talent, and ensuring compliance with Austrian labor laws, EORs afford companies the freedom to prioritize their core business activities. Using their legal expertise, EORs can help steer companies compliantly and efficiently through Austria’s legal and business environment, helping them avoid potentially reputationally and financially damaging non-compliance penalties.

Contracting an EOR can also prove more cost-effective for companies as they are freed from the need to make a long-term commitment to in-house HR staff. As the EOR acts as a legal employer, companies are not required to establish a legal entity in Austria. This affords companies more financial freedom by eliminating costs relating to facilities and office space.

Conversely, when establishing a legal entity, companies will need to complete a long and potentially daunting incorporation process. Businesses will be required to choose a business structure, submit documents such as ID and their business plan, obtain a trade license (Gewerbeberechtigung), register with the Commercial Register (Firmenbuch); obtain a tax number (Steuernummer), open a bank account and register for social security (Sozialversicherunganstalt). Businesses will additionally be required to locate and pay for office space and any necessary amenities. As a result, establishing a legal entity can be particularly financially testing for companies.

Using an Employer of Record in Austria

If setting up a company in Austria feels like too much too soon, you’re not alone. Between registering a legal entity, navigating EU labor laws, and managing payroll in euros, expanding into Austria can quickly turn into a bureaucratic maze. That’s where an Employer of Record (EOR) steps in.

An EOR acts as the official employer on paper, while you stay in charge of day-to-day management. They handle the backend work: contracts in German, local tax filings, social security contributions, paid leave tracking, and everything else the Austrian labor system requires.

What an EOR handles for you in Austria:

  • Drafts locally compliant employment contracts
  • Manages payroll and mandatory withholdings
  • Ensures enrollment in Austria’s social insurance system
  • Administers statutory benefits like vacation, holidays, and sick leave
  • Stays on top of legal updates and collective labor agreements

With an EOR, you can hire Austrian talent legally and quickly, without opening an entity, hiring a local legal team, or learning the difference between Abfertigung alt and Abfertigung neu.

Things to Know About Austria

  • Austria’s Labor Market Is Talent-Rich and Well-Educated: With a strong vocational training system and high university participation, Austria offers a workforce that’s both highly skilled and accustomed to structured employment environments, ideal for companies expanding internationally.
  • Collective Bargaining Agreements Are Widespread: Over 95% of employees in Austria are covered by collective labor agreements (CBAs). These set minimum wages, benefits, and working conditions by sector, an EOR ensures you meet all those requirements without needing to decode dense legal documents.
  • German Is the Business Standard, But Not a Barrier: While English is commonly spoken in business, employment contracts and labor documents are typically required in German. An EOR helps you manage this seamlessly, handling local-language contracts and employee communications.
  • Work-Life Balance Isn’t a Perk; It’s a Legal Norm: Austria mandates paid vacation, parental leave, and sick pay, all backed by a strong social insurance system. An EOR makes sure all entitlements are granted correctly from day one.
  • Austria’s Location = Easy Access to EU Markets: Strategically located in Central Europe, Austria is well-positioned for cross-border business with Germany, Switzerland, Hungary, and beyond. With an EOR, you can tap into Austrian talent without needing boots on the ground.
  • Payroll Rules Are Strict, But Predictable: Austria has one of the more structured payroll systems in Europe, with exacting requirements around holiday bonuses (Urlaubsgeld) and year-end pay (Weihnachtsgeld). A local EOR handles all calculations, filings, and on-time payments.

How Much Does an Austria Employer of Record Cost?

The cost of an Austria EOR provider will depend on the size of the business, the number of employees on the company’s payroll, and the complexity of the service provided. 

Remote People’s Austria EOR starts at $199 per employee per month, well below the typical $500 to $1,500 industry range, and includes payroll processing, ÖGK registration, Abfertigung Neu management, income tax withholding, 13th and 14th salary administration, plus ongoing compliance support. It is crucial that companies choose a provider who offers both a cost-effective and efficient service.

Employment and Labor Laws in Austria

Austria’s labor laws are built on structure, fairness, and social security, and they’re taken seriously. From mandatory vacation pay to sector-specific wage standards, the system leaves very little to chance. That’s great for employees and important for employers to get right.

Whether you’re hiring one person or building a full team, you’ll need to comply with both national legislation and the collective bargaining agreement (CBA) that applies to your industry. These agreements often dictate minimum salaries, working hours, bonuses, and termination protocols, so they’re not just suggestions; they’re law.

Employment contracts typically follow an “indefinite” model unless otherwise stated and must be provided in writing. Probation periods are common (up to 1 month), and notice periods for termination scale with tenure.

Employment Contracts

Employment agreements in Austria can be verbal, but if so, workers must still be provided with a written statement of the particulars of the contract (Dienstzettel). Written contracts are generally preferred for their reduced legal risk. These contracts can be in any language, though German is preferred. All contacts or Dienstzettels must include details of the following:

  • Identification of the parties
  • Start date
  • Place of work
  • Job title and duties
  • Salary
  • Payment schedule
  • Leave entitlements
  • Working hours
  • Notice period and termination conditions
  • Probation period
  • Name and address of corporate pension fund
  • Any applicable collective agreement

Working Hours

Most employees in Austria work a standard 8-hour day and 40-hour week under the Arbeitszeitgesetz (AZG), with mandatory rest breaks and minimum daily and weekly rest periods. Working time can be extended in exceptional cases to up to 12 hours per day and 60 hours per week, but weekly hours must generally average 48 hours over the reference period.

Overtime is typically paid with at least a 50% surcharge, while work on Sundays and public holidays is commonly compensated at 100%.

Working Time RuleStandard / LimitPay Requirement
Standard working hours (AZG)8 hours/day, 40 hours/week–
Flexible working (exceptional cases, 2018 amendment)Up to 12 hours/day, 60 hours/week–
OvertimeHours worked beyond standard limits50% surcharge
Sunday/public holiday workWork performed on Sundays or public holidays100% surcharge

Social Security

In Austria, the social security system is multi-layered and provides benefits for workers in the form of health, accident, pension, and unemployment insurance. Employers must make monthly contributions on behalf of their employees, as well as deduct employee contributions from their paychecks, and remit these funds to the Association of Austrian Social Insurance Institutions (Österreichische Gesundheitskasse or ÖGK). Employers are also required to register their employees with the ÖGK as soon as they begin work.

Employers pay 21.03% of each employee’s earnings, while employees have 18.07% deducted from their pay according to these rates:

Benefit SchemeEmployer ContributionEmployee Contribution
Pension12.55%10.25%
Health3.78%3.87%
Unemployment2.95%2.95%
Accident Insurance1.1%–
Minor LeviesIncludedIncluded
Total~21.03%~18.07%
Max contribution base: €6,930/month (2026).

Overtime Pay

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Probation Periods

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Vacation Entitlement

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Sick Leave

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

13th and 14th Salaries

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Social Insurance Contributions

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

How an Employer of Record Helps You Hire in Austria

Hiring in Austria without local support can feel like walking a legal tightrope. From CBAs that quietly dictate wage floors to holiday bonuses baked into payroll expectations, the details matter, and missing them can cost you.

That’s where an Employer of Record (EOR) becomes your secret weapon. An EOR acts as your boots-on-the-ground partner, taking care of employment contracts, monthly payroll, tax filings, social contributions, and even termination notices, while keeping everything 100% compliant with Austrian labor law.

Instead of building an internal legal team or decoding German employment codes, you get:

  • Locally compliant hiring, start to finish
  • Payroll handled in euros, with no tax headaches
  • Accurate benefits and leave management tied to CBAs
  • A trusted partner that tracks labor law updates so you don’t have to

The bottom line is that an EOR helps you hire faster, smarter, and legally, without the cost or delay of setting up an Austrian entity.

Payroll and Employment Taxes in Austria

Payroll Cycles

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Minimum Wage

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Bonus Payments

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Employer Tax Contributions

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Employee Payroll Contributions

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Income Tax

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Vacation Entitlement

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Registration & Reporting

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Managing these requirements across multiple employees, CBAs, and authorities demands accuracy and local insight. Mistakes can quickly lead to fines, audits, or strained employee relations.

How an EOR Helps You Run Payroll in Austria

Austria’s payroll system can be complex and unforgiving. From mandatory bonuses and union rules to social tax filings and payslip formatting, the list of compliance points is long. That’s why many global companies partner with an Employer of Record (EOR) to handle payroll legally, locally, and on time.

Here’s how an EOR makes payroll stress-free:

  • Local Salary Payments: Wages are disbursed in euros, through approved Austrian banking channels, always on time.
  • Payslip Management: Employees receive compliant payslips with clearly itemized pay, deductions, and bonuses.
  • Bonus Calculations: 13th and 14th salaries are calculated and paid according to Austrian labor norms and collective agreements.
  • Social Contributions & Tax Withholding: All employer and employee contributions to Austria’s pension, healthcare, and unemployment systems are managed without errors or delays.
  • Regulatory Filings: From ÖGK registrations to monthly reporting, an EOR handles the paperwork so you stay focused on growth, not bureaucracy.

The result is that employees are paid correctly and on time. You avoid compliance issues. And you can confidently operate in Austria without needing to decode its payroll infrastructure yourself.

Work Permits & Visas in Austria

If foreign nationals want to work in Austria, they must obtain the correct work authorization to live and work in the country. In general, employers sponsor work permit applications for their foreign employees. Once these permits are obtained, workers can apply for visas to enter Austria. Once in the country, they need to apply for residence permits if they will stay for longer than six months. The Red-White-Red Card is a long-term residence permit that allows skilled foreign workers coming to work in occupations with worker shortages, and is issued for 24 months.

European Union and European Economic Area citizens can work in Austria without visas or work permits. However, they must work for at least three months, obtain health insurance, and register their work with the local authorities. 

Remote People supports clients with their workers’ work permit and visa application process in Austria. We’re familiar with Austrian immigration processes and can facilitate these applications so that your workers can start in Austria as quickly as possible.

EU/EEA/Swiss Citizens

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Red-White-Red Card (RWR Card)

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

EU Blue Card

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Short-Term Visas

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

What Employers Need to Provide

  • A formal job offer with a compliant employment contract
  • Salary that meets Austria’s minimum threshold for the visa type
  • Proof of business registration and legal standing in Austria
  • Support with application submission through the Austrian Public Employment Service (AMS)

Simplify It with an EOR

An Employer of Record (EOR) can sponsor the visa on your behalf and handle the entire process, from coordinating documentation to tracking renewals. This allows you to focus on onboarding and productivity while ensuring full compliance with Austria’s immigration and labor laws.

Whether you’re relocating talent or hiring remotely from abroad, having a local expert manage permits and paperwork saves time, reduces risk, and gets your team started faster.

Hiring Contractors in Austria

While there are many benefits to hiring full-time and part-time employees, many employers in Austria choose to hire independent contractors instead. These workers, also known as freelancers, control when they work, supply their own equipment, take on entrepreneurial risk, and can work for multiple clients at once. They also pay their own taxes and make their own contributions to social security schemes through the Social Insurance Institution for the Self-Employed (SVS). 

Employers can save money by hiring contractors only for specific jobs, but they have to avoid asserting control over them or risk penalties for worker misclassification.

Workers' Compensation in Austria

Known as Accident Insurance in Austria, workers’ compensation insurance is mandatory for employers, who must pay contributions to the General Accident Insurance Institution (AUVA).

Contractors must make their own contributions for accident insurance through the SVS. Employers pay 1.1% of each worker’s salary up to a wage base limit of 6,450 EUR/month to provide workers with illness, injury, disability, and survivors’ benefits.

Time Off and Leave in Austria

Workers in Austria are entitled to many different leaves so that they can keep a good balance between their careers and personal and family obligations. These include:

Mandatory Leave Entitlements

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Public Holidays

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Sick Leave

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Parental Leave

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Maternity Leave

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Paternity Leave

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Other Leave

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Onboarding & Probation

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Clear and compliant leave policies don’t just keep you out of trouble. They show your team you respect their time, health, and life outside of work. And when managed through an Employer of Record, you can rest easy knowing your policies are legally sound and culturally aligned.

Terminations and Severance in Austria

Under the Abfertigung Neu system (effective 1 Jan 2003), employers contribute 1.53% of monthly gross salary into a Betriebliche Vorsorgekasse (BVK) from the 2nd month of employment. Employee does not contribute. 3-year vesting period. Capital guarantee is legally prescribed.

Termination During Probation

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Notice Periods

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Severance Pay

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Justified Dismissals vs. Regular Terminations

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Collective Bargaining Agreements (CBAs)

Austria’s labor law includes strict severance rules, mandatory social insurance, and collective agreements. An Austrian EOR handles all compliance. No local entity needed.

Handling terminations correctly is about compliance and maintaining fairness, transparency, and trust. An Employer of Record helps manage terminations in accordance with Austrian law, ensuring every step is legally sound and professionally handled.

Using an Employer of Record to Administer Benefits in Austria

Austria’s benefit system supports employees with meaningful protections and perks that reflect the country’s strong social values. But navigating health insurance enrollments, pension contributions, paid leave policies, and mandatory bonuses can be overwhelming, especially if you’re unfamiliar with Austrian regulations or collective bargaining agreements.

Expand into Austria Easily with Remote People’s Employer of Record in Austria

Frequently Asked Questions

Austria EOR pricing varies by provider and typically depends on headcount and what is included, such as compliant onboarding, payroll processing, statutory filings, and ongoing HR compliance support. In addition to the monthly per-employee fee, some EORs may charge onboarding fees or apply markups, so it is best to choose a provider with transparent, predictable pricing.

Employer social security costs are typically around 21% of gross salary, covering statutory schemes like pension, health, unemployment, and accident insurance (plus minor levies). Exact totals can vary slightly based on employee profile and applicable rules.

Austria does not have a single statutory national minimum wage. Minimum pay is generally determined by Kollektivverträge (collective bargaining agreements), which set binding wage floors and job classifications by industry and role.

Abfertigung Neu is Austria’s mandatory severance system for most employees, funded through ongoing employer contributions. Employers pay 1.53% of gross salary into a severance fund (BVK), building entitlements over time rather than relying on a single payout model at termination.

Maternity protection typically covers 16 weeks in total (generally split before and after birth). Pay during this period is effectively 100% of earnings through statutory maternity benefits, rather than being funded as a standard employer-paid leave.

Austria applies progressive personal income tax, ranging from 0% up to 55% depending on taxable income. Employers withhold income tax through payroll, so accurate setup and monthly withholding are essential for compliant employment.