Employer of Record Guide in Austria
Austria's unique employment landscape—with its industry-specific wage agreements and 14-month salary structure—requires careful navigation to unlock the country's exceptional talent pool. Our comprehensive guide breaks down everything you need to know to hire compliantly and confidently in this thriving Central European market.
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Austria combines a robust economy with a highly skilled workforce, offering access to in-demand talent across tech, healthcare, and engineering sectors in major hubs like Vienna and Salzburg. Understanding the local market dynamics—from the €58,484 GDP per capita to the German-language business environment—sets the foundation for successful expansion.
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Your EOR guide in Austria
From Austria's distinctive 14-month salary system to complex collective bargaining agreements, this guide covers the essential employment regulations that shape how you hire and manage teams. We'll walk you through everything from payroll cycles and tax obligations to leave policies and onboarding requirements, so you can focus on finding great talent while we handle the compliance complexities.
Minimum Wage
Austria operates without a national statutory minimum wage. Instead, minimum wages are established through industry-specific collective agreements (Kollektivverträge) that cover approximately 95% of all employees.
Recent 2025 Collective Agreement Updates:
- Taxi/rental car drivers: €2,000 gross per month (effective January 1, 2025)
- Public sector: Up to 3.5% increase, minimum €2,544.78 (effective February 1, 2025)
- Food/beverage industry: 3.8% increase (effective January 1, 2025)
Payroll Cycle
Austrian employers typically pay salaries monthly at month-end. However, the Austrian system includes 14 annual salary payments:
- 12 regular monthly salaries
- 13th month salary (holiday bonus, typically paid in June)
- 14th month salary (Christmas bonus, typically paid in November)
Individual Income Tax
Note: Please double-check these tax brackets as research sources showed discrepancies that require verification.
| Income Range (EUR) | Tax Rate |
|---|---|
| Up to €13,308 | 0% |
| €13,309 – €21,617 | 20% |
| €21,618 – €35,836 | 30% |
| €35,837 – €69,166 | 40% |
| €69,167 – €103,072 | 48% |
| €103,073 – €1,000,000 | 50% |
| Over €1,000,000 | 55% |
Tax Residency Criteria
Individuals who reside in Austria for 183 days or more in a calendar year are considered tax residents and must pay Austrian income tax on their worldwide income. Employment contracts exceeding 6 months generally create unlimited tax liability.
Employer Payroll Contributions
Austrian employers face significant payroll contribution obligations totalling approximately 29.21% of gross salary:
| Contribution Type | Rate |
|---|---|
| Pension Insurance | 12.55% |
| Health Insurance | 3.78% |
| Unemployment Insurance | 2.95% |
| Accident Insurance | 1.10% |
| Other contributions | ~9.83% |
| Total Employer Burden | ~29.21% |
Working Hours
- Standard work week: 8 hours per day, 40 hours per week
- Maximum daily hours: 12 hours per day
- Maximum weekly hours: 60 hours per week
- Average limit: Cannot exceed 48 hours per week over a 4-month period
Certain senior management positions and autonomous professionals may be exempt from standard hour limits under collective agreements.
Overtime Pay
- Premium rate: Minimum 50% premium pay or 1.5 hours compensatory time off
- Tax exemption: First 18 overtime hours per month (up to €200 monthly) are tax-exempt for 2024-2025
- Maximum overtime: 20 overtime hours per week permitted
Bonus Payments
The 13th and 14th month salaries are standard practice (though not legally mandated) and are nearly universal across Austrian employment:
- Tax treatment: Preferential 6% flat tax rate after allowance
- Pro-rata calculation: For partial year employment
- Timing: 13th month typically paid in June, 14th month in November
Full-Time vs. Part-Time
Austria doesn't establish strict statutory thresholds for full-time versus part-time classification. These definitions are typically established through collective agreements. However:
- Marginal employment threshold: €551.10 per month (2025)
- Equal rights: Part-time employees receive equal treatment regardless of classification
Vacation Leave
- Minimum entitlement: 25 working days (5 weeks) annually
- After 25 years of service: 30 working days (6 weeks)
- Eligibility: Full entitlement after 6 months of service
- Payout: Unused vacation must be paid out upon termination
Sick Leave
Austria provides generous sick leave with full salary continuation based on length of service:
- Initial period: 6 weeks full pay
- Extended periods: Increases with seniority
- Medical certification: Doctor's note typically required after 3 days
Maternity Leave
- Duration: 16 weeks total (8 weeks before birth + 8 weeks after birth)
- Extended leave: 12 weeks after birth for complications
- Job protection: Position guaranteed upon return
Parental Leave
Note: Please double-check parental leave duration as research sources showed conflicting information (22 vs 24 months).
- Duration: Up to 22 months if one parent takes leave, until child's 2nd birthday
- Flexibility: Can be shared between parents
- Income support: Parental allowance available through government programmes
Bereavement Leave
Bereavement leave is typically defined by collective agreements:
- Spouse/child/parent death: 2-3 days
- Siblings/grandparents: 1 day
- Paid leave: Generally provided by employer
Personal & Family Leave
Enhanced protections introduced in 2023:
- Care leave: For sick relatives, now includes parents, grandparents, children, and grandchildren not in same household
- Duration: Generally 1 week per year, with additional week for children under 12
- Eligibility: Expanded coverage for family caregiving responsibilities
Summary
| Leave Type | Duration | Paid? | Funding |
|---|---|---|---|
| Vacation | 25-30 days/year | Yes | Employer |
| Sick Leave | 6+ weeks | Yes | Employer |
| Maternity Leave | 16 weeks | Yes | Government |
| Parental Leave | Up to 22 months | Partially | Government |
| Bereavement | 1-3 days | Yes | Employer |
| Family Care | 1-2 weeks/year | Varies | Employer/Government |
Termination Types
Termination with Notice:
- Standard dismissal requiring notice period
- Most common form of employment termination
Dismissal for Cause (Entlassung):
- Immediate termination without notice
- Must involve serious misconduct or breach of duty
Mutual Agreement:
- Both parties agree to end employment
- Can waive notice periods by agreement
Notice Period Requirements
Notice periods for employer-initiated termination based on length of service:
| Length of Service | Notice Period |
|---|---|
| Up to 2 years | 6 weeks |
| 2-5 years | 2 months |
| 5-15 years | 3 months |
| 15-25 years | 4 months |
| 25+ years | 5 months |
Employee resignation: 1 month standard notice period
Severance Pay
Austria operates two severance systems:
Abfertigung Neu (post-2003 hires):
- Employer contributes 1.53% of gross salary to pension fund
- Employee owns funds, portable between jobs
- Minimum 3 years service required for payout
Abfertigung Alt (pre-2003 hires):
- Lump sum payment from employer
- 3 years service: 2 months' salary
- Scales up to 12 months' salary at 25 years service
Probationary Periods
- Standard duration: 1 month
- Termination rights: Either party can terminate without notice or reason during probation
- Extension: Can be extended up to 3 months in collective agreements
Final Pay Requirements
Final payment must be made on the employee's last day of work and includes:
- Outstanding salary
- Pro-rata 13th and 14th month salaries
- Unused vacation pay
- Any other accrued benefits
Termination Documents & Process
Required documents:
- Final payslip
- Employment certificate (Arbeitszeugnis)
- Social security de-registration confirmation
- Annual wage statement (L16)
Anti-Discrimination & Retaliation Laws
Austrian law prohibits termination based on:
- Gender, age, ethnic origin, religion, sexual orientation, disability
- Pregnancy or family status
- Union membership or activities
- Filing complaints or exercising legal rights
National Holidays (2025)
Austria observes 13 national public holidays:
| Holiday | Date |
|---|---|
| New Year's Day | January 1 |
| Epiphany | January 6 |
| Easter Monday | April 21 |
| Labour Day | May 1 |
| Ascension Day | May 29 |
| Whit Monday | June 9 |
| Corpus Christi | June 19 |
| Assumption of Mary | August 15 |
| National Day | October 26 |
| All Saints' Day | November 1 |
| Immaculate Conception | December 8 |
| Christmas Day | December 25 |
| St. Stephen's Day | December 26 |
Regional Holidays
Each Austrian state (Bundesland) observes additional regional holidays:
- March 19: St. Joseph's Day (Carinthia, Styria, Tyrol, Vorarlberg)
- May 4: St. Florian's Day (Upper Austria)
- September 24: St. Rupert's Day (Salzburg)
- October 10: Plebiscite Day (Carinthia)
- November 11: St. Martin's Day (Burgenland)
- November 15: St. Leopold's Day (Lower Austria, Vienna)
Holiday Pay & Working on Holidays
- Regular pay: Employees receive regular pay for holidays falling on working days
- Premium pay: Working on holidays typically requires premium pay (often 100%) or compensatory time off
- Eligibility: All employees entitled to holiday pay regardless of tenure
Required Documents for Employment
Essential documentation:
- Employment contract or statement of terms (Dienstzettel)
- Social security registration with ÖGK (Austrian Health Insurance Fund)
- Tax registration (handled by employer)
- Work authorisation (for non-EU/EEA citizens)
- Banking information for salary payments
Language Requirements
- Official language: German
- Employment contracts and official documents should be provided in German
- Collective agreements may specify language requirements for certain positions
Background Checks & References
Background checks are regulated under GDPR and must be:
- Job-relevant and proportionate
- Based on legitimate business interests
- Conducted with employee consent (generally required)
- Limited to criminal record checks only for specific roles (e.g., working with children)
Data Protection & Privacy
Austrian employers must comply with GDPR requirements:
- Legitimate legal basis required for data processing
- Data collection limited to employment necessity
- Employee notification and consent procedures
- Secure data storage and processing protocols
IP Assignment & Confidentiality
Key contractual provisions:
- Employee inventions: May belong to employer if within company's business field
- Non-compete clauses: Limited to maximum 1 year duration
- Salary thresholds: Required for non-compete enforceability
- Confidentiality: Standard provisions for protecting business information
Onboarding Timeline
| Step | Timeline |
|---|---|
| Job offer accepted | Day 0 |
| Employment contract issued | Day 1-2 |
| Employee signs contract | Day 3-5 |
| Social security registration | Day 3-5 |
| Tax registration completed | Day 5-7 |
| Onboarding materials provided | Day 5-7 |
| Payroll setup completed | Day 7-10 |
What the EOR Handles
Borderless AI manages:
- Employment contract preparation and execution
- Social security and tax registration
- Collective agreement compliance
- Document collection and filing
- GDPR compliance procedures
- Local language legal formatting
Worker Classification: Employee vs Contractor
Austrian law focuses on the degree of personal and economic dependence to determine classification:
- Employees: Work under employer direction, integrated into business operations, receive regular salary and benefits
- Independent contractors: Operate autonomously, bear business risk, invoice for services, responsible for own taxes and social security
Misclassification penalties: Back-payment of social security contributions up to 5 years, plus interest and penalties
Unionisation & Collective Agreements
Austria has a strong unionisation framework:
- Constitutional right: To organise and bargain collectively
- Coverage: Collective agreements cover approximately 95% of employees
- Terms: Often provide better conditions than statutory minimums
- Binding nature: Collective agreements are legally binding on all covered employers
Cultural Norms & DEI Expectations
Austrian workplace culture emphasises:
- Work-life balance: Strong separation between work and personal time
- Punctuality: Highly valued in all business interactions
- Formal communication: Professional, respectful communication standards
- Growing DEI focus: Increasing emphasis on diversity, equity, and inclusion initiatives
Anti-Discrimination Laws
Protected characteristics under Austrian law include:
- Gender, age, ethnic origin, religion, sexual orientation, disability
- Reasonable accommodation: Required for employees with disabilities
- Equal treatment: Mandatory across all employment practices
- Enforcement: Strong legal remedies for discrimination violations
Remote Work Considerations
The Teleworking Act (effective January 1, 2025) establishes comprehensive remote work regulations:
Key requirements:
- Written teleworking agreement required
- Employer must provide necessary equipment or reimbursement
- Tax-free allowance: €3.00 per day (maximum €300 per year)
- Health and safety obligations extend to home offices
Cross-border considerations:
- Complex tax and social security implications
- Requires careful legal review for employees working from other countries
- Potential impact on collective agreement coverage
Equipment and expenses:
- Employers responsible for providing or reimbursing necessary work tools
- Clear policies required for home office setup and maintenance
- Insurance considerations for home-based work arrangements
Built-in benefits packages for Austria
When the world is your competition, it pays to incentivize new hires and existing alike. Borderless AI benefits packages typically inlucde:
Medical Insurance
Dental Insurance
Retirement Contribution
Life Insurance
Vision Insurance
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