How To Hire And Pay Employees In Austria

Austria is centrally located within the EU. Being a member of the EU means there is vast talent pool of experienced and highly skilled workers able to relocate from other EU countries, as well as talent already located within Austria. However, Austrian employment law provides strong labour conditions and protections for employees, with many industry-wide collective agreements. A works council should be established in a business with more than 5 employees.

Full-time employees are entitled to 25 days holiday per year, which increases to 30 days after 25 years’ service.

In addition, there are 13 public holidays a year.

Probation periods in Austria are permitted for one month, during which time either the employee or employer may terminate without explanation.

If an employee is terminated without cause, then notice periods will apply depending on the duration of employment.   Below is a table as general guidance.

If employment lasts longer than one month, the employer is required to pay 1.53% of the employee’s monthly gross salary into an employee provision fund (betriebliche Vorsorgekasse). When terminated, the employee has a severance right against this fund (given a minimum of 3 years of service and the employee did not give notice or was dismissed by cause) or the amount can be left in the employee provision fund, in which a future employer continues to contribute. Employment generally should only end at the end of each calendar quarter (31^st March, 30^th June, 30^th, September, 31^st December). This can be changed by individual agreement so that employment can also end on the 15^th or at the end of each month.

If a works council is established, it must be informed at least one week prior to termination. Failure to comply results in the invalidity of the termination. Immediate dismissal is possible with cause, this type of termination is referred to as summary dismissal (Entlassung). This can be for reasons such as theft, serious breach of contract, falsified records, and disclosure of confidential information.

Post termination restraints can be enforceable if they are reasonable and protect a business’s legitimate interests. Garden leave is common amongst senior employees. Any clauses cannot exceed 12 months. There is no requirement for payment by an employer during a non-compete clause if the employee has resigned, or the employer has dismissed with cause. If an employer dismisses without cause, this is not enforceable. However, the employer can make this enforceable by paying the salary during the non-compete period. Customer non-solicits are permissible only in very narrow circumstances. Employee non-solicits are permissible.

Although a written contract of employment is not legally required in Austria, it is always best practice to have strong written contract in place. Employers are required by law to provide a document to the employee stating the terms and conditions of their employment. This is known as a ‘Dienstzettel’. This does not have to be signed by the employee but must contain information such as the workplace location, salary, collective agreements, job title, annual leave, and termination requirements.

Expectant mothers are entitled to 16 weeks’ maternity leave (Mutterschaftsurlaub), to be taken eight weeks before the expected due date, and eight weeks after the birth. During maternity leave, employees are entitled to pay which is the equivalent of the average salary over the previous 13 weeks before the maternity leave began. Within eight weeks of the birth, fathers are entitled to one month’s leave unpaid. Fathers may apply for an allowance during this time which is the equivalent of approximately €22 per day. Both parents are entitled to parental leave until the child reaches two years old, the condition being that the parent must live in the same household as the child. The minimum period of any parental leave is two months. During the time of parental leave, and provided the conditions are satisfied, childcare allowance (Kinderbetreuungsgeld) may be drawn.

Employees in Austria are generally entitled to sick pay under the Sick Pay Act (Entgeltfortzahlungsgesetz) (EFZG). However, the length of any entitled sick pay depends on the seniority and position held by the employee.

Austria offers a high-level social security system that is contribution based by both employer and employees. Social security covers areas such as unemployment, pensions, health, maternity, paternity, and parental benefits, disability, and work accident benefits.  Employers will automatically register employees for social security insurance when they are hired.

Everyone residing in Austria must have health insurance whether this is public or private. Employers are responsible for enrolling their employees for public health insurance with both employer and employee making contributions. Healthcare is free for those that are studying, retired, disabled, and employees earning below a certain threshold. Some employers may offer private health coverage as an additional benefit.  

Austria favours high-skilled immigration, which is why it has created a points-based system that ranks applicants based on their merits.

The Red-White-Red card is valid for two years, after which it may be extended or exchanged for a Red-White-Red Plus card, which allows holders to work for any company in Austria.

The EU Blue Card is aimed at highly skilled workers from outside the EU. Non-EU citizens who already have the EU Blue card but work in another country within the EU can more easily obtain a work permit for Austria.

The Job Seeker Visa is again aimed at highly skilled and qualified non-EU citizens, but those who do not already have an offer of employment. To be eligible for this visa applicants must score over 70 out of 100 on a points-based system. The visa will allow applicants to reside in Austria for up to six months to search for employment. During this time, if employment is found, then they must apply for a work permit such as the Red-White-Red card or EU Blue Card.  

The Austrian tax year runs from January to December. It is the employer’s responsibility to ensure taxes are paid from salaries before payments are made to employees. Income tax is known as Einkommensteuer, the general personal income tax rates are listed below as guidance.

Salaries are paid on a monthly basis in Austria. A 13th and 14th month bonus payment, equal to one month’s salary and taxed at a low rate, are customary and are paid in the summer and before Christmas. 13th and 14th month payments will need to be included in a contract, or any collective bargaining agreements.

Social security contributions are the responsibility of the employer to deduct from an employee’s salary before payment. Both the employer and employee are subject to social security contributions. Below is a guideline for contributions for employer and employee. Please note these can vary.