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Employer of Record in Austria

Employer of Record in Austria

Skuad’s Employer of Record Austria (EOR) solutions make business expansion to Austria easy and hassle-free. Our unique HR platform allows companies to hire exceptionally talented employees in Austria, without having to set up a separate legal entity. It streamlines the process of hiring and onboarding a remote team by handling payroll management, taxation, and other legal compliances. To learn more about Skuad, Book a demo today.

Austria at a Glance

Population: 8.86 million

Currency: Euro

Capital city: Vienna

Language: German

GDP: 42,300 €

What You Must Know Before Employing in Austria

All employees in Austria can freely access the government and labor support whenever they claim to have been maltreated. Filing of complaints with the labor tribunal is common here.

The following are some standard benefits you should know before starting to negotiate an employment contract:

Entitlements Explanations
Statutory Working Hours Austrians generally work eight hours a day/40-hours a week. However, many industries have an agreement that sets their workweek to 38 hours.
Overtime Eligibility Overtime needs to be compensated by adding time to the off/leave period or paying for the concerned period at an additional 50% rate. This rate is to be increased to 100% if it involves night and weekend shifts. However, there are a few CBAs (collective bargaining agreements) that grant higher supplements in general.
Paid Public Holiday
  • 1 January, New Year's Day
  • 6 January, Epiphany
  • 2 April, Good Friday
  • 3 April, Easter Saturday
  • 4 April, Easter Sunday
  • 5 April, Easter Monday
  • 1 May, Staatsfeiertag
  • 9 May, Mother's Day
  • 13 May, Ascension Day
  • 23 May, Pentecost
  • 24 May, Whit Monday
  • 3 June, Corpus Christi
  • 15 August, Assumption
  • 26 October, National Holiday
  • 1 November, All Saints' Day
  • 8 December, Immaculate Conception
  • 24 December, Christmas Eve
  • 25 December, Christmas Day
  • 26 December, Boxing Day
  • 31 December, New Year's Eve
Vacation Benefits

The Austrian laws give the right to five weeks or 25 days (for a 5-day week) period of vacation leave per year to all employees working for the institution for six continuous months.

After 26 years of employment, the entitlement of vacation leaves becomes 30 working days/6 weeks per year.

Medical Leave Employees in Austria are entitled to pay when they cannot work due to physical conditions like- sickness or industrial accidents. The period for which the employee receives pay depends on their seniority and employment type, and status. A certificate issued by a medical professional is also required sometimes to prove the inability.
Maternity Leave

Sixteen weeks of leave are there for each pregnant employee. The leaves are given both before and after the birth. They are split evenly between the two phases.

Apart from that, both parents are entitled to parental leaves until the child is two years old. The minimum leaves provided under this are two months long. The employees don’t get salaries during this leave.

Annual Leave Accrual Entitlement Annual paid leaves are similar to vacation leaves. Employees are entitled to five weeks of paid leaves annually. If the employee works 6 days a week, the total entitlement is for 30 days. After completing 25 years of service, the employee becomes entitled to six weeks of leave.
Calculation of Leave For the initial six months of the employment, the total entitlement of leaves is calculated from total leaves in proportion to the time worked. However, when the seventh month starts, employees become entitled to full leaves.
Sickness During Leave If one reports falling ill during leaves and sustains the sickness for more than three calendar days, these days don't count as part of the leave. However, they need to provide a medical certificate to prove it.
Compassionate Leave Employees can choose compassionate leave to care for severely ill children or be with dying relatives or may reduce or rearrange their working hours in such cases.
Employee Protection and Anti-Discrimination
Rights

Employees in Austria are protected against discrimination based on gender, ethnicity, religion, philosophy of life, age, or sexual orientation. The law passed as the Equal Treatment Act (Gleichbehandlungsgesetz) in 2004 is the statutory basis.

In 2011, the protection against discrimination of employees involved in trade union activities was included in this catalog.


To ensure your expansion endeavors are in compliance with the Austrian employment laws, Contact Skuad today.

Contractors vs. Full-Time Employees

There are three kinds of employment contracts in the country:

  1. Regular employment contracts
  2. Service employment contracts
  3. Freelance employment contract

Traditional employment contracts all share similar criteria:

  • Stable place of work
  • Control over their working hours
  • Strict ban for additional work or employment
  • Employer supervision, rules, and instructions

Freelance contractors are only paid for the duration and as per the completion of their assignment. If there is no specific agreement, they are not entitled to receive any pay per the fixed rates. However, they are entitled to a few terms and conditions (Dienstzettel) without a written contract.

In terms of a contract for a long period, they receive their remuneration monthly. Freelance contractors have to make their arrangements for the payment of the taxes for the remuneration. Both freelance contractors and employers pay social insurance contributions. Social insurance contributions of both parties are deducted and then paid over by employers.

In terms of full-time employees, all the entitlements mentioned in Table 1.1 above have to be taken care of. In case of termination of employment, formal notice and a valid reason need to be given.

Both contractual and full-time employees have their pros and cons. Hence, you need to decide which form of employment fits your business requirements. However, Skuad EOR can be helpful in both cases.

Hiring in Austria

Hiring in Austria is done both offline and online. However, online hiring has become prominent in recent times. Both part-time and contracted employees are hired online as per the job requirement and through different platforms. Portals like Monster.com, LinkedIn, Glassdoor, The Local - Jobs, and StepStone have gained genuine popularity among recruiters and job seekers in Austria.

Monster is the most popular portal in terms of applications and job postings in Austria. However, on these platforms, the recruiters can give only limited specifications of the right candidate. So, if you are looking to hire in Austria, you could go through these portals or work with an EOR for a more personalized way of finding the right talents for your company.

Skuad's progressive tech platform helps organizations hire both types of workers with ease and simplicity. Learn more here.

Probation & Termination

Probation Period

The probation period in Austria is one month, generally agreed to in the employment contract. Either party can terminate the employment contract without explanation during the probation period.

Termination of Service

The termination of an employee's services in Austria by an employer requires advance notice. The legal minimum term of notice for salaried employees is calculated as per years of service that the employee has served with the company.

Years of Service Period of notice to terminate employment
Less than or 2 years 6 weeks
3 – 5 years 60 days
6 – 15 years 90 days
16-25 120 days
26+ years 150 days

In addition to the notice period, employers have to pay severance pay. If the employment relationship has lasted longer than a month, the employers have to pay 1.53% of the employees' monthly salary as the employee provision fund. If you need more help understanding the compensation laws in Austria, visit Skuad.

EOR Solution in Austria

The Austria Employer of Record (Austria EOR) solution makes it easier and faster for businesses to expand into Austria. Skuad can help you manage monthly payroll, contracts, work permits, taxation, etc., in Austria for your employees.

General Employer of Record Service Terms:

Taxes that apply to invoices

Austrian entity - 7% GST
Foreign company - No GST

Minimum duration of service Three months
Currency Accepted USD / EUR / GBP
Required Details & Documents For Austrian Citizens: Personal information, copy of passport, bank details, copy of NRIC (for permanent residents), job description.

For Expatriates: Personal information, job description, educational qualifications, technical qualifications, CV, copy of passport, a copy of your ID, bank details, photographs, police verification, medical exam results.

Outsourcing Employment Through an Employer of Record

When you decide to expand into Austria as an organization, you also need to decide the route you want to take; whether you want to build an in-house team or take the services of an EOR to manage payroll and employee lifecycle.

Types of Visas in Austria

Austria allows some foreigners to enter the country without a visa. For example- the citizens of the nations associated with the European Union (EU) or European Economic Area (EEA).

Visa Category Explanation
Red-White-Red Card A “Red-White-Red Card” holder is entitled to a temporary settlement and employment with a particular employer. Therefore, it is suitable for those who intend to settle in the country permanently.

The “Red-White-Red Card” is issued only if the applicant proves adequate employment.

The job must be corresponding to the qualifications of the applicant and be paid adequately complying with the special eligibility criteria that are set for the “Red-White-Red Card '' which the candidate has applied for.

Visa C & Visa D Visa C permits you in all the Schengen countries and to stay in those countries for 90 days in total, that too within to180 days, given that you fulfill the conditions of general entry.

A Visa D gives you an entitlement to stay in Austria. It can be granted for a duration of 91 days up to 6 months. Holders of a Visa D also enjoy the freedom of movement to other Schengen countries for up to 90 days.

Note

You are not permitted to engage in gainful employment or self-employment during a visa-free stay or a stay within the scope of a Visa C or D described above.

Unpaid work may also be considered gainful employment (e.g., unpaid traineeship, internship).

Business Visa A Business Visa allows the holder to enter Austria for business purposes.

A Business Schengen Visa is required to travel to Austria for business-related purposes.

Jobseekers Visa The Austria Job Seeker Visa is a points-based visa ideal for professionals looking to build a career in Europe.

Points are now awarded based on your age, qualification, relevant work experience, proficiency in the English language, and studies in Austria. Based on your profile, you may need to get 65 or 70 points to qualify for this program.

EU Blue Card Visa EU Blue Card Visa is granted to highly skilled people’s employment in Austria.

Third-country nationals can get this if they have completed their studies from an institution for tertiary education lasting more than three years. They also need to earn a yearly gross salary above or equal to 65,579 Euros (2021) for a job related to their studies.

Student's Residence

Permit

Student Residence Permit holders can get a work permit to work in Austria up to 20 hours/week. They can even apply for a permanent residence or a work permit once the studies are completed.

Work Permit

Skuad Austria can sponsor foreign workers for work permits. As an EOR in Austria, Skuad takes care of all the requirements and responsibilities related to employment. On Skuad’s HR platform, the client company can manage their employees’ daily activities and operations.

Can Skuad Sponsor Work Permit in Austria? Yes
Processing Time 2 weeks
Work Permit Process

Step 1: Skuad’s local partner in Austria applies for the Employment Pass.

Step 2: Ministry of Manpower gives an in-principle approval (IPA) letter.

Step 3: The worker enters Austria with the IPA letter.

Step 4: The worker is provided with a letter that permits them to start work and travel in Austria.

Step 5: The employee submits his biometrics at the Employment Pass Services Centre.

Step 6: The employee gets his pass card.

Passport Submission The employee's original passport is presented during their appointment with the Ministry of Manpower.
Work Permit Validity The Employment Pass is valid for 1 year. The employee can get it renewed after 1 year.
Work Permit Process for Different Countries For most, the process to obtain a work permit is the same. However, there are some exceptions for citizens of some countries like China.
Change of Sponsor Within Austria The employee needs to submit a new application for a change of sponsor.
Where is the Application Processed? The application may be processed in Austria for the employee’s home country.
Work Permit Restrictions

All EEA and Swiss citizens can work in Austria without having to apply for a visa. All third-country nationals who want to stay in Austria for more than 180 days must obtain a work visa. Austria considers third-country nationals who are not EEA citizens or Swiss citizens.

Individuals that do not have a European or Swiss passport must apply for a Work Visa.

What’s the Cost of a Business Visa? USD 400
Duration of Business Visa Processing 5-10 days
Switch Business Visa to Work Permit? No
Can Spouses Work on Dependent Visas? The spouse of the employee, who has obtained the work permit, cannot work on a dependent's visa. They must apply for a Letter of Consent to work in Austria.
Termination of Work Permit No notice period is required for cancellation. However, the work permit should be canceled within a week of the last day of the employment termination notice period or 1 day after the EP expires.
Special Requirements for Work Permit Cancellation The employer or appointed employment agent must cancel the work permit.

This information will be helpful if you are looking to hire international personnel to work in Austria. If you need more help, let us know.

Things You Must Know to Set Up Payroll in Austria

You can manage payroll and taxation in Austria- all you need is to be aware of some rules. These rules vary for various categories. The first thing you need to consider is if you want to hire foreign professionals or locals.

If you are looking to take complete control over your payroll- you need to register, hire, and complete the incorporation process. You can set up a bank account in Austria in 4 weeks.

Taxes in Austria

Tax Explanation
Monthly Taxable Income
Gross income Tax Rate (%)
€ 0 to € 11,000 0%
over € 11,000 to € 18,000 25%
over € 18,000 to € 31,000 35%
over € 31,000 to € 60,000 42%
over € 60,000 to € 90,000 48%
over € 90,000 to € 100,000 50%
over € 100,000 58%
Tax Returns Tax returns have to be filed by April 30 of the following year (paper form) or the end of June of the following year (electronic filing).
Financial Year The fiscal year is the calendar year, from 1 January to 31 December.
Corporate Tax At the level of the company, profits are taxed at the standard corporate income tax (CIT) rate of 25%, regardless of whether profits are retained or distributed.
Withholding Tax (For Non-Residents) The following categories have tax withheld at 20% of income:
  • Employment income or directors’ fees
  • Earnings from the practice of an art or a sport, from advice (commercial/ technical), or personnel leasing
  • Income received for an intellectual property
Payroll Tax Social security contributions include three types of insurance together with some other contributions to funds. All employees are compulsory members of these insurances.
Sales Tax

A customer is required to pay 20% VAT above the net sales.

Several services are exempted from VAT. These services include exports and some other services for foreign customers.

VAT is reduced to 10% on a few products. This includes basic food and printed material.

Employers and Employees Social Security
Social security categories Employer % Employee% Total %
Sickness 3.78 3.87 7.65
Unemployment 3.00 3.00 6.00
Pension 12.55 10.25 22.80
Accident 1.20 0.00 1.20
Miscellaneous 0.70 1.00 1.70
Total 21.23* 18.12* 39
Public Pension The state pension system is a pay-as-you-go scheme, which employer and employee contributions finance. These amount to 10.25% of earnings for employees and 12.55% for employer contributions.

Incorporation: How to Set Up a Subsidiary in Austria

You need to obtain a trade license to pay resident employees as per Austria's subsidiary laws. You may apply for a trade license at the local municipal court or with the district management team. LLCs require an Austrian bank account to pay employees, too — this is typically a four-week step. It can take a few weeks to a few months for the registration. You'll also need to hire human resource management employees for taxation, employment compliance, among other things. Skuad's team has been practicing it for a long time now and has mastered the process. Connect with Skuad to know how you can leverage its expertise for doing business in Austria.

PEO

A PEO, also known as a Professional Employer Organization, is a firm that outsources services to small and medium-sized businesses (SMBs). These services typically include filing of employer payroll tax, retirement vehicles (401(k)), safety and risk mitigation, human resource consultancy, processing of the payroll, employee medical benefits, workers' compensation insurance, training and development, practice and liability insurance for employees’ (EPLI), and workforce management technology.

The main difference between PEOs and EORs is the longevity and personalization of service. With Skaud’s EOR solutions, you get a more discrete and specialized service, and the EOR will remain with you throughout the process and will help you grow too. On the other hand, with a PEO, the scope is quite restricted and is usually better suited for smaller setups. However, even for the smaller setups, it becomes difficult to shift and change your associations when scaling and growing.

Skuad's EOR solution is a good way to expand your business in Austria without setting up a separate entity. Our solutions help you to stay focused on your business and leave all business compliances, payroll processing and complete management work to us. Connect with Skuad to know more.

Conclusion

Austria is a potential investment and business hub; Its resources and laws make it a convenient environment for growing businesses. The immigration laws and quality of life also make it a lucrative place to move or start your business.

With expertise and complete knowledge of the country’s laws and regulations, Skuad’s Austria EOR solution can help you set up and grow your business in Austria. Talk to Skuad’s team of experts to know more about its quick and cost-effective solutions designed for your needs.

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