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Employment Laws in Austria

Updated on:
16 Jan, 2024
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Austria is a landlocked country in Central Europe. The small and medium enterprises dominate the Austrian economy. You can find ample business opportunities for expansion, and complying with employment laws in Austria opens doors to a skilled workforce and market success. 

Austria’s labor law is on par with European Union standards. Specific employment laws in Austria, like the White-Collar Workers Act, Leave Act, and Labor Constitution Act, are the foundation for employee rights and employer obligations. 

But remember, your responsibilities extend beyond full-time employees. The contract employment law in Austria also extends specific benefits to freelancers and remote employees. 

From contracts to benefits, let’s unpack the key labor regulations you need to know.

Contractual Agreements

Even though the employment laws in Austria do not mandate it, you can define and outline an employment relationship through a contractual agreement between you and your employee. 

Alternatively, you can provide a simple statement of terms, Dienstzettel, with key details like: 

  • Your business info
  • Employment start date
  • Work location
  • Job description
  • Negotiated salary/wages
  • Benefits (e.g., bonuses)
  • Payday
  • Vacation days
  • Work hours
  • Relevant agreement (collective or works)
  • Notice period
  • End date (fixed-term contracts)

Further, you can sign Data Processing Agreements alongside employment contracts to prevent any legal disputes in the future. 

Types of employment contracts in Austria

The employment laws in Austria favor the following types of employment agreements, namely: 

  • Full-time contracts (Arbeitsvertrag) 
  • Freelance contracts (freier Dienstvertrag) 
  • Work contracts (Werkvertrag) 

Obligations and rights for both parties

  • You must avoid the spillover of any reduction in working hours due to statutory requirements for hourly wage compensation. That is, wages must be increased in the same proportion as working hours are reduced.
  • The employment laws in Austria require you to deduct and withhold taxes (at a progressive rate of 0-50%), social insurance contributions, and other deductions (like trade union and religious contributions) and pay the same to respective authorities.
  • Upon termination, the labor laws of Austria require you to include the following in the employment paper:
    • Salary statement
    • Certificate of employment
    • Pay slip (L16)
    • Testimonial
    • Deregistration from the health insurance fund
  • Austria labor law encourages you to extend social security benefits to freelancers. When employing a freelancer without a written contract, you must produce a statement of terms and conditions (Dienstzettel).

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Working Hours and Overtime

The Working Time Act, Arbeitszeitgesetz, lays out the following regulations regarding work hours and overtime for nearly all private-sector employees over the age of 18: 

Regular working hours

  • Austria labor law prescribes an eight-hour workday or 40-hour workweek.
  • The employment laws in Austria allow you to achieve the statutory working hours requirement based on the nature of your work.
  • Further, labor law in Austria allows you to extend regular working hours to 12 hours.

Overtime regulations and compensation

  • You cannot ask employees to work overtime beyond the following limits:
    • Daily working time of 12 hours (exceptions up to 13 hours in case of standby duty or for preparation and end-of-day work).
    • Weekly working time of 60 hours (not exceeding 48 hours over an average of 17 weeks).
  • Moreover, Austria labor law mandates overtime compensation of 50% in money or time balance.

Minimum Wage and Compensation

The minimum wage rate in 2024

There is no standard minimum wage in Austria. 

Instead of a single national minimum wage, the employment laws in Austria allow specific collective agreements in your sector to determine the minimum wage rate. In some cases, the labor laws of Austria may favor individual companies with a work council to set up minimum wage in addition to internal company rules.

Factors Affecting Wage Determination

Remuneration per employment laws in Austria can be through any financial means and benefits. Individual factors such as age, qualifications, working hours, job role, etc., may determine wages or salaries. 

Moreover, your obligations towards remote employees in Austria remain more or less the same. 

Employee Benefits and Social Security

The employment laws in Austria extend the following statutory employee benefits and social security contributions: 

Statutory benefits

  • The employment laws in Austria require you to pay employees an annual salary in 14 equal installments instead of the typical 12 monthly payments. It may be a Christmas remuneration and a holiday bonus.
  • Austria labor law ensures maternity allowance, Wochengeld, to cover the salary pay during maternity leave.
  • The labor laws of Austria provide for a government-funded allowance, Kinderbetreuungsgeld, during childcare leave.
  • The employment laws in Austria allow benefits from the unemployment scheme to be utilized as a training allowance, Weiterbildungsgeld, during study leave. 

Social Security contributions and requirements

The actual calculation of social security contributions takes into account the gross salary ("contribution base") and the above contribution rate for each relevant benefit program. All contributions must be transferred to the relevant health insurance provider no later than the 15th of the following month.

Category Employer Contribution (%) Employee Contribution (%)
Pension 12.55 10.25
Health 3.78 3.87
Unemployment 2.95 2.95
Accident 1.10 0.00

The actual calculation of social security contributions takes into account the gross salary ("contribution base") and the above contribution rate for each relevant benefit program. All contributions must be transferred to the relevant health insurance provider no later than the 15th of the following month.

Vacations and Paid Time Off

The employment laws in Austria regulate the following paid and unpaid leave agreed upon in the employment contract. 

Annual leave entitlement

  • Austria labor law prescribes five weeks or up to 30 working days of paid annual leave in a year. It must be extended to six weeks for employees with 25 years of service. 
  • You must extend the same to part-time employees.

Public holidays and special leaves

  • You may observe paid time off during the following public holidays:
    • January 1st (New Year)
    • January 6th (Epiphany)
    • Easter Monday
    • May 1st (national holiday)
    • Ascension Day
    • Whit Monday
    • Corpus Christi
    • August 15th (Assumption Day)
    • October 26th (national holiday)
    • November 1st (All Saints' Day)
    • December 8th (Mary's Conception)
    • December 25th (Christmas Day) and December 26th (St. Stephen's Day)
  • The employment laws in Austria require you to extend the following special leaves to uphold employee rights:
    • Sick leave: Austria labor law provides the principle of continued remuneration (based on seniority and nature of work) that guarantees continued salary payments during illness, work accidents, occupational illnesses, and recovery leave. However, you must provide health insurance to cover sick pay after the negotiated continued remuneration expires.
    • Maternity leave: The labor law in Austria enforces the "Mutterschutz" period - paid leave eight weeks before and eight weeks after the expected delivery date.
    • Parental leave: You must offer unpaid leave to eligible employees for childcare until 24 months. The minimum duration of parental leave is two months. Austria labor law necessitates job protection for four weeks following the leave's conclusion.
    • Care leave: The labor laws of Austria prescribe one week of paid leave to take care of a family member living in the same household. You may offer one more week per calendar year to care for children under 12.
    • Study leave: Austria labor law requires you to offer a minimum of two months and a maximum of one year of unpaid study leave. You may grant study leave spread over up to four years.
  • You negotiate other leave entitlements per contract employment laws in Austria.

Termination and Severance

Here’s a brief overview of the termination of an employment contract and employer obligations that follow with it, as per the employment laws in Austria: 

Grounds for termination

  • Some valid grounds for ending an employment contract per labor law in Austria include:
    • Termination of a fixed contract upon expiry of a set date
    • Termination by mutual consent of the employee
    • Dismissal (with a valid reason like persistent negligence at work)
    • Resignation (for a valid reason like workplace discrimination or misconduct)
    • Unilateral termination with a notice period

Probationary period

  • The labor law in Austria allows you to employ individuals on a probationary period not exceeding one month.  
  • You can terminate the employment contract within the probationary period without giving a reason. 

Notice period 

  • You may determine the length of the notice period based on the nature of work and seniority level at the job.
    • White-collar employees: The White-Collar Workers Act (unless collective agreement states otherwise) prescribes six weeks for new hires to up to six months for veterans.
    • Blue-collar employees: Similar rules apply, but they mainly refer to the General Civil Code.

Severance pay

  • Austria labor law calls for a funded severance pay system called "Abfertigung neu."
  • You must pay a monthly contribution of 1.53% of the employee's gross salary (including bonuses) into a severance fund. 
  • The severance pay in Austria is not subject to income tax.
  • The labor laws of Austria encourage you to include the same in freelance contracts.

Discrimination and Equal Opportunity

The following employment laws in Austria regulate the various aspects of discrimination and equal opportunity in the workplace: 

  • Federal Equal Treatment Act (GIBG): Covers private sector employment.
  • Federal Act on the Equal Treatment Commission and Ombudsperson: Provides support and investigation mechanisms.
  • Other federal and provincial laws: Extend protection to specific groups and settings.

Prohibitions against workplace discrimination

The employment laws in Austria make you equally responsible for employee discrimination by third parties, such as colleagues or customers. 

Therefore, you must remain payroll and HR compliant to avoid getting penalized for workplace discrimination, for example: 

  • You cannot mistreat employees throughout employment
  • You must extend fair terms without discrimination
  • You must offer equal access to support and opportunities
  • You cannot discriminate based on gender or ethnicity when providing services

Health and Safety Regulations

The employment laws in Austria enforce comprehensive occupational health and safety (OHS) regulations, including: 

  • Safe and sanitary workspaces, equipment, and facilities
  • Reducing strain, noise, and exposure to dangerous substances
  • Providing and using appropriate safety gear
  • First aid, working hours, and conditions for specific needs

Stay Compliant with Skuad

You can easily navigate the complexities of employment laws in Austria with an Employer of Record (EOR) like Skuad.

Skuad simplifies everything for you - onboarding, payroll, taxes, compliance - across 160+ countries (including Austria) without setting up local entities. 

Book your demo today and start building your globally distributed and diverse team.

FAQs

Q1. What are the payroll rules in Austria?

A1. The employment laws in Austria require you to deduct and withhold employee income taxes and mandatory social security contributions. While there is no national minimum wage, industry agreements often set them. You may offer 13th & 14th Salary (for Christmas and holiday bonus). Overtime requires extra pay or time off in lieu. Employees enjoy at least 25 paid vacation days, sick leave, and public holidays. 

Q2. What is the notice period in Austria?

A2. The notice period in Austria depends on the length of employment, the type of employment, and collective agreements. It is usually between six weeks to six months. 

Q3. What is the legal working age in Austria?

A3. You can employ anyone above 15 years old for apprenticeships. However, the legal working age in Austria is 18 years as a formal white-collar employee. 

Q4. Does Austria pay 14 months’ salary?

A4. The employment laws in Austria require you to pay employees an annual salary in 14 equal installments instead of the typical 12 monthly payments. These additional payments are not bonuses but proportions of their annual salary spread evenly throughout the year so employees can manage expenses smoothly during Christmas and holidays. 

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EOR in 
Austria
Monthly
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Annually
Pay monthly at a discounted rate with a 12-month commitment
$
269
/month
(billed annually)
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limited-offer-banner
EOR in 
Austria
Monthly
$
299
/month
(billed annually)
Annually
Pay monthly at a discounted rate with a 12-month commitment
$
269
/month
(billed monthly)
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Employ contractors and employees in 160+ countries

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Table of Content

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