Introduction to Payroll in Austria

Austria is one of Europe’s most stable and thriving economies. A country that combines old, stunning towns and cities with breath-taking natural landscapes, Austria’s charm appeals to visitors and investors alike.

Choosing to expand your company to Austria can generate new and profitable revenue streams, but not without some challenges. One of the main ones is managing and processing payroll in Austria.

In particular, companies that decide to set up their Austria payroll independently might struggle to keep up with the country’s many laws, rules, and statutory regulations. One easy way to avoid these challenges is to work with an experienced and reputable global payroll provider like Skuad.

Payroll Process in Austria

Overall, payroll processes in Austria include three different stages: pre-payroll, payroll calculation, and post-payroll. In our guide, we will be discussing each of these in detail.

Pre-payroll phase

During this initial stage, you will need to set up a business entity in Austria. This also means determining and understanding all the legal aspects of payroll, as well as gathering and validating payroll input.

Setting up the organization

Creating your new Austrian-based business means defining standardized policies and rules around payroll management.

Business profile

Registering your business in Austria will make it legal and provide you with your own business number that will identify your company on all official payroll documentation.

Work location

Despite being a small country, it’s worth checking whether the specific area where your company will be operating follows particular laws around labor and employment.

Leave policy

Your company will need to establish and communicate policies on annual leave, sick leave, parental leave, and any other leave types.

Attendance policy

One of the main factors that influence payroll calculation is work attendance. So, make sure that you put specific policies in place to help you calculate all employee attendance, including overtime, special permits, and more.

Statutory components

It’s essential to always comply with Austrian rules and regulations around payroll and employment.

Salary components

Typically, the salary calculation needs to take into consideration aspects such as allowances, deductions, types and lengths of leave.

Pay schedule

Your company should establish its own payday and payment schedule. Remember to always make your employees fully aware of when they should be expecting their salaries every month.

Employee information

It is necessary to gather some information on your employees, as this will affect the final payroll calculations.

Payroll calculation phase

If you choose to do business in Austria, you might opt for an automatic payroll system. This helps you rapidly transfer the information you collected during pre-payroll into your main payroll system, which will work out individual salaries at the touch of a button.

Post-payroll phase

Salary payments

Typically, salaries are one of the biggest regular outgoings for most companies. Paying salaries is an essential part of the post-payroll phase, and one that you can choose to handle either manually or automatically.

Payroll accounting

Maintaining a track record of your salary payouts helps you keep your accounts in good standing order in the long term.

Payroll reporting and compliance

To be compliant in all aspects of your Austrian payroll, you will also need to communicate payroll information to relevant authorities.

Ensuring that your in-house team can look after all this in an autonomous, efficient, and cost-effective way can be incredibly challenging. Teaming up with a trusted, professional payroll provider like Skuad, on the contrary, can ease your payroll burden and allow you to focus on running and expanding your business.

Payroll Processing in Austria

Processing payroll in Austria is not easy. There are many different tax types and tax brackets to consider, as well as a range of different local and national authorities to which you must report. All this can be complicated enough to cause your business to suffer from delays and inefficiencies, while also putting compliance at risk.

Payroll Processing Company in Austria

To navigate payroll in Austria in a smooth, effective, and compliant way, the best approach is teaming up with a payroll processing company like Skuad. Our team handles all the different stages of payroll so that you don’t have to, and gives you back valuable time and resources to focus on vital business decisions.

Payroll Management in Austria

Payroll management is a complex task that involves recording all your employees’ financial information and knowing all the relevant rules and regulations on payroll and employment.

Payroll Compliance in Austria

In Austria, all employees within the private sector and above the age of 18 are protected by the Working Time Act or “Arbeitszeitgesetz,” which also contains provisions around payroll compliance.

Payroll Components in Austria

Several factors determine how your company calculates individual salaries. These are known as payroll components, and in the next section, we will discuss the main ones.

Compensation

Austria doesn’t have a specific national minimum wage. Collective agreements establish minimum salary amounts for different sectors and companies. However, the average salary in Austria is around €48,000 per year.

Working hours

In Austria, people working in offices are normally employed 9 to 5, Monday to Friday.

Overtime laws

Collective agreements establish specific rules and regulations around overtime work and pay. On a federal level, the limit is set at 48 working hours per week.

Social security

Austrian employers contribute 21.32% of the gross salary of their employees towards social security.

Sick leave

Austrian employees are entitled to six to 12 weeks of sick leave every year. These are paid in full by their employer. Any additional time off due to sickness or injury is paid in half, and is usually capped at four extra weeks.

Parental leave

Austrian women receive a cash benefit known as “ Wochengeld.” In addition to this, insured women are entitled to full pay during maternity leave, but only after they have worked for the same employer for at least three months.

New fathers can also take time off after the birth of a child. This is called “Familienzeit,” meaning family time, and corresponds to one month of unpaid leave.

Public holidays

Here is a list of the main national holidays in Austria:

• January 1: New Year's Day
• January 6: Epiphany
• April 18: Easter Monday
• May 1: Labour Day
• May 26: Ascension Day
• June 6: Whit Monday
• August 15: Assumption of the Virgin Mary
• October 26: Austrian National Holiday
• November 1: All Saints' Day
• December 8: Immaculate Conception
• December 24: Christmas Eve
• December 25: Christmas Day
• December 26: Boxing Day
• December 31: New Year

Payroll taxes

Austrian employers are required to pay a series of taxes, including:

• Social security tax
• Corporate income tax
• Withholding tax
• Sales tax
• Municipal employees tax
• Contribution to pension fund
• Contribution to the Chamber of Commerce
• Tax on insurance contracts

Other laws

• Termination of Employment. Austrian employers can terminate an employee based on a specific reason, such as misconduct, negligence, or criminal offense. Dismissals can be communicated either in writing or verbally. In some cases, Austrian employers can dismiss an employee without just cause, but the employee can raise a complaint with the labor and social security court.
• Paid Annual Leave. Austria is one of the most flexible and generous countries worldwide when it comes to paid annual leave. By law, workers are entitled to 25 days of paid holidays every year. After 25 years of service, this allowance grows to 30 days. In addition to this, people employed in sectors where they are required to perform heavy nighttime work can also request further leave days, all paid in full by their employer.

After all considerations, it’s easy to feel like managing payroll in Austria is a complex and daunting task. This is why you should hire a partner who knows exactly how to navigate such a complicated landscape, a partner like Skuad.

Conclusion

There are several options to manage payroll in Austria. These include:

• Internal payroll. If you opt for this, you will run every single aspect of your Austrian payroll in-house. This means having to incur much higher expenses, as you’ll need to set up dedicated HR and accounting teams.
• Remote payroll. With this approach, your parent company will manage payroll in Austria. This is a cheaper option compared to internal payroll, although it can also be very complicated, as it requires solid knowledge and understanding of all local and national labor and employment laws.
• Payroll processing company. If you decide on this approach, you will need to hire a local payroll processing company. Technically, this can be a great option, but it also means having to perform an in-depth search of the local market in order to find an excellent, experienced, and reputable local payroll agency, a search that can be far from quick or easy.
• Outsourced payroll. This is, undoubtedly, the most comprehensive, efficient, and cost-effective way to manage payroll services in Austria. At Skuad, we are a global payroll processing company that can take care of all your payroll requirements on your behalf, letting you get back to what truly matters to you and your business.

Are you interested to see how our product works, in practice? Then, be sure to take a look at our FREE demo, today.

As of May 22, 2022, the U.S. dollar is equivalent to .95 Euros, the currency in use in Austria and throughout the European Union.