What is a professional employer organization (PEO)?
Foreign companies hiring remote employees in Austria can sign on with a professional employer organization or PEO to be able to run HR functions and processes in the country. PEOs enter joint employment agreements with their client partners in order to offer the capability to perform HR processes in the markets in which they operate, including:
- Recruitment, hiring, and onboarding
- Developing compensation packages
- Implementing payroll processing
- Administering statutory and supplementary benefits
- Guaranteeing compliance with local employment practices
Entering into a joint employment agreement means clients and their partner PEOs become co-employers. They each share liabilities and responsibilities for any workers hired under the agreement. PEOs can accommodate the needs of their client partners by increasing or decreasing how many HR functions they handle, and this is indeed one of the competitive advantages of working with them. PEOs can provide efficient HR process administration, management, and payroll as well as the platform that serves as the digital infrastructure for the endeavor.
However, the real value in partnering with a trusted PEO is compliance management. A PEO in Austria can help clients maintain complete compliance to the country’s local labor laws regardless of how many HR functions they want to run. With compliance taken care of, clients can then focus on other important areas of business, such as scaling their efforts to build globally distributed teams.
Compliance is the most challenging issue facing companies looking to outsource roles. For example, hiring remotely in the Republic of Austria requires compliance to several laws and acts, including:
- Act on the Adjustment of Labor Contract Law
- Labor Constitution Act
- Salaried Employees Act
- Austrian Civil Code
- Annual Leave Act
- Working Time Act
- Maternity Protection Act
And that’s not even an exhaustive list.
Austria is active in the outsourcing market. Its IT outsourcing sector alone is estimated to have brought in $1.825.3 billion in 2021. Its geographical location makes it appealing to foreign investors, and its strong economy translates well into an image of stability in the region. The country’s workers are highly skilled from a well developed educational infrastructure; according to a 2022 list from multiple sources, Austria ranked 16th in the world in terms of quality of education.
Of course, access to that highly skilled talent pool is locked behind a gate of compliance. This same hurdle will present itself repeatedly to businesses expanding to many international markets, as well.
Clearly, there is much value in finding a reliable PEO to become a partner for global growth.
What are the benefits of using a PEO in Austria?
There are always inherent general benefits that come with offloading HR and payroll management to a service provider. However, as mentioned earlier, the true value of a PEO stems from its in-country legal expertise.
- PEOs ensure compliance with local labor laws. Labor laws in Austria span practically every nook and cranny of employment practice in the country. If you intend to outsource to the country, you need to make sure you follow statutory guidelines for everything from recruitment to management to payment, and even more complicated issues such as intellectual property (IP) transfers and protections. Otherwise, you open yourself up to a lot of risks associated with noncompliance.
- PEOs make payroll processing and tax filing more efficient. Leveraging in-country legal knowhow, PEOs offer their clients secure, compliant, and efficient payroll and tax management systems. Not only will these platforms centralize and streamline related HR functions, they will also always keep your payroll and tax administration compliant with local labor laws.
- PEOs mitigate risks. Because PEOs ensure that you stay compliant to local labor laws, they actually shield you from a lot of potentially heavy penalties and costly legal fees and fines. Even if there are no penalties levied in the event of inadvertently running foul of mandatory requirements, you will often still be required to pay any missed compensation due appropriate parties because of the noncompliance. Additionally, should you need it, PEOs can offer expert in-country legal counsel and advice outside the scope of your current engagement.
- PEOs administer competitive benefits. To attract and retain the top talent in Austria, you need to develop job offers with salary packages that are competitive with industry and market rates. These salary packages include benefits both mandatory and supplementary. PEOs can help you create the ideal benefits to attract highly skilled workers for the roles you want to fill.
- PEOs reduce employee costs. All of the above cost a fair bit of overhead when handled in-house. As PEOs package all of these and more under a single offering, you can actually reduce overhead costs as you scale your business.
Explore Skuad’s services in Austria to reap these benefits and more. Let Skuad focus on essential compliance concerns so you can turn your attention to growing your business.
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What are the differences between an EOR and a PEO?
Another option similar to a PEO is an employer of record (EOR). EORs also let overseas companies hire remotely in a similar fashion to PEOs, with one key difference that impacts how the relationship to client partners functions.
Hiring in Austria with a PEO
Austria is an excellent place to find highly skilled, English-proficient workers and is particularly suited for businesses that want to engage with the rest of the EU region. For companies looking for German-proficient employees who can act as the boots on the ground for expansion opportunities, Austria is likewise quite appealing as a place to hire remote workers.
The first and most critical speed bump to any such plans, of course, is local compliance.
Sign up with Skuad’s services in Austria so you can jumpstart your efforts in hiring globally distributed teams in the country. Skuad guarantees 100% compliance with Austrian labor laws and a cutting-edge platform for management and payroll processing.
Payroll in Austria is challenging. It’s easy when you use a PEO.
Payroll processing can be tricky enough without compliance issues to labor laws with which you are unfamiliar, but when hiring remote employees overseas, you can expect payroll to become doubly challenging. Local labor laws in Austria dictate key statutory components of payroll, such as:
- Compensation structure and minimums
- Working hours and overtime
- Taxation and deductions
- Types of leaves
And in each and every one you need to carefully perform due diligence to ensure adherence to mandatory guidelines.
For companies looking to scale aggressively through outsourcing, it is difficult to expect they can muster the resources to address this compliance challenge in-house. The problem is that noncompliance is a sure way to not only incur penalties and legal costs but also hurt your relationship with remote workers.
Lastly, even if you could perform all this in-house, you’ll need to do so again every time you hire new international workers.
Partners like Skuad are highly sought after as a strategic solution for these reasons. Skuad’s global HR management and payroll platform addresses all these concerns so you don’t have to.
Request a demo from Skuad’s experts to know more.
What a PEO in Austria can and cannot do for you
If you’re keen on understanding the bottomline concepts behind what a PEO can and cannot do for you, here’s a simple, high-level breakdown:
A PEO can
- Run streamlined HR management and payroll processing for your remote teams in Austria as well as other markets, handling compliance concerns along the way
- Assist with the recruitment, onboarding, and management of your Austrian employees, and do the same for other international markets
- Mitigate HR overhead costs that come with the management of globally distributed teams, and while doing so, protect you from risks associated with noncompliance
A PEO cannot
- Hire employees as the sole legal employer on your behalf
- Take full control of your company
- Make the decision on whether to hire or fire your employees
Businesses big and small can find value in partnering with a PEO in Austria
The first step to building globally distributed teams is understanding the importance of compliance to local labor laws. You need to comply with mandated standards and processes detailed by relevant Austrian legislation so you can legally perform your required HR and payroll functions. The second step is finding the right partner to help you do so.
Few companies big or small can handle complex local compliance issues in-house. This is especially herculean for companies looking to continuously expand internationally by hiring more remote employees in the future.
A reliable PEO in Austria is the solution to the crucial compliance conundrum. A trusted PEO in Austria can help you scale your company by letting you legally and compliantly hire, manage, and pay employees in Austria easily and stress-free.
Book a demo with Skuad today.