Employment Law

Employment Contracts in Austria

When recruiting in Austria, we strongly recommend that you provide all employees with a written employment contract. Every contract needs to contain relevant details of the employment arrangement, such as wages, leave and termination provisions. It should be written in German and use Euros for currency.

Working with our Austrian PEO, Remoly's team of local experts can provide assistance in drafting strong employment contracts that comply with local regulations.

Fixed Term

Indefinite

Austria Working Hours

Most workers are limited to 40 hours per week and 8 hours per day, but some employees can negotiate lower limits through a collective bargaining agreement (CBA) or individual bargaining. For work beyond these limits, employers are required to either provide future rest periods or pay overtime at a minimum of 150% of regular wages (or 200% on nights and weekends).

Holiday Policy

Austria Vacation

Employers must provide at least 25 days of paid leave to employees who have worked for the organization for at least six months. After 25 years of service, workers can enjoy an extended subsidy of 30 days of paid leave per year.

Some employers may choose to offer more holidays, but these are the statutory minimum and the most common holiday allowances.

Austrian Sick Leave

Most employment contracts provide employees with paid sick leave. However, the exact number of days and compensation amounts vary and depend on the individual role, any negotiations and collective bargaining agreements, the length of employment, and other factors.

Parental Leave in Austria

Mothers in Austria are required to take 16 weeks of paid maternity leave, which includes 8 weeks before and 8 weeks after birth. Both parents can take unpaid leave until the child is two years old, and the minimum leave to which they are entitled is two months. Employers must keep their positions open until at least four weeks after they return to work.

Termination and Severance in Austria

The mandatory notice period required to terminate a contract varies depending on how long the employee has been with the company (once the probation period is exceeded). For employment of less than two years, the notice period is six weeks. For employment between three and five years, the notice period is two months. Three months’ notice for years 6 to 15, four months for years 16 to 25, and five months’ notice for years 26 and above.

In Austria, severance pay is common upon dismissal and the employer usually deposits a percentage of salary into a severance fund, which is either paid or passed on to the next employer.

The specific terms of termination and severance pay can vary significantly, so it is important that you fully understand your situation and the specifics of the agreement when you are employed in Austria. If you are unsure, always seek professional advice.

For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. ​​Remoly’s Austrian PEOs can reduce risks for foreign companies and provide guidance during the process.

Austrian Taxes

Both employers and employees in Austria are required to contribute certain amounts to various funds to benefit employees. For example, pension insurance requires 12.55% and 10.25% of salary respectively, and health insurance requires 3.78% each. Employers are also required to purchase workplace accident insurance at a rate of 1.3%. Overall, mandatory social welfare contributions are usually around 32% of the employer's salary.

Austrian income tax is levied gradually from 0% to 55% based on employee income.

Austria's corporate tax rate is 25%.

Health Insurance in Austria

Austria has a well-established public health system, so employer-provided private health insurance is neither necessary nor the norm. However, some organizations may choose to offer it as part of their benefits package, particularly for more senior positions.

Salary and Benefits

Austrian Compensation Law

There is no legally mandated minimum wage in Austria. However, most positions will have a minimum level of negotiation, so it is crucial to understand the CBA and each employee's individual negotiations when recruiting in Austria.

Welfare Administration in Austria

Setting up a benefits system for Austrian employees can be difficult and complex if you are unfamiliar with the country and its labor laws. If you want to handle the setup independently, it may take several weeks and may delay your scaling process.

Remoly offers an alternative to simplify your benefits administration through our Austrian PEO. Our outsourcing services will cover your benefits setup and administration, helping you focus on faster, more successful expansion.