Hire and manage employees in Austria

Complying with labor and employment laws in Austria

Austria’s local employment landscape is shaped by the General Civil Code, the Salaried Employees Act, and collective agreements that cover nearly all employees, in addition to EU regulations that harmonize standards across member states.

For international employers, adapting to Austria’s layered system of local labor laws and collective agreements can feel complex. Staying compliant isn’t just about avoiding penalties—it’s about building trust with your workforce and ensuring smooth operations. If navigating Austrian employment laws feels overwhelming, partnering with Rippling EOR can simplify the process by keeping your employment practices aligned with the latest laws in Austria and beyond.

Employment contracts in Austria

In Austria, employment contracts can be written, verbal, or even implicit when an employee begins working. However, if no written contract is provided, employers must issue a Dienstzettel—a written statement of terms—at the start of the employment relationship. While not a contract itself, the Dienstzettel ensures employees have documentation of the key conditions of their job.

A Dienstzettel must include at least the following:

• Name and address of the employer

• Name and address of the employee

• Contract start date

• Normal place of work

• Job classification and intended assignment

• Basic salary or wages, plus any bonuses or other remuneration

• Date of payment

• Annual leave entitlement

• Normal daily and weekly working hours

• Applicable collective agreement or works agreement

• Notice period

• Contract end date (for fixed-term contracts)

Contracts may be indefinite or fixed-term. While fixed-term agreements are permitted, chaining several together without justification may lead to reclassification as an indefinite contract. Regardless of the type, terms can never be less favorable than what is established in Austrian labor law or collective agreements.

Labor unions in Austria

Trade unions play a powerful and institutionalized role in Austria’s labor environment. While union membership stands at around 27%, virtually all employees are covered by collective bargaining agreements (CBAs)—with coverage often as high as 98%. Many CBAs extend beyond union members to cover entire sectors, regardless of union affiliation.

The Austrian Trade Union Federation (ÖGB), supported by sector-specific member unions like GPA (private sector) and PRO‑GE (industrial workers), negotiates CBAs at the industry and regional levels. These agreements regulate essential employment conditions, including wages, overtime, working hours, and bonuses. Businesses operating in Austria should be aware of the relevant collective agreements in their industry and ensure their employment terms adhere to these standards.

Mitigating permanent establishment risk in Austria

A permanent establishment (PE) is a core concept in international taxation that determines whether a company has enough physical or operational presence in a country to trigger local corporate tax obligations. In Austria, a company is considered resident for tax purposes if it is either legally registered there or if its place of effective management—where day-to-day decisions are made—is located in Austria. This definition closely follows the OECD model, which Austria generally applies.

Under Austrian tax law, a PE is created when a business operates through a fixed establishment, such as:

• A place of management

• Plants, warehouses, or sales offices

• Construction sites lasting more than six months

• Employee home offices, which may qualify as a PE if they are regularly used for core business activities

Because PE definitions can differ slightly across Austria’s tax treaties, businesses need to evaluate both local regulations and applicable treaties. To avoid inadvertently creating a PE, companies should avoid conducting contract-signing or core management functions in Austria unless fully registered there, carefully document the scope of employee activities, and seek local tax advice from experts.

Probationary period in Austria

In Austria, employers and employees may agree to a probationary period at the start of the employment relationship. During this time, either party can terminate the contract without notice or reason. By law, probation is generally limited to one month, though for apprenticeships it extends to the first three months of training.

Probationary periods give both sides a chance to assess fit and performance before committing to a longer term arrangement. Once the probation period ends, standard termination rules and notice periods apply.

Local laws in Austria

Beyond the General Civil Code, the Salaried Employees Act, and collective agreements, Austrian employers must also comply with a broader framework of labor and employment regulations. Adhering to these rules not only keeps your business compliant but also helps build trust with employees and avoid potential disputes.

Here are some key areas of Austrian law relevant to foreign employers:

• Data protection: Austria follows the EU’s General Data Protection Regulation (GDPR) as well as its national Privacy Deregulation Act (2018). Employers must handle employee data carefully, ensuring transparency, lawful use, and adequate safeguards against misuse or breaches.

• Equal rights and equal pay: Austrian labor law mandates equal treatment of employees regardless of gender, ethnicity, religion, and other protected characteristics. Employers are required to provide equal pay for equal work, and larger companies must regularly prepare income reports to ensure compliance with gender pay equality rules.

• Workplace safety: The Austrian Occupational Health and Safety Act (ASchG) requires employers to provide a safe and healthy work environment. This includes conducting workplace risk assessments, preventing hazards, and taking measures to protect both the physical and mental well-being of employees.

Worker classification and misclassification in Austria: Contractors vs. employees

When building your team in Austria, one of the first decisions you’ll need to make is whether to engage workers as full-time employees or as independent contractors. The distinction matters, not only for day-to-day workforce management, but also for compliance with Austria’s employment, tax, and social security laws.

Getting Austrian worker classification wrong can be costly, leading to back payments, fines, and legal liabilities. Understanding where the line is drawn between employee and contractor status will help you stay compliant and avoid unnecessary legal risks.

Learn more about the differences and the potential consequences of misclassification below.

Worker classification in Austria: Key differences between contractors and employees

Consequences of misclassification in Austria

Misclassifying contractors as employees in Austria can result in significant financial, legal, and reputational risks. Key consequences include:

• Back payments: Employers may have retroactive obligations to pay minimum wages, holiday and sick pay, employer pension contributions, and other benefits normally granted to employees.

• Fines and penalties: Severe sanctions apply under Austria’s laws, with fines reaching up to EUR 400,000 for serious violations. Additional penalties may apply depending on which law is breached.

• Tax liabilities: Employers can be held liable for underpaid payroll taxes and may need to repay wrongly deducted VAT.

• Legal action and criminal liability: Misclassified workers can claim full employee protections, and employers risk criminal liability, with penalties ranging from fines to imprisonment, depending on the sums involved.

Employers should also be mindful of EU-wide developments, such as the 2024 directive on platform workers and the 2023 cross-border social security framework, which continue to tighten standards for contractor classification.

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Wages and payroll in Austria

Managing wages and payroll is one of the most detail-heavy aspects of hiring in Austria. Beyond simply calculating salaries, employers need to navigate CBAs, ELDA reporting requirements, mandatory social security contributions, and detailed payslip requirements. Since Austria does not have a universal statutory minimum wage but instead relies on sector-specific CBAs, compliance depends on knowing which agreement applies to your workforce.

For most companies, this means understanding not just the monthly pay cycle but also common practices like the 14 annual salary payments. Getting payroll right in Austria is critical—not just to avoid fines, but to build trust with your employees. Here’s what you need to know.

Minimum wage in Austria

Austria does not have a universal statutory minimum wage. Instead, sector-specific CBAs determine minimum pay levels and ensure employees receive fair compensation. These agreements establish the collectively agreed minimum wage, which is legally binding and enforceable in labor and social courts.

Most collective agreements in Austria already ensure a minimum gross wage of at least €1,700, paid 14 times per year, which equates to an average monthly gross salary of around €1,983. To determine the minimum wage applicable to a given employee, employers must identify which collective agreement governs their industry or occupation.

Payroll frequency in Austria

Austrian labor law does not set a specific payroll frequency, but in practice, monthly payments are the standard. Wages and salaries are typically paid at the end of the month, unless a CBA specifies a different schedule.

Employers are required to issue a detailed payslip each pay period, outlining gross pay, deductions for taxes and social security contributions, and the employee’s net salary. These payslips may be provided in electronic form.

Bank transfers, or EPS, are the standard method of wage processing in Austria, though e-wallets and other forms of payment are becoming more common. Cash payments are not recommended, as they can raise compliance concerns with Austrian authorities.

13th and 14th month pay in Austria

13th month pay is an additional salary given to employees as a holiday or year-end bonus. While it’s a statutory benefit in many European countries, Austrian law does not mandate it. However, most CBAs in Austria require both 13th and 14th month salaries, and the near-universal coverage of these agreements makes them a standard expectation for employers. The 13th salary is usually paid in the summer (often referred to as “holiday pay), and the 14th salary is paid in December (commonly called the “Christmas bonus”). 

These bonus payments are each equivalent to a full month’s salary, meaning Austrian employees effectively receive 14 annual payments instead of 12. Employers planning to hire in Austria should budget for these extra payments and ensure the terms are clearly addressed in the employment contract to comply with local law and the relevant CBA.

Run payroll compliantly in Austria

Because Austrian payroll is shaped heavily by CBAs and noncompliance can lead to steep penalties, many businesses pursuing global employment work with an employer of record (EOR). An EOR like Rippling can offer local market insights, handle payroll processing, tax withholdings, and benefits management on your behalf, ensuring your team is paid correctly and compliantly while you focus on growth.

Because Austrian payroll is shaped heavily by CBAs and noncompliance can lead to steep penalties, many businesses pursuing global employment work with an employer of record (EOR). An EOR like Rippling can offer local market insights, handle payroll processing, tax withholdings, and benefits management on your behalf, ensuring your team is paid correctly and compliantly while you focus on growth.

Employer and employee taxes in Austria

Austria’s tax framework is shaped by both domestic legislation and EU directives, and it is administered by the Federal Ministry of Finance. Employers are responsible for calculating and remitting the appropriate income tax withholdings, social contributions, and other statutory payments on behalf of their employees. Getting these obligations right is critical, not only to maintain compliance but also to avoid costly penalties.

Here are the key considerations to keep in mind about employer and employee taxes in Austria.

Employer taxes in Austria

Here are the mandatory contributions for employers in Austria:

Employee taxes in Austria

Employers must deduct the following contributions from employees’ paychecks as a percentage of their income:

Austrian employees also pay progressive income tax:

Penalties for not paying taxes in Austria

Austria imposes strict rules on late filing and payment of corporate income tax (CIT) and VAT. If a company fails to file a tax return on time, the tax office may levy a late-filing charge of up to 10% of the assessed tax. For unpaid taxes, a late-payment surcharge of 2% is applied, rising by an additional 1% after three months and another 1% after six months, capped at 4% total. Interest on differences between prepayments and final assessments accrues from Oct. 1 of the year following the tax year, at the base rate plus two percentage points (currently about 1.38%). Enforcement charges of up to €5,000 may also apply if the tax office must compel compliance.

Criminal liability can also arise in cases of tax evasion, such as deliberately filing false returns or concealing information. Penalties range from fines of up to twice the evaded tax to prison terms of up to 10 years for aggravated offenses.Given the potential for steep fines and even criminal sanctions, businesses expanding into Austria should take tax compliance seriously. Seeking local expertise or utilizing an employer of record in Austria can help ensure that filings and payments are made accurately and on time, reducing the risk of costly mistakes while freeing your team to focus on growth.

Employee benefits in Austria

In Austria, employee benefits are a combination of mandatory social protections and optional perks that help companies compete in a highly skilled labor market. Statutory benefits like health insurance, pension plans, and unemployment insurance form the foundation of worker protections, while many employers supplement them with extras such as private health insurance, meal allowances, or professional development programs.

Here’s an overview of the mandatory and optional benefits employers should know about.

Mandatory benefits in Austria

Mandatory benefits are legally required, meaning employers must offer them to eligible employees. In Austria, the statutory benefits include:

• Health insurance: Employers and employees contribute to Austria’s social insurance system, ensuring employees have access to healthcare services, including medical treatment, hospital care, and sick pay. The employer contribution rate for health insurance is 3.78%.

• Accident insurance: Fully funded by employers (at a rate of 1.1% of each employee’s gross salary), this covers workplace accidents and occupational diseases, providing medical treatment and compensation where necessary.

• Old-age pension insurance: Austria’s pension system consists of three pillars, of which employers and employees must contribute to the first (at a rate of 12.55% and 10.25%, respectively). The first pillar, also known as State Pension, provides income upon retirement, as well as survivor benefits for family members.

• Unemployment insurance: Funded jointly by employers and employees, this benefit ensures income replacement for individuals who lose their jobs and meet eligibility requirements. Both employers and employees contribute 2.95%.

• Insolvency Guarantee Funds: Employers contribute 0.55% to protect employees’ wages in the event their company becomes insolvent, ensuring they still receive their owed salary.

• Family Burdens Equalization Levy:  Employers contribute 3.9% to this fund, which finances family allowances and parental benefits to support employees with dependents.

Optional benefits in Austria

To stay competitive in Austria’s labor market, many employers go beyond baseline requirements by offering fringe benefits and additional perks. While not legally required, these benefits help companies attract and retain top talent, boost employee satisfaction, and foster loyalty. Common optional benefits include:

• Private health insurance: Provides quicker access to specialists and private clinics, reducing wait times compared to the public healthcare system.

• Risk life insurance: Offers financial security to employees’ families in the event of death or long-term disability, adding an extra layer of protection beyond statutory coverage.

• Additional pension: Employers may contribute to supplementary retirement schemes, such as collective insurance or direct benefit commitments, to enhance long-term financial security for employees.

• Transportation benefits: Subsidies for public transit or contributions toward commuting costs are common, especially in larger cities like Vienna.

• Professional development: Funding for courses, training, or certifications helps employees build new skills and supports career growth.

• Meal allowances: Employers may provide meal vouchers or subsidies for lunch, improving daily convenience and employee well-being.

Working hours, overtime, and leave in Austria

When expanding into Austria, employers must carefully manage working hours, overtime, and leave. These regulations are highly structured and influenced by both Austrian law and EU directives, all designed to safeguard employee health, work-life balance, and fairness in the workplace.

Austria’s Working Time Act sets the foundation, but collective bargaining agreements often add further specifics, such as reduced weekly hours or enhanced leave entitlements. Whether your team is based in Vienna’s financial hubs or in Austria’s industrial regions, compliance with these regulations is key to maintaining smooth operations and avoiding legal pitfalls.

Here’s what employers need to know about standard working hours, overtime laws, and leave entitlements in Austria.

Standard working hours in Austria

According to Austria’s Working Time Act, a standard workweek is 40 hours, with eight-hour working days over five days per week. However, collective agreements in many industries have established shorter weeks at 38 hours. Some collective agreements, though, may extend daily working hours to 10 hours, instead of the typical eight. In certain cases, a four-day workweek may be possible as well, if the employee works 10 hours per day. 

When deciding an employee’s working hours, be aware of any relevant collective agreements for your industry to ensure the terms laid out in the employment contract adhere to those standards.

Overtime laws in Austria

Overtime in Austria is strictly regulated under the Working Time Act. Employees may be required to work beyond the standard hours only if permitted by law, included in their contract, or agreed upon case-by-case. Daily working time, including overtime, cannot exceed 12 hours, and weekly working time is capped at 60 hours. On average, working time must not exceed 48 hours per week over a 17-week period.

Employees generally earn a 50% pay premium for overtime hours, though they may opt for time off in lieu instead, accruing 1.5 hours for every overtime hour worked. Collective agreements may also set additional rules, particularly in industries where standby duty applies. Importantly, employees can refuse overtime if it exceeds 10 hours per day or 50 hours per week.

Rest period and break laws in Austria

Austria’s Working Time Act guarantees employees specific rest and break entitlements to protect health and work-life balance:

• Breaks during work: Employees must take at least a 30-minute break if their working day exceeds six hours. This break can be split into two 15-minute or three 10-minute segments, and in some cases may be reduced to 15 minutes by works council agreement or the Labour Inspectorate.

• Daily rest: Workers must have at least 11 consecutive hours of rest between two working days. Collective agreements may reduce this to eight hours if compensatory rest is provided within the next 10 days.

• Weekly rest: Employees are entitled to at least 36 consecutive hours of weekly rest, typically including all of Sunday. In shift work, this may be reduced to 24 hours, but the average must remain 36 hours off per week over a four-week period. If employees work during their weekly rest, they must receive compensatory rest the following week.

Leave laws in Austria

Austrian employees are entitled to paid and unpaid leaves, ensuring employees can prioritize work-life balance.

The types of leave employees are entitled to receive in Austria include:

• Annual leave: Employees in Austria are entitled to five weeks of paid annual leave per year once they’ve completed six months of service with the same employer. After 25 years of service, this entitlement increases to six weeks.

• Sick leave: Employees are entitled to paid sick leave, with the length of coverage depending on how long they’ve been employed:

  • One year of service: Six weeks of sick leave with full pay, four weeks with half pay

  • Two to 15 years of service: Eight weeks of sick leave with full pay, four weeks with half pay

  • 16 to 25 years of service: 10 weeks of sick leave with full pay, four weeks with half pay

  • 26 or more years of service: 12 weeks of sick leave with full pay, four weeks with half pay

• Maternity leave: Pregnant employees typically receive eight weeks of maternity leave prior to their child’s birth and eight weeks after. In cases of premature birth, c-section, or multiple births, the postnatal period can be extended to at least 12 weeks of paid time off. During this time, the mother is entitled to full maternity benefits.

• Paternity leave: Fathers in Austria are entitled to two weeks of paid paternity leave, which must be taken within the first eight weeks after the birth of their child. 

• Parental leave: Both parents are entitled to unpaid parental leave until the child turns 22 months old (24 months in special cases). The leave must be taken in periods of at least two months, and it can be shared between the parents twice.  If only one parent takes leave, it may last until the child reaches 22 months; if both parents alternate, the entitlement extends until the child’s second birthday. Note that the parent taking leave must reside in the same household as the child.

• Compassionate leave: Employees may take compassionate leave to take care of severely ill children or relatives. This leave is unpaid. Alternatively, employees can choose to reschedule or reduce their working hours, instead of taking leave.

• Bereavement leave: Depending on their employment contract details or collective agreement, employees may receive short-term paid leave in the event of a close relative’s death. Employers typically grant one to three days of leave, though there is no legally mandated minimum.

• Public holidays: Austria celebrates 13 public holidays, which include:

  • New Year’s Day

  • Epiphany

  • Easter Monday

  • Labour Day

  • Ascension Day

  • Whit Monday

  • Corpus Christi

  • Assumption Day

  • National Day

  • All Saints’ Day

  • Immaculate Conception

  • Christmas Day

  • St. Stephen’s Day

• One year of service: Six weeks of sick leave with full pay, four weeks with half pay

• Two to 15 years of service: Eight weeks of sick leave with full pay, four weeks with half pay

• 16 to 25 years of service: 10 weeks of sick leave with full pay, four weeks with half pay

• 26 or more years of service: 12 weeks of sick leave with full pay, four weeks with half pay

• New Year’s Day

• Epiphany

• Easter Monday

• Labour Day

• Ascension Day

• Whit Monday

• Corpus Christi

• Assumption Day

• National Day

• All Saints’ Day

• Immaculate Conception

• Christmas Day

• St. Stephen’s Day

Work permits in Austria

If you’re planning to expand your business in Austria, hiring international talent means navigating the country’s work permit system. As the employer, it’s your responsibility to ensure that every hire has the legal right to live and work in Austria before their first day on the job.

Austria is a member of the European Union, which means citizens of the EU, EEA, and Switzerland can live and work in the country without a permit—though they must register with local authorities. For third-country nationals, however, the rules are stricter. Depending on the role, qualifications, and length of employment, your new hires may need to obtain a Red-White-Red Card, EU Blue Card, or another type of residence permit.

Understanding these requirements early helps protect your company from delays, fines, or compliance issues down the road. Here's what employers need to know about Austria’s work permit options.

Who needs a work visa in Austria?

Citizens of the EU, European Economic Area (EEA), and Switzerland do not need a visa or work permit to live and work in Austria. They simply register with local authorities upon arrival, making mobility within the EU straightforward.

By contrast, third-country nationals (non-EU/EEA/Swiss citizens) must obtain a residence and work permit to legally work in Austria. The type of permit required depends on the length and nature of employment—common options include the Red-White-Red Card for skilled workers and residence permits tied to specific employers.

How long does it take to get a work visa in Austria?

Processing times for Austrian work visas vary depending on the type of permit and the volume of applications being handled at the time. In many cases, applicants can expect a decision within a few weeks, provided that all required documents are complete and accurate.

For certain visas—such as the D visa—Austrian authorities must examine and decide on the application within six months at most. However, it’s more common for decisions to be made well before that deadline. Because processing times can fluctuate based on case loads, holidays, or requests for additional documentation, employers and employees alike should plan ahead and begin the process early to avoid delays in a new hire’s start date.

Types of work visas in Austria

Austria offers several categories of work and residence permits depending on the nature and duration of employment. The most common options include:

• Red-White-Red Card: Designed for highly qualified third-country nationals, skilled workers in shortage occupations, and other key workers. It grants both residence and work authorization for up to two years. The general requirements include meeting certain salary thresholds, having health insurance, and a rental contract.

• EU Blue Card: Available to highly qualified third-country nationals with a university degree and a job offer that meets the minimum salary thresholds. It provides residence and work rights for up to two years, with easier mobility within the EU.

• D Visa (long-term visa): Allows non-EU nationals to live and work in Austria for up to six months (12 months in some exceptional cases). It is often used for temporary assignments or while waiting for a longer-term permit, such as the Red-White-Red Card.

Termination and redundancy in Austria

When hiring in Austria, it’s important to plan not only for recruitment but also for the eventual possibility of ending an employment relationship. Austrian law provides structured rules for termination, notice periods, and severance that protect both employers and employees. Failing to follow these rules can expose companies to legal disputes and financial penalties.

Whether you’re managing notice requirements, navigating the old and new severance pay systems, or ensuring compliance with collective bargaining agreements, understanding Austria’s framework is critical. Here’s what employers need to know about termination procedures and redundancy in Austria.

Does at-will employment exist in Austria?

At-will employment, which allows either party to end an employment relationship at any time without cause or notice, is common practice throughout the United States. However, it does not exist in Austria.

Terminations in Austria must be based on specific legal grounds and follow the required procedures. Employers may dismiss employees through ordinary termination, subject to statutory or collectively agreed notice periods, or through extraordinary termination, which requires a serious reason such as misconduct. Employees also have the right to contest dismissals in court if they believe the termination was unjustified.

Notice periods in Austria

In Austria, both employers and employees may end an employment contract without giving a reason, but the correct notice period must always be observed. While verbal notice is legally valid, written notice is strongly recommended to prevent disputes. Since 2021, notice rules for white- and blue-collar workers have been unified, meaning the same standards now apply across the workforce.

For employees, the statutory notice period is one month. For employers, notice periods vary by the employee’s length of service:

Austrian employment law also has statutory termination dates, which say that an employment relationship can only end at the end of the quarter, which affects terminations. Employers and employees can agree via the employment contract or CBAs to include additional possible termination dates, like the end of each month, and/or the 15th of each month.

Collective bargaining agreements or individual contracts may also extend notice periods up to six months. Employers and employees should always review the relevant agreement to ensure compliance with applicable rules.

Severance pay in Austria

Austria operates under two statutory severance pay systems, depending on when an employment contract began:

• Old severance system (pre–Jan. 1, 2003): Employees hired before this date may be entitled to severance directly from their employer if the employment relationship ends through no fault of their own (e.g., redundancy). The amount of the payment depends on the employee’s length of service. However, severance is not owed if the employee resigns or is dismissed for cause.

• New severance system (post–Jan. 1, 2003): For employees hired after this date, employers must contribute 1.53% of the employee’s gross monthly salary into an external pension fund (Betriebliche Vorsorgekasse). At termination, employees may claim severance from this fund, rather than directly from the employer. Employees can also choose not to claim severance, leaving the money in the fund for future investment.

How to terminate employees compliantly in Austria

In Austria, employers and employees can end an employment contract at any time without giving a reason, but strict rules around notice periods, severance, and documentation apply. Missteps can result in legal disputes, so it’s critical to follow the correct process when offboarding staff.

Because Austria’s labor and social protections are comprehensive, companies should consult legal experts or consider partnering with a global employment platform, like an employer of record (EOR). An EOR can manage the complexities of Austrian termination rules, helping businesses employ workers compliantly while focusing on day-to-day operations and growth.