Introduction
Business expansion into Austria is exciting and full of growth and innovation prospects. However, registering as an employer in this new market can seem overwhelming. While designed to promote fairness and productivity, Austria's employment laws require rigorous attention to detail and stringent compliance from the start.
To simplify Austrian employer registration, this guide is here. We'll help you set up your eBranch and manage your commitments without a local entity. Austria's business-friendly climate simplifies market access. Start without a Professional Employer Organization (PEO) and ease your transition with a virtual office.
Understanding and following Austria's employment laws will help you tap into its skilled labor and strong economy. This book will help you comply and succeed in the Austrian market, whether you're a startup or an established company trying to expand.
Let's set up your firm for success in Austria, ensuring you're ready to meet your employer requirements and take advantage of this beautiful and economically robust country's potential.
EU Employment Law Comparison Chart
This chart compares key employment law considerations across the 10 largest EU countries (by population) to help entrepreneurs understand the flexibility and liabilities associated with recruiting and managing staff in each country.
Country | Max Trial Period | Permanent Contract Requirement | Firing Complexity | Employer-Paid Sick Leave | Overall Flexibility Rank |
Germany | 6 months | No, but common | High | 6 weeks full pay | 5 |
France | 2-4 months | No, but encouraged | Very High | Up to 6 months, partially paid | 8 |
Italy | 6 months | No, but incentivized | High | Up to 180 days, partially paid | 7 |
Spain | 2-6 months | Yes, for most positions | High | 15 days full pay | 9 |
Poland | 3 months | No | Medium | 33 days full pay | 3 |
Romania | 90 days | No | Medium | 5 days full pay | 4 |
Netherlands | 1-2 months | No, but common | High | 2 years, partially paid | 6 |
Belgium | 1-12 months | No | High | 1 month full pay, then partially paid | 7 |
Greece | 12 months | No | High | Up to 6 months, partially paid | 8 |
Czech Republic | 3-6 months | No | Low | 14 days partially paid | 2 |
Key Takeaways
Most Flexible: Czech Republic offers a good balance of reasonable trial periods, no permanent contract requirement, and relatively simple firing procedures.
Least Flexible: Spain and France have some of the most rigid employment laws, with complex firing procedures and extensive employer obligations.
Trial Periods: Greece offers the longest potential trial period, while the Netherlands has the shortest.
Sick Leave: The Netherlands has the most generous sick leave policy for employees, which could be a significant liability for employers.
Firing Complexity: Most countries have medium to high complexity in termination procedures, with the Czech Republic being an exception with relatively simpler processes.
This comparison suggests that for an entrepreneur seeking flexibility in recruiting and managing staff with fewer liabilities, the Czech Republic, Poland, and Romania might be the most favorable options among the largest EU countries. However, it’s crucial to consider other factors such as labor market conditions, skill availability, and overall business environment when making a final decision.
Types Of Workers Protected By Employment Law In Austria
Worker Type | Key Characteristics | Protection Level |
White-collar | Commercial/office work | Full protection |
Blue-collar | Manual labor | Full protection |
Seasonal | Tourism/agriculture | Industry-specific |
Freelance | Independent contractors | Limited protection |
Marginal | Below €518.44/month | Basic protection |
Austrian Employment Contracts And Mandatory Provisions
Specialities of Austrian Employment Law
Austrian employment law includes some intriguing differences:
Valid oral contracts: Austrian law does not require written employment contracts. Agreements are fine verbally.
Dienstzettel: Employers must offer a written declaration of terms, even without a contract.
No National Minimum Wage: There is no minimum wage in Austria. Instead, industry-specific collective agreements set pay.
Mandatory Provisions
Irrespective of the type of contract, certain essential provisions are applicable to all employment arrangements in Austria:
Maximum Working Hours: Up to 48 hours per week
Minimum Paid Vacation: 25 days per year
Public Holidays: 13 days annually
Maternity Protection: Entitlement to 16 weeks of leave
Social Security Contributions: Compulsory for both employers and employees
Anti-Discrimination Protection: Stringent laws prohibiting workplace discrimination
Collective Agreements
Instead of having a national minimum wage, Austria uses industry-specific collective agreements to set minimum salaries. It is essential to determine the relevant collective agreement for your sector when starting a business in Austria.
Social Security System in Austria
Austria has a thorough system of social security, which is financed through contributions. It includes employees as well as their families. In 2020:
Employee contribution: 18.12 per cent of gross salary,
Employer contribution: 21.32% on the gross salary of an employee,
This very robust system makes Austria even more attractive to highly skilled labor and therefore it becomes an attractive destination for them.
Factors For International Companies
If your company sets up a local base in Austria:
You can operate here without a PEO.
Ensure that you are following best practices not only as an EU citizen, but also as an Austrian citizen.
eBranch or virtual office will facilitate your integration into the market.
Be familiar with collective agreement relevant to your industry.
This insight into core principles of how business functions will be successful in Austria is given by the fact that the correlation between flexibility (oral contracts) and strong worker protections finds a better equilibrium there.
Employer Registration Process
Establishing a firm in Austria as an employer necessitates a series of specific actions. Here is a concise guide:
Establish the Business Registration: Register your firm with the Austrian Economic Chamber (WKO) and acquire a trading license if required.
Employer Tax ID: Obtain an employer tax identification number via the Austrian tax authority.
Social Security Registration: Enroll with the Austrian General Social Security Institution (ÖGK) for employment coverage.
Employee Onboarding: Register new employees for social security within seven days of their employment commencement.
Payroll Configuration: Implement a compliant payroll system, encompassing the withholding of income taxes and contributions.
Steps To Register As An Employer In Austria
The registration journey takes about 15 weeks. Here's what the timeline typically looks like:
Week | Registration Activity |
1-2 | Initial tax authority registration |
3-4 | Social security setup |
5-8 | Employee documentation processing |
9-12 | Bank account setup |
13-15 | Final verification and approval |
Required Documentation For Employer Registration In Austria
Essential Documents |
Valid passport or birth certificate |
Marriage certificate (if name differs from birth name) |
Business location proof in Austria |
Commercial Registry excerpt (not older than 6 months) |
Certificate of competence for regulated trades |
Employee documentation |
Submission Options
You can submit these documents through:
eBranch setup
Virtual office arrangement
No physical presence is required for submission!
Tax Authority Registration
Foreign companies must complete tax authority registration within one month of starting business operations in Austria. This process involves several key steps:
Timeline: Must be completed within one month of starting business
Employer Tax ID: Receive a unique identifier for income tax withholding purposes
Payroll Accounts: Set up individual payroll accounts for each employee
Process Details:
Submit registration form to the local tax office (Finanzamt)
Provide necessary documentation, including company details and business activities
Receive tax identification number and access to online tax portal
Social Security Registration
Social security registration is a crucial step in the process, ensuring compliance with Austrian labor laws and providing essential benefits to employees.
Registration Method: Online process through the Austrian Social Security Institution
Employer Social Security ID: Obtain a unique identifier for the company
Employee Registration: Must be completed before an employee’s first workday
Reporting Requirement: Monthly reporting by the 15th of the following month
Process Details:
Register company on the ELDA (Electronic Data Exchange with Austrian Social Insurance Agencies) platform
Obtain employer social security number
Register each employee individually, providing their personal details
Set up system for monthly reporting of employee hours and earnings
Employee Social Security Information
Each employee hired by the foreign company will receive:
Sozialversicherungsnummer: A unique social security number
E-card: An electronic card for identification and access to health services
Employer Responsibilities For Contributions
As an employer, you are responsible for calculating and submitting contributions for:
Health Insurance
Pension Insurance
Unemployment Insurance
Accident Insurance
These contributions are typically split between the employer and employee, with specific percentages determined by Austrian law and collective agreements.
Benefits Of Virtual Office Setups
Using a virtual office setup in Austria offers several advantages:
Cost-effective: No need for physical office space
Flexibility: Manage operations remotely while maintaining a local presence
Compliance: Easier to meet local registration and documentation requirements
Professional Image: Provides a local business address and contact information
No PEO Required
It’s important to note that foreign companies can handle the entire registration and employment process without the need for a Professional Employer Organization (PEO). This allows for:
Direct Control: Maintain full control over business operations and employee management
Cost Savings: Avoid additional fees associated with PEO services
Simplified Structure: Direct relationship between the company and its employees
Key Employment Terms And Conditions In Austria
Working Hours And Overtime Regulations
Working Time Type | Duration | Notes |
Standard Week | 40 hours | Can be modified by agreements |
Maximum Day | 12 hours | Including overtime |
Rest Breaks | 30 minutes | For 6+ hour workdays |
Weekly Limit | 60 hours | Including overtime |
Overtime Bonus: 50% on top of regular pay
Management: Can be handled through a virtual office setup, no physical presence needed
Minimum Wage Requirements
No national minimum wage
Collective agreements set base rates
Minimum of €1,500 per month across all industries (since 2017)
Implementation:
Can be done without a local entity
Foreign companies can handle directly
Key Points:
Basic salary must meet collective agreement minimums
Overtime, bonuses, and allowances calculated separately
Regular increases typically negotiated annually
Leave Entitlements
Annual Leave
5 weeks (25 working days) standard
6 weeks after 25 years of service
Full salary continues during leave
Holiday pay in advance
Sick Leave (based on length of service)
6 weeks full pay
Parental Leave
All leave entitlements can be managed without a PEO
Employee Rights and Protections
Austria provides extensive employee rights and protections, often described as a “safety net made of platinum.” These protections are crucial for businesses registering as employers in this new market.
Anti-Discrimination Laws In Austria
Austria takes equality seriously. The Equal Treatment Act covers the private sector with impressive protections. Whether you're running an eBranch or managing through a virtual office, these rules apply:
Protected Category | Coverage Areas |
Gender | Employment, pay, promotion |
Ethnic background | Workplace access, benefits |
Religion/beliefs | All work conditions |
Age | Hiring, termination |
Sexual orientation | Career advancement |
Disability | Workplace accommodation |
Termination and dismissal procedures
In Austria, termination and dismissal follow structured protocols:
Notice Periods: These vary from 6 weeks to 5 months, depending on tenure.
Works Council Consultation: Mandatory before dismissals; the council has a one-week review period.
Protected Employees: Pregnant workers, those on parental leave, and long-serving employees (5+ years in firms with 5+ staff) enjoy extra safeguards.
Immediate Termination: Allowed only for severe misconduct.
Compliance is key, even for businesses without a local entity—missteps can have significant legal consequences.
Collective Bargaining And Works Councils
In Austria, works councils play a crucial role in workplace governance, especially for companies with 5+ employees, even if operating without a physical office. Here's how they work:
Requirements: Works councils are elected for 5-year terms and require consultation on significant company decisions. Members are safeguarded against dismissal.
Powers: They oversee workplace conditions, access employee records, engage in decision-making, and challenge dismissals.
These councils foster fairness and collaboration, transforming workplace dynamics into a stable and productive environment. Their implementation ensures compliance and employee satisfaction, even for remote operations.
Austrian Payroll And Social Security Obligations Guide
Tax Withholding Requirements
Income Tax Rates:
Progressive rates ranging from 0% to 55%
Special payments (e.g., 13th and 14th month salaries) taxed at lower rates
Municipal Tax:
3% of monthly gross salaries
Employer’s responsibility to withhold and pay
Family Burdens Equalization Levy:
3.9% of monthly gross salaries
Paid by the employer
Social Security Contributions
Insurance Type | Employer (%) | Employee (%) | Total (%) |
Health | 3.78 | 3.87 | 7.65 |
Pension | 12.55 | 10.25 | 22.80 |
Unemployment | 3.00 | 3.00 | 6.00 |
Accident | 1.20 | 0.00 | 1.20 |
Other | 0.70 | 1.00 | 1.70 |
Maximum assessment base: €6,060 per month (as of 2024)
Contributions are calculated on gross salary up to this cap
Reporting And Payment Schedules
Monthly Requirements:
Submit payroll reports by the 15th of the following month
Pay social security contributions by the end of the month
Transfer wage tax by the 15th of the next month
Annual Requirements:
Keep payroll records for 7 years
Submit annual wage statements by end of February
Process special payments (typically in June and November)
Key Points to Remember
Each employee needs a Sozialversicherungsnummer (social security number) and e-card
Special payments (13th and 14th month salaries) are common and have preferential tax treatment
Accurate record-keeping is crucial for compliance
Online systems are available for most reporting and payment processes
Compliance Tips
Stay updated on collective agreement changes affecting minimum wages
Implement a reliable payroll system to handle complex calculations
Consider seeking professional advice for initial setup and periodic audits
Ensure timely submissions to avoid penalties
Acquaint yourself with the benefits of the Austrian social security system.
Remember, while these obligations may seem complex, they contribute to a comprehensive social security system that benefits both employees and employers in the long run.
Austrian Payroll And Social Security Guide
Tax Withholding Requirements
Income Tax Rates
Progressive rates ranging from 0% to 55%
0% up to €11,000 annual income
20% for income between €11,000 and €18,000
35% for income between €18,000 and €31,000
42% for income between €31,000 and €60,000
48% for income between €60,000 and €90,000
50% for income between €90,000 and €1 million
55% for income over €1 million
Special Payments
13th and 14th month salaries are taxed at a flat rate of 6% up to €83,333 per year.
Municipal Tax
3% of monthly gross salaries, paid by the employer.
Family Burdens Equalization Levy
3.9% of monthly gross salaries, paid by the employer.
Social Security Contributions
Insurance Type | Employer (%) | Employee (%) | Total (%) |
Health | 3.78 | 3.87 | 7.65 |
Pension | 12.55 | 10.25 | 22.80 |
Unemployment | 3.00 | 3.00 | 6.00 |
Accident | 1.20 | 0.00 | 1.20 |
Other | 0.70 | 1.00 | 1.70 |
Maximum Assessment Base
€6,060 per month (as of 2024). Contributions are calculated on gross salary up to this cap.
Austrian Employment Compliance Guide
Reporting and Payment Schedules
Monthly Requirements
Submit payroll reports by the 15th
Pay social security contributions by month-end
Transfer wage tax by the 15th of next month
Annual Requirements
Keep payroll records for 7 years
Submit annual wage statements by January
Process special payments in June and November
Here's something cool - you can handle all this without a PEO! The Austrian system is like a well-oiled machine, and once you're in sync, it practically runs itself.
Compliance Challenges And Best Practices
Hold onto your lederhosen - we're about to tackle the most thrilling part of being an employer in Austria!
Common Pitfalls For Foreign Employers
The Financial Police in Austria are like employment ninjas - they can show up anytime to check your compliance. Here's what they're looking for:
Violation Type | Penalty Range (EUR) | Impact |
Work permit violations | 1,000-10,000 per case | Business suspension |
Minimum salary breach | 1,000-10,000 per employee | Reputation damage |
Document retention | 1,000-10,000 per instance | Operating restrictions |
Posted worker notification | 1,000-10,000 per case | Market access limits |
Strategies For Maintaining Compliance in Austria
Even with a virtual office setup or no local entity, you can excel in compliance. Here’s how:
Documentation Management
Keep employment contracts in German or English
Store payslips and bank transfers for 7 years
Maintain real-time access to work permits
Create digital copies of all essential documents
Proactive Compliance Monitoring
Conduct regular internal audits (quarterly is ideal)
Track collective agreement changes
Monitor working hours meticulously
Document all salary adjustments
An eBranch operation once aced their inspection, earning compliments from the Financial Police for their organization!
Resources For Staying Updated on Regulations
You don’t need a PEO to stay current with Austrian regulations. Here’s your treasure map to compliance resources:
Austrian Chamber of Labor
Published 2.3 million consultations in 2023
Obtained EUR 645 million in employee claims
Offers preventative legal measures
Provides contract templates
The younger workforce is more likely to take legal action, so staying updated is crucial.
Recommended Channels
Official Channels
Subscribe to AMS newsletters
Join Chamber of Commerce updates
Follow Labor Inspectorate announcements
Monitor collective agreement changes
Professional Support
Connect with employment lawyers
Join industry associations
Establish relationships with authorities
Build a compliance network
Areas Of Focus For Financial Police
The Financial Police are particularly interested in:
Construction companies
Hospitality businesses
Transport and logistics
Low-wage industries
Remember, you can manage all this without a physical presence! Whether you’re running an eBranch or operating through a virtual office, compliance is achievable.
Employee Misclassification
This is a critical area of focus. Authorities check whether someone should be an employee or independent contractor based on specific criteria. Misclassification can lead to serious penalties.
Think of Austrian compliance like a Viennese waltz. It might look complicated at first, but once you learn the steps and get into rhythm, it becomes second nature. And the best part? You can do it all without establishing a local entity!
Conclusion
Austrian employment regulations create a clear framework for businesses entering the market. Social security systems, employee protections, and structured registration processes make Austria an attractive destination for international companies. The combination of well-defined working conditions, leave entitlements, and strong anti-discrimination laws builds a stable foundation for both employers and employees, while the works council system adds an extra layer of workplace harmony.
Success as an employer in Austria depends on careful attention to documentation, timely submissions, and proper classification of workers. Your business can meet these requirements through virtual office solutions or eBranch setups, without establishing a physical presence or using a PEO service. Sign up for a free trial today for ebranch today to Register as an Employer and start your Austrian business journey with confidence. The Austrian market offers excellent opportunities for growth when you follow these established guidelines and maintain proper compliance.
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