Expand your organization into Austria even without an Austrian entity
Austria is a popular destination for businesses looking to expand. The Central European country has a diverse history and culture, a strong economy, and strong ties to neighboring countries such as Germany and Italy.
However, expanding your organization to Austria can take longer than expected. The official language, German, presents a language barrier for many organizations, and the nation’s unique set of business and employment laws can be difficult to navigate. These factors and more can present delays, and the expansion process can take weeks or even months to get traction.
At Horizons, we specialize in helping businesses from all industries to expand abroad, including into Austria. Our professional employer organization (Austria PEO), employer of record, and payroll services can offer you everything you need to start your Austrian expansion rapidly, efficiently, and compliantly.
As the only global PEO with an in-house recruitment team, we can also take care of the sourcing, hiring, and onboarding of your Austrian workforce, along with any associated HR and legal compliance work. Our tailored services can save you thousands of Euros in expansion costs.
Our Austria PEO simplifies your expansion
Horizons enables your business to expand its operations into Austria, without setting up a legal subsidiary.
Employment & Labor Laws in Austria
📝 Employment contracts in Austria
When hiring in Austria, we strongly recommend that you provide all employees with a written contract of employment. Each contract needs to have any relevant details of the employment arrangement, such as salary, vacation leave, and termination terms. It should be written in German and use the Euro currency for any references to money.
By partnering with our Austria PEO, Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
⏰ Working hours in Austria
The majority of workers are limited to 40 hours per week and eight hours per day, although some employees may negotiate lower limits via collective bargaining agreements (CBAs) or individual negotiations. For work beyond these limits, employers will need to either offer the time as time off in the future, or pay overtime, which is at least 150% of normal pay (or 200% for nights and weekends).
📅 Public holidays in Austria
Employees in Austria commonly receive the following public holidays (but not necessarily all):
New Year’s Day
Saint Rupert’s Day
All Saints’ Day
Saint Leopold’s Day
Immaculate Conception Day
St. Stephen’s Day
🏖 Austria vacation leave
For employees that have worked at least six months with an organization, employers must provide at least 25 days of paid vacation leave. After 25 full years of employment, workers can take an extended allowance of 30 days of paid vacation leave each year.
Some employers may choose to offer more holiday, but these are the legal minimums and most commonly offered vacation allowances.
😷 Austria sick leave
Most employment contracts will offer paid sick leave to employees. The exact number of days and amount of compensation varies, however, and depends on the individual role, any negotiations and CBAs, and the length of employment, among other factors.
👶 Parental leave in Austria
Mothers in Austria are required to take 16 weeks of paid maternal leave, split as eight weeks prior to and eight weeks after the birth. Both parents can take unpaid leave until the child is two years old, and the minimum amount they are entitled to is two months. Employers must retain their positions until at least four weeks after they return to work.
💰 Terminations and severance in Austria
The mandatory notice periods required for terminations vary depending on an employee’s time with a company (once out of any probation period). For less than two years of employment, the notice period is six weeks. For three to five years of employment, the notice period is two months. Six to 15 years is three months, 16 to 25 years is four months, and 26 years or more is five months of notice.
Severance payments are common upon termination in Austria, and employers generally contribute a percentage of salary to a severance fund that is either paid or passed on to the next employer.
The exact terms of terminations and severance can vary significantly, so it is important that you fully understand the specifics of your situation and agreements when employing in Austria. Always get professional advice if you are unsure.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. Horizons’ Austria PEO can mitigate risk for foreign companies and provide guidance through this process.
🏦 Taxation in Austria
Employers and employees in Austria must both contribute a certain amount towards various funds to benefit employees. For example, they must contribute 12.55% and 10.25% of salary respectively to pension insurance, and 3.78% each for health insurance. Employers also need to cover accident insurance for the workplace, at a rate of 1.3%. In total, mandatory social benefit contributions are generally around 32% on top of salary for employers.
Income tax in Austria is progressively rated from 0% to 55% depending on employee income.
The corporate tax rate in Austria is 25%.
🏥 Health coverage in Austria
Austria has a comprehensive public health system, so it is not necessary or the norm for employers to offer private health insurance. However, some organizations may choose to offer it as part of their benefits packages, particularly for more senior-level roles.
💳 Austria compensations & benefits
Compensation laws in Austria
There is no legally determined minimum wage in Austria. However, most roles will have a negotiated minimum, so it is vital that you understand the CBAs and individual negotiations for each employee when hiring in Austria.
Benefit management in Austria
Setting up a benefits system for your Austrian employees can be difficult and complicated to navigate if you are unfamiliar with the country and its labor laws. If you want to tackle the setup independently, you can expect it to take several weeks and potentially present delays to your expansion process.
Horizons offers an alternative to simplify your benefits management through our Austria PEO. Our outsourcing services will cover your benefit setup and management, helping you focus on a faster and more successful expansion.