This guide demystifies compliant hiring through an Employer of Record (EOR) in Austria, offering a strategic solution to bypass entity setup while ensuring adherence to local regulations.
Discover how EOR services streamline employment processes, mitigate legal risks, and unlock access to Austrian expertise—all while optimizing your global expansion efforts with precision and confidence.
Understanding Employer of Record Services in Austria
What is an Employer of Record and How it Works in Austria
An Employer of Record (EOR) acts as the legal employer for companies hiring in Austria, managing payroll, taxes, social security, and compliance. This allows businesses to hire without establishing a local entity, ensuring adherence to Austrian labor laws. Learn more about the core functions of EOR services to understand their role in Austrian hiring.
The EOR assumes full legal responsibility for employment matters, including compliant contracts, tax filings, and social security contributions. Client companies maintain operational control over daily work activities. This structure eliminates the need for a local entity, with EORs ensuring compliance with Austrian regulations while reducing administrative burdens for businesses expanding internationally.
Key Responsibilities of an EOR for Hiring Employees in Austria
Core Employment Responsibilities Managed by EORs in Austria
| Responsibility | Details | Impact |
| Legal Employer Entity | EOR acts as the official employer in Austria | Eliminates need for a local legal entity |
| Payroll Management | Manages monthly payroll including 13th/14th-month salaries | Ensures timely and accurate payments |
| Tax Compliance | Withholds income tax and submits to Austrian authorities | Maintains tax law adherence |
| Social Security Contributions | Employer 21-22%, employee 18% of gross salary | Covers health, pension, unemployment, accident coverage |
| Employment Contracts | Drafts compliant contracts in German | Guarantees legal validity and local compliance |
| Benefits & Leave Administration | 25+ annual leave days, 13 public holidays, 100% sick pay for 6-12 weeks | Meets statutory requirements and employee expectations |
| Collective Bargaining Agreements | Complies with CBAs covering 95% of employees | Ensures sector-specific wage and work standards |
| Work Permit Sponsorship | Manages permits for non-EU/EEA/Swiss workers | Facilitates legal employment of international talent |
| HR Administrative Tasks | Registers employees with GKK, handles onboarding/offboarding | Streamlines HR processes and compliance |
| Abfertigung Neu Contributions | 1.53% of monthly gross salary (post-2003 contracts) | Manages statutory severance obligations |
EORs protect intellectual property through contract clauses while maintaining GDPR compliance for employee data. They implement robust security measures to prevent unauthorized access, ensuring both employee information and company assets remain protected. These mechanisms align with Austrian and EU data protection frameworks to safeguard sensitive information throughout the employment relationship.
Legal Compliance and Employment Laws in Austria
Austrian Labor Laws and Employment Regulations
Austria’s employment framework includes the Labour Constitution Act, Leave Act, and Collective Bargaining Agreements (CBAs). These laws govern contracts, work hours, and termination. Explore key compliance requirements for European markets to navigate Austrian labor laws effectively.
- Collective bargaining agreements cover 98% of private-sector employees, setting minimum wages and work standards
- Working hours capped at 8 hours/day and 40 hours/week, with mandatory breaks after 6 hours
- Paid annual leave includes 25 days for full-time roles, increasing to 30 days after 25 years of service
- 13th and 14th-month salaries paid in December and June under sector-specific CBAs
Employment contracts require a Dienstzettel (work certificate) if unwritten. For a comprehensive guide to compliant contracts, Review European employment contract best practices. The White-Collar Workers Act mandates 40-hour workweeks, while the Leave Act guarantees five weeks of annual leave. Termination requires one month’s notice, with longer periods for employees with more seniority.
Payroll, Tax, and Social Security Compliance
Austrian payroll processes involve monthly tax deductions at source, social security contributions, and communal tax payments. Employers must complete filings and payments by the 15th of each month, covering income tax, social security, and 3% communal employer tax on gross salaries.
Social security contributions include 21-22% from employers and 18% from employees on gross salaries. These cover healthcare, pensions, unemployment, and accident insurance. Contributions fund benefits like healthcare coverage, 100% sick pay for 6-12 weeks, and statutory severance obligations through Abfertigung Neu.
Benefits and Practical Aspects of Using an EOR in Austria
Advantages of Using an EOR for Global Companies
EORs simplify compliant hiring by managing payroll, taxes, and social security. Companies avoid setting up local entities, accelerating market entry. Global enterprises save time and reduce administrative costs while maintaining full compliance with Austrian employment regulations.
Using an EOR accelerates expansion by handling legal formalities. Businesses avoid the 6-12 week entity setup process, which can often trigger a permanent establishment, deploying talent within days. This model proves especially valuable for market testing or when rapid scaling becomes necessary for strategic growth initiatives.
Typical Employment Benefits and Leave Policies in Austria
- Statutory benefits include 25 days annual leave, 13 public holidays, and 16 weeks maternity leave
- 13th and 14th-month salaries are common in many sectors
- Meal allowances (€50-€100/month) and home office allowances (€300/year) enhance competitiveness
Austrian employees receive 25 days annual leave, increasing with tenure. They benefit from 100% sick pay for 6-12 weeks and parental leave until their child turns two. The country observes 13 public holidays with premium pay for work performed on these days.
Cost Structure and ROI When Working with an EOR
| Cost Type | EOR Model | Entity Establishment |
| Setup Fees | $500-$2000 | Significantly higher legal and administrative costs |
| Monthly Fees | $299-$599/employee | Fixed overhead costs |
| Scalability | Linear cost structure | Break-even at 10-15 employees |
EOR services deliver measurable ROI through risk reduction and operational efficiency. Companies avoid legal exposure while redirecting resources to core business functions. Understand cross-border compliance benefits to evaluate the full ROI of EOR services.
Selecting the Right Employer of Record for Your Business in Austria
Key Criteria for Choosing the Right EOR Partner
When selecting an EOR for Austria, prioritize local expertise and compliance capabilities. Verify their ability to manage payroll, tax filings, and social security contributions. Discover how local expertise impacts HR success when selecting an EOR partner in Austria.
Local presence ensures EORs understand Austrian labor laws, including collective bargaining agreements covering 95% of workers. Assess their track record with similar businesses to confirm experience with sector-specific regulations. Look for providers handling 13th/14th-month salary requirements and social security contributions of 21-22% for employers.
Evaluating EOR Services and Features
- Local expertise in Austrian employment law and collective bargaining agreements
- Comprehensive compliance covering payroll, tax, and social security obligations
- Multi-currency payroll processing for accurate euro-based payments
- Technology platform with multilingual support for employee communication
Effective EOR services include contract management, work permit sponsorship, and adherence to Austrian data privacy standards. Verify providers handle 13th/14th-month salary mandates and maintain relationships with local authorities for streamlined social security contributions and tax filings.
Implementation Process and Timeline
Most EOR onboarding processes take 2-3 weeks, covering contract creation, work permit applications, and social security registrations. Ensure providers maintain clear communication channels for document submission and compliance verification.
Post-implementation success depends on monitoring onboarding speed, compliance rates, and payroll accuracy. Establish performance metrics like employee satisfaction scores and audit results. Resolve issues through predefined communication protocols, ensuring timely corrections for payroll discrepancies or compliance gaps.
Austrian Employment Market Trends and Considerations
Current Labor Market Conditions in Austria
The Austrian employment market shows a 74.1% employment rate (2023) across green technology, digital, healthcare, and education sectors. Talent shortages persist in IT, engineering, and healthcare, with high demand for software developers, engineers, and medical professionals. The hospitality sector faces staffing challenges despite 5.3% unemployment (2024), reflecting structural skill mismatches.
Key industries driving growth include renewable energy and healthcare. Over 81 occupations are classified as shortage professions (2025), including mechanical engineers and nurses. While Austria maintains a highly skilled workforce, companies must navigate complex labor laws and address gender pay gaps (19.9% disparity) when recruiting top talent.
Salary Expectations and Competitive Compensation
Austrian salaries average €3,700/month (gross), with engineers earning €95,000-€262,000 annually. Collective bargaining agreements set minimum wages across 98% of private-sector roles. Most employees receive 13th/14th-month salaries, five weeks annual leave, and 100% sick pay for 6-12 weeks.
Competitive compensation includes meal allowances (€50-€100/month) and home office stipends (€300/year). Employers must pay 150% of gross salary for overtime and comply with sector-specific collective agreements. The national minimum wage stands at €1,500/month for full-time roles, emphasizing Austria’s focus on fair compensation standards.
Remote Work and Flexible Employment Options
Remote work adoption accelerated post-pandemic, with EORs enabling compliant remote employment for international companies. Remote workers in Austria must follow written agreements defining work hours and equipment provisions. Employers cover technical requirements under the Remote Work Act (2021), ensuring ergonomic workspaces and cost reimbursements.
Flexible employment options include part-time roles and fixed-term contracts. The Austrian Labor Constitution mandates equal treatment for remote workers, with 8-hour daily limits and mandatory breaks. EORs handle cross-border compliance, managing tax obligations and social security contributions for globally distributed teams.
For businesses aiming to hire employees in Austria, an Employer of Record ensures compliance with local labor laws, streamlines payroll and benefits management, and minimizes legal risks. By partnering with a trusted EOR, companies gain agility to focus on growth while operating within Austria’s regulatory context confidently. Choosing the right provider transforms compliant hiring into a strategic asset, enabling seamless expansion and long-term success in a competitive market.
