Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Austria can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Austria, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Austria .
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Austria is not the same as paying workers in your own country. Employees have to be paid using Austria’s employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
Full-time employment is considered 8 hours daily, and 40 hours weekly.
Anything over 40 hours per week is paid at a rate of 150% of the regular pay.
Salaries are regularly paid monthly and wages must be paid by the end of the month.
It is common practice to give a 13th salary split between 2 installments (June and November).
PTO is calculated by the:
There are 13 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Any sick leave beyond the above entitlement is covered by social security.
Maternity leave is for 16 weeks in Austria and can start from 8 weeks prior to the expected due date. For high-risk births, leave after the birth is extended to 12 weeks.
Maternity leave is paid by social security and is based on the average earnings of the last 3 months before the maternity leave begins.
Fathers are entitled to 1 month of unpaid paternity leave and can be taken until the child reaches the age of 24 months.
There are 2 options that parents can choose:
Parental leave can be taken until the child reaches the age of 24 months. During parental leave, parents are entitled to payment under the Child Care Payment Act from social security.
There are several types of termination in Austria:
The notice period in Austria is based on the length of employment:
The Severance Pay in Austria depends on:
Every month starting from the 2nd month of employment, the employer is obligated to contribute 1.53% towards a provision fund. When the employment relationship is terminated, the employee is entitled to severance pay unless:
If the employee would like to draw the amount from the provision fund, they must submit a letter in writing within 6 months of termination.
Probation period is 1 month.