How to Hire Remote Employees In 

Austria

The Basics

Currency
Euro (EUR)
Employer Taxes
21.23%
Payroll Frequency
Monthly
Official Language
German

Employment in 

Austria

Hire Independent Contractors

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.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Austria

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:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

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 .

Use an Employer-of-Record (EOR)

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:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

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 Remote Employees

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:

Pay through a local entity

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.

Work with an EOR

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.

Austria

 Specific Information

Working Hours

Full-time employment is considered 8 hours daily, and 40 hours weekly.

Overtime

Anything over 40 hours per week is paid at a rate of 150% of the regular pay.

Payroll Tax

Employer

Employer

  • Sickness
  • Unemployment
  • Pension
  • Accident Insurance
  • Miscellaneous

Minimum Wage

There is no national set minimum wage in Austria. Minimum wages are set by collective bargaining agreements and are industry-based.

Payroll

Pay Cycle

Salaries are regularly paid monthly and wages must be paid by the end of the month.

13th Salary

It is common practice to give a 13th salary split between 2 installments (June and November).

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • After 6 months of employment, employees are entitled to 25 days of paid annual leave.
  • After 25 years of employment with the same employer, the entitlement is 30 days of paid annual leave.

Public Holidays

There are 13 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • 1 year of employment- 6 weeks
  • 2-15 years of employment- 8 weeks
  • 16-25 years of employment- 10 weeks
  • 26+ years of employment- 12 weeks

Any sick leave beyond the above entitlement is covered by social security.

Maternity Leave

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.

Paternity Leave

Fathers are entitled to 1 month of unpaid paternity leave and can be taken until the child reaches the age of 24 months.

Parental Leave

There are 2 options that parents can choose:

  • One parent can take 12-28 months
  • Both parents can take 15- 35 months

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.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

There are several types of termination in Austria:

  • Fixed-term contract- if a fixed-term contract is expiring, no action is needed.
  • Termination by mutual consent- when employment ends by mutual consent, no notice period is required and can be in writing or verbally, however, termination in writing is recommended.
  • Unilateral termination– Can be verbal or in writing and no reason for the termination needs to be provided.
  • Dismissal- This terminates the employment agreement with immediate effect and a reason must be given.  If the employee deems the dismissal unjustified, they are able to make a claim with the labor and social security courts.
  • Resignation – If the employee chooses to resign, this terminated the employment relationship with immediate effect.

Notice Period

The notice period in Austria is based on the length of employment:

  • Up to 2 years of employment- 6 weeks’ notice
  • 2-5 years of employment- 2 months’ notice
  • 5-15 years of employment- 3 months’ notice
  • 15-25 years of employment- 4 months’ notice
  • 25+ years of employment0 5 months’ notice

Severance Pay

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:

  • The termination was initiated by the employee
  • The employer terminated the employment agreement based on misconduct on the part of the employee

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

Probation period is 1 month.