- Overview: Austria
- Work permit for hiring expats via PEO
- Global HR Compliance
- Global PEO and payroll
- Contractor vs. employee: which is better?
- Expand without a Company Set Up
Global HR Compliance in Austria
The legal landscape for businesses to operate their employment practices continues to grow more complex, rapidly evolving, and multifaceted. Today’s employers are not only challenged by complying with an increasing number of federal and state laws but also by the evolution of those laws and their implications on a global scale. It is no longer enough to comply with one or two employment laws; employers need to understand the impact of these laws on their business and ensure they have implemented the appropriate compliance strategies.
In the past few years, companies have witnessed dramatic changes to the legal landscape through legislation and many country-specific laws that impact hiring, termination, benefits eligibility, background checks, and other employment practices. These areas of concern are further complicated by varying interpretations of these laws by different enforcement agencies and courts around the country.
Non-Compliance Risk in Austria. How It Affects Your Global Operations
Compliance with local labor regulations is a challenge for many global employers. International employees can often be subject to different tax and social security obligations than those they are accustomed to in their home country. Domestic employers often need to negotiate an intricate maze of local labor laws to hire foreign workers lawfully. These regulations vary across countries, and the penalties for non-compliance vary along with them. In some cases, employers risk being shut down entirely by overzealous regulators.
Non-compliance risk is also a factor that is often overlooked when companies set up operations in foreign countries. The complexities of a new jurisdiction may not be fully appreciated by all involved, and any resulting errors can have significant consequences for an employer’s bottom line.
HR Compliance Risks to Global Employers
- Complex in-country tax and social security regulations
- Ubiquitous and highly demanding trade unions
- Labor laws favoring the rights of employees over employers
- Employee misclassification risk
- Reputational damage risk.
The potential for these negative outcomes can be reduced through careful due diligence before taking on new business abroad and partnering with an Employer of Record (EOR) or a Professional Employment Organisation (PEO) in Austria. These efforts will help ensure that all parties understand their responsibilities under the law and avoid non-compliance risks.
Employee Misclassification Risk Prevention in Austria
When it comes to employee misclassification risk in Austria, many factors contribute to the chances of an organization being classified incorrectly—and you can easily avoid them by ensuring your business stays compliant with applicable law.
The first step to preventing misclassification is understanding what it means and how you can recognize it. Employee misclassification occurs when an employee is mistakenly classified as an independent contractor. The governments, labor, and tax authorities have created a series of regulations and guidelines to determine whether someone should be considered an employee or an independent contractor. If you follow the guidelines, you’ll be on the right track to avoiding the risk of misclassification.
One of the biggest factors affecting misclassification is a lack of understanding about employment status and how certain actions can jeopardize your organization’s tax status.
For example, if you hire independent contractors instead of full-time employees to save money on expenses normally covered for full-time employees—such as benefits, paid time off, and sick days—you may have more indirect costs down the line. You’ll have to do more paperwork at tax time and pay back taxes and penalties if you’re audited by government authorities, and they discover a misclassification case.
Achieving HR Compliance with Global PEO and EOR Solutions in Austria
Austria is not the only place companies are at risk of employee misclassification. It’s a growing problem in many other European countries. An Employer of Record (EOR) or a Professional Employment Organisation (PEO) can help streamline your HR compliance, particularly for your distributed workforce. This will allow you to focus on growing your business and meeting your goals. An EOR and PEO can help you avoid legal consequences of employee misclassification by providing in-country customer support and in-depth expertise in Austrian labor law and tax and compliance regulations. Acumen International PEO and EOR solutions can provide global companies with the ability to employ seamlessly, onboard, and payroll globally distributed teams of professionals; you will save time, money, and effort.
Global EOR and PEO Solution: The Best Way to Achieve 100% HR Compliance in Austria
Acumen International is a leading provider of global EOR and PEO services, offering fully compliant and cost-effective solutions for businesses that need to manage international payroll, HR & benefits administration across 190 countries. The team of Acumen PEO provides strategic guidance and a wide array of high-quality, cost-effective services tailored to your specific requirements that can help your company grow and scale up safely. Here are some of them.
- Processing Immigration requirements
- Business visa applications & extensions
- Work permit sponsorships
- Streamline onboarding, benefits, payroll, PTO
- Local labor law compliance across 190 countries
- Audit-proof compliance requirements
- Employee benefits management
- Handling employment contracts, terminations, and compensation
- Processing medical insurances and benefits
- Payroll, including year-end tax statements
- Relocation services & housing
- Benefits administration
- Special needs or requirements
- Multi-country employment without limitations
- Handling contract worker and ex-pat workforce management
- Compliant employment or termination within 72 hours.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need it, regardless of time zones. We can create tailored global employment solutions for you to deploy in Austria that are managed legally and in full compliance with the employment laws, tax, social security, and immigration requirements in Austria.
Global Employment Cost Prediction
As your company grows and expands its operations globally, it becomes increasingly important to have a global employment cost prediction that can give you visibility into your worldwide workforce expenses. Global Payroll Calculator can do that by providing you with predictive analytics on global employment costs and employer and employee tax analysis capabilities. This allows you to budget more effectively for your expansion plans and manage your international workforce. Having global employment costs at your fingertips helps you stay ahead of the competition and maintain a healthy bottom line.
The Global Payroll Calculator leverages unique up-to-date data collected by Acumen’s expert in-house team research of over 1500 official government sources and validated with local lawyers, compliance experts, and accountants.
Global Payroll Calculator helps companies minimize labour costs while providing up-to-date information on hiring, compensation, and tax requirements across 190 countries. The Global Payroll Calculator is also ideal for rapid global employment as it provides accurate estimates of an organization’s international intake, accounting for relevant factors such as salary levels, taxation rules, hiring requirements, and other legal standards across multiple jurisdictions.
HR Compliance Guide: Hiring and Firing Workforce in Austria
Austria has a very stable economy, is located in the center of Europe, and thus is a focal point for East and West relations, has a well-developed transport infrastructure and a highly skilled workforce, to name a few. Notwithstanding the foregoing, some challenges must be risen to penetrate and do business in Austria successfully. One example of such challenges is the need for one to grasp and comply with the country’s employment regulatory framework. Failure to do so always poses a serious threat to your enterprise.
Here are a few facts to be aware of concerning employment in Austria:
Employment Agreements in Austria
Legally, a distinction is made between a contract of employment (Arbeitsvertrag), a freelance contract (Freier Dienstvertrag), and a contract for works (Werkvertrag).
If no written employment contract is concluded, employees and independent (freelance) contractors receive a statement of terms and conditions (Dienstzettel) immediately on the commencement of the employment relationship.
Contracts for Work (Werkverträge)
The conventional contract of employment in a permanent employment relationship with all its rights (leave entitlement, protection against dismissal, social insurance, etc.) and obligations continues to be the most common.
Part-time employees are subject to the same labor legislation rules as full-time employees. They have (except in marginal employment) the same insurance protection (sickness, accident, unemployment, and pension).
The same applies to fixed-term employment contracts, although there are no notice periods since the employment relationship ceases at the end of the contract.
Apprentices (trainees) in all sectors must conclude their contracts of apprenticeship in writing for under-age apprentices, their legal representatives have to agree as well. Apprentices enjoy full insurance protection (sickness, accident, unemployment, and pension insurance) and have special protection against dismissal.
Seasonal workers in the hotel and catering trade are subject to special collective treaty provisions regarding their working time; there is full social insurance protection.
Agency workers enjoy full insurance protection but are, to some extent, covered by specific statutory provisions (e.g., short-term dismissal protection).
There are collective agreements in Austria. Collective agreements aim to ensure minimum wages, standards, and other important working conditions without the state’s involvement.
Collective agreements are concluded between representatives of the employer and the employees who have the capacity to enter into such agreements. Alongside the minimum wage, they also regulate other essential labor law provisions (such as arrangements regarding pay, flexible working hours, the termination of the employment relationship, etc.).
Employment Termination and Severance Pay (Dismissal)
In Austria, employment relationships can be terminated:
- By mutual agreement
- Unilaterally by the employer giving notice
- By immediate dismissal due to a legally appropriate reason.
Unilaterally terminating an employment relationship requires no reason or authority’s consent. Only notice periods are required to be met. Termination of a fixed-term contract – employment ends automatically after the contract term expires.
Notice can be given verbally, in writing, or implicitly (handover of employment papers). No reason for termination needs to be given.
Periods of notice and deadlines in the event of termination by the employee are:
For white-collar workers: one month (to the last day of the month)
For blue-collar workers: two weeks, unless agreed otherwise. Notice may be given in writing; no reasons need be given.
Dismissal terminates an employment relationship with immediate effect. There must be a reason for dismissal (e.g., persistent neglect of duties). Dismissal may be effected verbally, in writing, or implicitly. An unjustified dismissal also terminates an employment relationship with immediate effect; you have the possibility to complain to the labor and social security court
Unlawful Dismissal in Austria
The employee may challenge the termination for certain prohibited reasons, as provided under the Labor Relations Act (for example, due to the employee’s activity as a works council member). Further, the employee may challenge a termination based on discriminatory reasons, i.e., discrimination based on sex, religion, sexual orientation, disability, age, etc. For both concepts, the law requires a lower level of proof than regular litigation to reasonably enable the employee to bring his/her case before the court.
Another unlawful ground is a transfer of business. Neither the transferor nor the transferee may dismiss an employee due to the transfer of business; if a dismissal occurs in close connection with a transfer of business, the employer will have to prove in any lawsuit initiated by the employee that there is another reason for the dismissal (e.g., redundancy), even if the dismissal does not affect substantial interests of the employee
Notice Period in Austria
Here are the Notice Periods of notice in the case of employment termination by the employer :
|Period of service with the company||The minimum period for white-collar workers|
|Under two years||One month|
|After two years||Two months|
|After five years||Three months|
|After 15 years||Four months|
|After 25 years||Five months|
The minimum period for blue-collar workers as defined by the Industrial Code is Statutory 14 days; extension or reduction is possible via a collective agreement or an individual employment contract.
Employee Benefits and Contributions in Austria
The employer must make social security contributions consisting of mandatory health, pension, and accident insurance. Regarding health and pension insurance, the employee must bear a portion of the contributions, and the employer must deduct this portion from the gross salary before payment.
Health and accident insurance are part of the mandatory national social security scheme. In addition, employees are entitled to continued payment of their remuneration in the event of sickness (sick pay) during the periods. In addition, employees are often entitled to hours or days off for several family-related purposes due to their applicable CBA (e.g., weddings, child birth, childcare) if such family duties require them to be absent from work. Employees will most likely be entitled to salary payments during such leave.
Miscellaneous remunerations are payments received on a one-off basis or at major intervals, in addition to the current wages. The most important miscellaneous remunerations are holiday pay and Christmas allowance (13th and 14th monthly salary). Further examples of miscellaneous remunerations include the following:
- Severance payments
- Balance-sheet allowances
- Anniversary bonuses
- Profit-sharing plans
- Travel benefits
- Travel costs (e.g. mileage allowance)
- Per-diem allowances
- Overnight accommodation costs
Minimum Statutory Salary in Austria
Minimum wages are generally set by collective agreements for the respective sectors, or in rare cases, by works agreements for individual companies.
No general statutory minimum wage exists in Austria. However, salaries, working hours, and other working conditions are usually governed by CBAs (collective bargaining agreements) and statutory provisions.
Probationary Period in Austria
During the probationary period, an employment contract may be terminated by the employer or by the employee at any time without giving reasons. If the parties stipulate a probationary period, it must not exceed one month (apprenticeship: three months)
Overtime is accumulated if the regular working hours (eight hours per day or 40 hours per week) are exceeded and none of the above-mentioned exceptions apply. Employees may only be subjected to overtime if this does not conflict with their considerable interests (e.g. child care, urgent doctor’s appointments).
Overtime must be remunerated with an additional bonus of 50% in money or time balance.
Working Hours in Austria
Regular working hours are:
- An eight-hour working day (working hours within 24 hours)
- A 40-hour working week (working hours from Monday to Sunday).
For example, collective agreements in many industries have shortened the regular weekly working hours to 38 hours.
A collective agreement may extend the regular daily working hours to ten hours.
Annual Leave in Austria
Employees have a minimum entitlement to paid annual leave of five weeks in each year of work. When calculating leave according to working days (incl. Saturday), one is entitled to 30 days of leave in each year of work. After 25 years of service, this entitlement increases to six weeks.
Sick Leave in Austria
The principle of continued remuneration ensures that employees’ remuneration will continue to be paid in the event of sickness, industrial accident, and occupational illness and during rest cure and convalescence leave. How long one continues to be paid depends on seniority, and different regulations may apply to white-collar and manual workers.
After continued remuneration, one receives sick pay from the health insurance provider. The amount of sick pay depends on the earnings in the last month before the illness and the amount of continued remuneration paid. As an employee, one must inform the employer as soon as one becomes incapacitated.
The employee must immediately notify the employer of any disability that restricts his/her ability to work without unreasonable delay. If the employer requests, the employee must provide a doctor’s certificate.
Parental Leave in Austria
Mothers and fathers are entitled to parental leave (release from work in return for a suspension of wages/salary) until the child reaches the age of 24 months (maximum), provided the parent in parental leave lives in the same household as the child. The minimum period of parental leave is two months. The dismissal and termination protection ends four weeks after the end of the parental leave.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Austria by providing you with Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations immediately, cost-effectively, and compliantly without any requirement to set up a legal entity first or thereafter.