Employ Candidates Compliantly in Austria

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  1. Overview: Austria
  2. Global HR Compliance
  3. Global PEO and payroll
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in Austria

If you hire an international workforce or plan to hire employees, then the Hiring and Firing Workforce in Austria Guide below will help you understand the nuances of labor legislation in the country.

When the company is planning to enter a new foreign market in Austria and has a need to employ a local national there, the first question to answer is how it is going to make local hires.

Acumen International has designed a Global Employer of Record service to help you outsource the global employment of your foreign workforce to companies like ours.

This solution helps you employ your global sales force in Austria as well as in other 180+ countries of the world, provide pay and benefits to your employees, as well as administer any business expenses with our help.

Our solution is different from other hiring modes in that it helps you engage your foreign workforce in full compliance with the local labor legislation. This means you are protected from any non-compliance and employee misclassification risks while we bear all employment risks, not you.

So, it looks very much like hiring your in-house sales force in your home country. However, you focus on only on your global business development while we administer your global HR. In addition, you don’t need to open your own entities in foreign countries and can leverage our infrastructure in Austria instead. With our service, you can become a global company with reduced costs and minimized time and effort on your end.

Your employed foreign sales force will devote 100% of their time to your company product and may stay with you longer than foreign independent sales reps.

Global Employer of Record solution is a 100% compliant solution that guarantees you and your employees fully comply with local legislation in Austria.

We are experts in global workforce employment in Austria, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

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, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.

With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Austria.

Hiring and Firing Workforce in Austria Guide

You certainly cannot mention the top well-heeled countries in Europe without mentioning 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 but a few. Notwithstanding the foregoing, there are still some challenges that must be risen to so as to successfully penetrate and do business in Austria. The need for one to grasp and comply with the country’s employment regulatory framework is a case in point and failure to do that always poses a serious threat to one’s enterprise.

The good news is that there is an alternative way to go about this situation. All you need to do is employ the services of a locally sourced provider who knows the ins and outs of the employment law in Austria. Global employer of Record is all you need to do that.

Here are a few facts to be aware of concerning employment in Austria:

Employment Agreements

Legally, a distinction is made between a contract of employment (Arbeitsvertrag), a freelance contract (freier Dienstvertrag) and a contract for works (Werkvertrag).

Dienstzettel

If no written contract of employment 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 form.

Part-time employees are subject to the same labor legislation rules as full-time employees and have (except cases of marginal employment) the same insurance protection (sickness, accident, unemployment and pension insurance).

The same applies to fixed-term employment contracts, although there are no periods of notice 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 statutory provisions specific to them (e.g., short-term dismissal protection).

There are collective agreements in Austria. The intention behind collective agreements is to ensure minimum wages and minimum standards as well as other important working conditions without the involvement of the state.

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 and 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.

The unilateral termination of an employment relationship does not require any reason or the consent of any authority. Only notice periods are required to be met. Termination of a fixed-term contract – employment ends automatically when the term of the contract has expired.

Unilateral termination

Notice can be given verbally, in writing or implicitly (handover of employment papers). No reason for termination need 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

It is prohibited to dismiss

The employee may challenge the termination for certain prohibited reasons, as provided under the Labor Relations Act (for example due to the activity of the employee as a member of the works council). Further, the employee may challenge a termination based on discriminatory reasons, i.e., for discrimination based on sex, religion, sexual orientation, disability, age, etc. For both concepts, the law requires a lower level of proof as compared to regular litigation in order 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

Periods of notice in the case of 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

The employer must make social security contributions consisting of mandatory health, pension, and accident insurance. With regard to health and pension insurance, a portion of the contributions has to be borne by the employee 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 time periods. In addition, employees are often entitled to hours or days off for a number of family-related purposes as a result of their applicable CBA (e.g., weddings, the birth of a child, childcare) if such family duties require them to be absent from work. In most cases, employees will be entitled to salary payments during such leave.

Miscellaneous remunerations are payments that are received on a one-off basis or at major intervals, in addition to the current wages. The most important types of 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
  • Bonuses
  • Anniversary bonuses
  • Profit-sharing plans
  • Travel benefits
  • Travel costs (e.g. mileage allowance)
  • Per-diem allowances
  • Overnight accommodation costs

Minimum statutory salary

Minimum wages are generally set by collective agreements for the respective sectors, or in rare cases also 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), in addition to statutory provisions.

Probationary period

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

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 own 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.

Work hours

Regular working hours are:

  • An eight-hour working day (working hours within a 24-hour period)
  • A 40-hour working week (working hours from Monday to Sunday).

Exceptions:

Collective agreements in many industries have shortened the regular weekly working hours, for example to 38 hours.
A collective agreement may extend the regular daily working hours to ten hours.

Annual Leave

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

The principle of continued remuneration ensures that in the event of sickness, industrial accident, and occupational illness and during rest cure and convalescence leave, employees’ remuneration will continue to be paid. How long one continues to be paid mainly depends on the seniority, and different regulations may apply to white-collar workers 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 is obliged to inform the employer as soon as one becomes incapacitated from work.

The employee must immediately notify the employer of any disability that restricts his/her ability to work without any unreasonable delay. If requested by the employer, the employee must provide a doctor’s certificate.

Parental Leave

Mothers and fathers are entitled to parental leave (release from work in return for a suspension of wages/salary) of 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 almost immediately, cost-effectively, and compliantly without any requirement to set up a legal entity first or thereafter.

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