Hire employees in Austria using an Employer of Record

You found the perfect software engineer in Vienna. Then you discovered Austria requires a complex collective bargaining agreement analysis, mandatory 13th and 14th month salary payments, and specific termination procedures that vary by industry. Your lawyer just quoted you €25,000 and six months to set up proper compliance—and that's before you even make the job offer.

Meanwhile, your competitor hired three people in Austria last month while you're still trying to figure out if you need a local entity. The candidate you wanted? They accepted another offer two weeks ago.

Option 1: Set up your own entity

• Cost: €15,000-40,000 upfront, €8,000-15,000 annual maintenance

• Timeline: 4-8 months minimum

• Complexity: Austrian Commercial Register filing, tax registration, collective bargaining compliance, payroll infrastructure, works council considerations

• Makes sense when: Hiring 25+ people long-term, permanent market presence with local operations

Option 2: Hire contractors

• Cost: None upfront, but significant risks

• Timeline: Immediate

• Risks: Misclassification penalties up to €50,000, back taxes on social contributions, potential criminal liability for tax evasion

• Makes sense when: Short projects under 6 months, highly specialized consulting work

• Note: Hire with Columbus also handles compliant contractor agreements and payments

Option 3: Use an employer of record (Recommended for most)

• Cost: $179/month per employee

• Timeline: 2-3 days to hire

• Complexity: None—we handle collective bargaining, mandatory payments, compliance updates

• Makes sense when: 1-50 employees, testing the Austrian market, building distributed teams

If you're hiring 1-10 people, entity setup costs more than 4-5 years of EOR fees ($179/month = $2,148/year per employee). An EOR like Hire with Columbus handles employment contracts, collective bargaining compliance, mandatory 13th/14th month payments, payroll taxes, social insurance, and keeps you updated on Austria's frequent labor law changes. Hiring 3 people costs $537/month versus €25,000+ entity setup plus €10,000/year maintenance.

Ready to hire in Austria without the legal headaches? Get started with Hire with Columbus and have your team member onboarded this week.

What employment types can you use?

You've got three ways to bring someone onboard in Austria, and the right choice depends on your timeline, budget, and how many people you're planning to hire.

How can you hire in Austria?

Here's your decision framework:

Setting up your own entity

You're looking at €25,000-€35,000 just to get started, plus 3-6 months of paperwork before you can hire anyone. That covers incorporation, tax registration, and setting up payroll systems.

Then there's the ongoing stuff: annual compliance costs around €8,000-€12,000, plus accounting fees, legal updates, and HR infrastructure. Austria doesn't mess around with employment law compliance either.

This makes sense if you're planning to hire 20+ people long-term and want full control over your Austrian operations.

Hiring contractors and freelancers

The fastest option, but also the riskiest. Austria's labor authorities actively hunt for misclassified workers, and penalties hit €50,000 plus back taxes and social contributions.

Real contractors must work independently, use their own tools, and serve multiple clients. If you're setting their schedule, providing equipment, or treating them like employees, you're asking for trouble.

Good for genuine project work under 6 months or specialized skills you need occasionally. Just make sure the relationship actually looks like contracting.

Using an employer of record (recommended)

This is where Hire with Columbus comes in. We become the legal employer in Austria while you manage the day-to-day work and performance.

You get someone onboard in 2-3 days instead of months, pay $179/month per employee, and skip the entity setup entirely. We handle employment contracts, payroll, tax compliance, benefits, and all the legal requirements.

The math works out: 5 employees costs $895/month with us versus €25,000+ upfront plus ongoing compliance costs with your own entity.

Employment contract types in Austria

Once you've decided how to hire, you need to pick the right contract type. Most international companies start with permanent contracts because they're straightforward and give you the most flexibility.

Permanent contracts (unbefristeter Arbeitsvertrag)

Your go-to for core team members. No end date, standard notice periods, and full employee protections under Austrian law.

These contracts automatically include collective bargaining agreement terms if your industry has one (and most do). You can't opt out, so factor those salary minimums and benefits into your budget.

Fixed-term contracts (befristeter Arbeitsvertrag)

Useful for specific projects or covering maternity leave, but Austria limits how you can use them. Maximum 4 years total per employee, and you can only renew twice.

After that, the contract automatically converts to permanent. If you try to get around this with back-to-back contracts, labor authorities will treat it as permanent employment from day one.

Part-time contracts (Teilzeitvertrag)

Part-time employees get the same protections as full-time workers, just prorated. That includes vacation days, sick leave, and collective agreement benefits.

You'll need to be specific about working hours and schedules upfront. Austrian law gives part-time workers the right to request schedule changes, and you need legitimate business reasons to refuse.

Temporary work (Leiharbeit)

Only available through licensed temp agencies. You can't directly hire temporary workers - the agency remains their legal employer while they work at your location.

Useful for seasonal work or short-term coverage, but expect to pay agency fees on top of wages.

Which contract type should you choose?

For most international hires, permanent contracts work best. They're simple, give you full management control, and avoid the restrictions that come with fixed-term arrangements.

Use fixed-term only when you genuinely have a project with a clear end date or need temporary coverage. Don't try to use them as a "trial period" - Austria has proper probationary periods built into permanent contracts.

When you work with Hire with Columbus, we'll draft the right contract type based on your specific situation and make sure it complies with Austrian employment law and any relevant collective agreements.

How does payroll and taxation work?

Hiring someone in Austria will cost you about 35-40% more than their base salary once you factor in all the employer contributions and taxes. That's not a typo – Austria has some hefty social security requirements that catch a lot of companies off guard.

The good news? Austrian employees expect this, so salaries are typically negotiated with these costs in mind. The challenging part is making sure you're calculating everything correctly and hitting all the payment deadlines.

Austrian tax brackets for 2025

Austria uses a progressive tax system, and the rates changed slightly in 2025. Your employees will pay these rates on their income:

Most of your hires will likely fall into the 35% or 42% brackets. Keep in mind this is just income tax – social security contributions come on top of this.

Social security contributions breakdown

This is where things get expensive. Austria's social security system covers a lot of ground, which means both you and your employee contribute to multiple funds:

Yes, you read that right – you'll pay nearly 25% of the employee's gross salary in social contributions alone. The employee pays about 18%, which gets deducted from their paycheck.

Payment schedule and bonus months

Austrian employees get paid monthly, typically on the last working day of the month. But something that trips up international companies: Austria has a 14-month salary system.

You'll pay two additional monthly salaries each year:

• Holiday allowance (Urlaubsgeld): Paid in June, typically

• Christmas bonus (Weihnachtsgeld): Paid in November or December

These aren't "bonuses" in the traditional sense – they're mandatory payments equal to one month's salary each. The good news is they're taxed at a reduced rate of 6%, making them more valuable to employees.

Total employment cost example

Let's say you hire someone at €60,000 per year. What you'll actually pay:

Base salary: €60,000 Your social contributions (24.93%): €14,958 Holiday allowance: €5,000 (one month) Christmas bonus: €5,000 (one month)

Total annual cost: €84,958

That's about 42% more than the base salary. For budgeting purposes, multiply any Austrian salary by 1.4 to get your real cost.

Payroll cycle and deadlines

Austrian payroll runs on a strict monthly cycle with several key deadlines you can't miss:

Monthly deadlines:

• Salary payment: Last working day of the month

• Social security filing: 15th of following month

• Wage tax filing: 15th of following month

Annual deadlines:

• Annual tax reconciliation: March 31st

• Social security annual report: February 28th

Missing these deadlines triggers automatic penalties starting at €200 and can go up to €2,180 for repeated violations. The Austrian tax authorities (Finanzamt) don't send friendly reminders – they send bills.

Common payroll mistakes in Austria

Most international companies mess up Austrian payroll in predictable ways:

Forgetting the 14th month calculation: Many payroll systems aren't set up for Austria's bonus structure. You need to accrue 1/12th of each bonus month throughout the year.

Wrong social security calculations: The contribution rates have caps and floors that change annually. In 2025, the minimum contribution base is €518.44 per month, and the maximum is €6,060 per month.

Missing registration deadlines: You must register new employees with social security before they start work, not after. Late registration costs €300 per employee.

Incorrect vacation accrual: Austrian vacation days accrue monthly and must be tracked precisely. Getting this wrong affects your 13th/14th month calculations.

Setting up compliant Austrian payroll

Running Austrian payroll yourself means finding a local accounting firm (€800-1,200 per month), buying compliant payroll software (€200-400 per month), and hiring someone who understands Austrian labor law (€50,000+ per year).

One mistake with social security calculations can cost €2,000+ in penalties, and Austrian labor inspectors are thorough.

With Hire with Columbus, you pay $179/month per employee and we handle all of this – the 14-month calculations, social security filings, tax deadlines, and compliance requirements. Your employee gets paid correctly and on time, and you never have to worry about Austrian payroll penalties.

We also handle the initial employee registration, ongoing tax filings, and year-end reconciliations. It's Austrian payroll without the Austrian complexity.

What benefits and leave are required?

You'll pay your Austrian employees 14 salaries per year, not 12. That's just the start of Austria's generous benefit system that can catch international employers off guard.

The good news? Once you understand the requirements, they're pretty straightforward to manage. The challenging part is getting all the details right from day one.

Annual vacation

Austrian employees get a minimum of 25 working days (5 weeks) of paid vacation annually. After 25 years with the same employer, this increases to 30 days - though most people don't stick around that long anymore.

Vacation days accrue monthly, so new employees earn about 2.08 days per month. They can't use vacation they haven't earned yet, which means no negative balances.

Here's what trips up most employers: unused vacation must be paid out when someone leaves, and employees can carry over unused days to the following year. There's no "use it or lose it" policy allowed.

Sick leave

Employees get unlimited paid sick leave, but there's a catch - who pays depends on how long they're out.

Days 1-3: Employer pays 100% of salary Days 4-42: Social insurance pays (employer gets reimbursed) Day 43+: Reduced social insurance payments

You'll need a doctor's certificate for absences longer than 3 days, or immediately if the employee has a history of frequent short absences. Most companies require a doctor's note from day one to avoid abuse.

The social insurance reimbursement process takes about 4-6 weeks, so you'll need cash flow to cover the initial payments.

Parental leave

Austria offers some of the most flexible parental leave in Europe, but it's complicated to administer.

Maternity leave: 16 weeks (8 weeks before birth, 8 weeks after). Mothers receive 100% of their average earnings from social insurance, with a daily maximum of €66.78 in 2025.

Parental leave: Parents can choose from several models:

The "+2", "+3" numbers represent bonus months if both parents take leave. Most families choose the 15+3 model.

Paternity leave: Fathers get 1 month of paid paternity leave (called "Papa Month") that must be taken within the first 91 days after birth.

Public holidays 2025

Austria has 13 national public holidays in 2025. Employees must be paid their regular salary even when they don't work.

If a public holiday falls on a weekend, there's no substitute day off - employees just lose that holiday.

Mandatory benefits

Three benefits are legally required for all employees:

Social security contributions:

These rates apply to gross salary up to €6,060 per month (2025 ceiling). Anything above that amount is exempt from social security contributions.

13th and 14th month salary: Every employee receives two extra monthly salaries per year - one in June (vacation bonus) and one in November/December (Christmas bonus). These are taxed at a reduced rate of 6% up to €11,000 each.

Works council representation: Companies with 5+ employees must allow works council elections if employees request them. The works council has consultation rights on hiring, firing, and working conditions.

Optional competitive benefits

Smart employers offer these extras to attract talent:

Meal vouchers: Tax-free up to €8 per working day. Employees love them because they're completely tax-exempt.

Company car: Popular but complex. The employee pays 1.5% of the car's value as taxable benefit monthly, plus 0.6 cents per kilometer for commuting.

Private health insurance: Supplements the public system. Costs around €100-300 per month depending on coverage.

Flexible working: Not legally required, but expected by most professionals. About 40% of Austrian employees work hybrid schedules.

Training budget: €1,000-2,000 annually is standard for professional roles.

Common benefit mistakes

Forgetting the 14 salaries: Budget for 16.33 months of salary annually (12 regular + 2 extra + 2.33 months of social contributions on the bonuses).

Miscalculating social security ceilings: The €6,060 monthly ceiling applies to each contribution separately, not the total. Get this wrong and you'll overpay by thousands.

Vacation payout errors: You must pay out unused vacation at the employee's current salary rate, not what they earned when they accrued the days.

Missing works council deadlines: If employees request elections, you have 4 weeks to organize them. Delays can result in fines up to €7,300.

Sick leave cash flow problems: You'll pay full salary for months before getting social insurance reimbursements. Many companies don't budget for this.

Administering these benefits correctly requires local HR expertise (€65,000+ annual salary), benefits software (€200+ monthly), and legal review (€5,000+ annually). Get it wrong and you're looking at fines starting at €1,000 per violation.

Hire with Columbus handles all Austrian benefit administration, from calculating the 14th month bonus to managing parental leave paperwork, for $179/month per employee. We also maintain the cash flow for sick leave reimbursements so you don't have to.

What are the compliance requirements?

Miss one mandatory contract clause in Austria and the entire employment agreement becomes invalid. Austrian labor law is incredibly detailed about what must be included, when notices are required, and how terminations work.

The good news? Follow the rules exactly and you'll avoid the hefty fines and legal headaches that trip up most international employers.

Employment contract requirements

Every employment contract in Austria must be written in German and include specific mandatory clauses. You can't skip these or use vague language.

Required contract elements:

• Employee's full name, address, and social security number

• Employer's legal name and Austrian business registration number

• Job title, detailed job description, and reporting structure

• Start date and workplace location (specific address required)

• Salary amount, payment schedule, and any additional compensation

• Working hours per week and daily schedule

• Vacation entitlement and calculation method

• Notice periods for both parties

• Applicable collective bargaining agreement (if any)

Contracts must be signed within 5 working days of the employee's start date. If you're hiring remotely, the employee needs a physical copy before they begin work.

Pro tip: Most collective bargaining agreements in Austria override individual contract terms, so you need to check which one applies to your industry and job role.

Probation periods

Austria allows probation periods of up to 6 months for most positions. During probation, either party can terminate with just 7 days' notice.

Here's what you need to know:

• Standard probation: 3 months (most common)

• Maximum allowed: 6 months

• Minimum notice during probation: 7 days

• No severance pay required during probation

You must specify the exact probation period in the employment contract. Don't leave it vague or use phrases like "standard probation period."

Working time regulations

Austria's working time rules are strict, and violations result in immediate fines from labor inspectors.

Daily and weekly limits:

• Maximum 8 hours per day, 40 hours per week (standard)

• Extended to 10 hours per day, 50 hours per week (with employee agreement)

• Mandatory 11-hour rest period between work days

• At least 36 consecutive hours of rest per week (usually Saturday evening to Monday morning)

Overtime rules:

• First 5 hours per week: 50% premium

• Beyond 5 hours per week: 100% premium

• Alternative: Time off in lieu (1.5x hours for first 5 hours, 2x hours after that)

You must keep detailed records of all working hours, including start times, break periods, and overtime. Labor inspectors can request these records at any time.

Notice periods

Notice periods in Austria depend on how long someone has worked for you. Both employee and employer notice periods are the same.

Notice must be given in writing and delivered by registered mail or in person with written acknowledgment. Email notices aren't legally valid for terminations.

Important timing rule: Notice periods always end on the last day of a calendar month. If you give notice on March 15th for a 2-month period, termination becomes effective May 31st.

Termination process

You can't just fire someone in Austria, even for cause. The process depends on the reason and requires specific documentation.

Termination for cause (immediate dismissal):

• Theft, fraud, or serious misconduct

• Repeated violations after written warnings

• Must occur within 2 weeks of discovering the cause

• Requires detailed written documentation

Regular termination:

• Must provide proper notice period (see table above)

• Written termination letter with specific reason

• Employee has right to request detailed explanation

• Works council consultation required (if applicable)

Termination during illness: You cannot terminate an employee who's on sick leave unless it's for serious misconduct unrelated to their illness.

Severance pay

Austria requires severance pay for most terminations, calculated based on tenure and monthly salary.

Exception: No severance required if employee resigns voluntarily or is terminated for serious cause during the first 3 years.

New system (employees hired after 2003): Instead of lump-sum severance, employers contribute 1.53% of monthly salary to an employee severance fund. The employee can access this when they leave.

Data protection requirements

Austria follows GDPR rules strictly, with additional local requirements for employee data.

Key obligations:

• Written consent for processing employee personal data

• Data processing agreements with payroll providers

• Employee access rights to their personal data

• Secure storage and transmission of employee information

• Notification requirements for data breaches (within 72 hours)

You must inform employees exactly what personal data you collect, how you use it, and who has access. This includes background checks, performance evaluations, and any monitoring systems.

Common compliance mistakes

Invalid employment contracts: Missing mandatory clauses makes the entire contract void. You'll owe back payments and face contract renegotiation.

Wrong termination process: Skipping notice requirements or improper documentation can result in wrongful dismissal claims and reinstatement orders.

Overtime violations: Not paying proper overtime premiums or exceeding working time limits results in immediate fines and back pay obligations.

Missing works council consultation: For companies with 5+ employees, failing to involve the works council in certain decisions voids those decisions.

Improper probation periods: Extending probation beyond 6 months or not specifying the exact period in writing makes the probation invalid.

Penalties for violations

Austria doesn't mess around with employment law violations. Here are the actual costs:

Common compliance failures:

• Invalid employment contract: €2,180-€10,900 fine plus contract reconstruction costs

• Improper termination: 3-6 months' salary compensation plus legal fees (€5,000-€15,000 average)

• Working time violations: €218-€2,180 per violation per employee

• Missing overtime payments: 100% back pay plus 4% annual interest plus administrative fines

• Data protection violations: €20 million or 4% of annual revenue (whichever is higher)

• Works council violations: €1,090-€21,800 plus decision reversal

Real example: A German tech company paid €45,000 in fines and back pay after improperly calculating overtime for 8 employees over 6 months. The labor inspector found missing break records and incorrect premium calculations.

Hire with Columbus ensures every contract includes all mandatory clauses in proper German, handles terminations according to Austrian law exactly, and maintains compliant working time records. Our local legal team reviews every employment decision before you make it, so you avoid these costly mistakes entirely.

What has changed recently?

Austria's job market got some major updates in 2025 that'll hit your hiring plans and employee costs directly.

Minimum wage increases

The national minimum wage shot up to €1,847 per month in January 2025, jumping from €1,744 in 2024. That's a 5.9% increase that blindsided plenty of companies. If you're hiring entry-level people, this needs to go straight into your budget calculations.

Most collective bargaining agreements also pushed through 4-6% increases for 2025. Even if you're paying well above minimum wage, your labor costs probably took a hit.

New digital nomad visa rules

Austria rolled out its "Red-White-Red Digital Nomad" visa in March 2025. Remote workers can now stay in the country for up to 12 months without the usual visa headaches. This opens doors if you want to hire Austrian talent who's working remotely from other EU countries.

But it also cranks up competition for local talent. The visa requires proof of €3,500 monthly income and solid health insurance, so it's pulling in higher-skilled workers who expect premium pay.

Updated parental leave benefits

Starting July 2025, Austria expanded paid parental leave options. Parents can now pick from more flexible setups, including a new 15+3 month model. One parent takes 15 months, the other takes 3 months, with better daily allowances than before.

This changes your workforce planning since employees might disappear for longer stretches. You'll also need to understand the new benefit math when you're budgeting for coverage.

Stricter working time regulations

Austria's labor inspectors started cracking down hard on digital time tracking in 2025. Companies now face fines up to €50,000 for weak time tracking systems, especially with remote workers.

You need proper digital tools to track hours, breaks, and overtime for everyone, including salaried employees. The old honor system is dead.

Social security contribution changes

Employer social security contributions crept up in 2025 to 21.83% of gross salary, up from 21.7% in 2024. Health insurance contributions got the biggest bump, rising to 3.87%.

These look like tiny changes, but they pile up fast. An employee earning €50,000 now costs you about €65 more per year in contributions alone.

When you work with an EOR like Hire with Columbus, we handle all these compliance updates automatically. You don't have to track every regulation change or worry about botching contribution calculations. We adjust everything behind the scenes so your Austrian employees stay compliant while you focus on actually running your business.