Hire and manage talent in Austria without establishing a local entity.
Using an Employer of Record in Austria allows international companies to stay compliant with labor laws, payroll, and benefits while hiring remotely.
Key Takeaways
- An Employer of Record (EOR) in Austria legally employs staff on behalf of foreign companies, handling employment contracts, payroll, tax filings, social security contributions, and statutory benefits in compliance with Austrian labor law and Collective Bargaining Agreements (CBAs). EOR providers must hold a valid labor leasing license (Arbeitskräfteüberlassung) to operate legally.
- Using an EOR is faster and reduces compliance risk compared to setting up a local GmbH, especially given Austria’s detailed labor regulations and CBA-based wage system.
- Austria offers a highly skilled, multilingual workforce with strengths in IT, engineering, finance, life sciences, manufacturing, and customer support. The employment rate for ages 15–64 remains stable at around 75%.
- Austria has no national minimum wage. Instead, wages are set by industry-specific CBAs covering about 98% of workers. In 2026, many entry-level minimum salaries exceeded €2,000 gross per month. Some sectors (e.g., retail, hospitality) range from €1,700–€1,900 gross per month. Salary levels increased following inflation adjustments in 2024–2025: Median annual gross salary (full-time): ~€55,678, and Median monthly gross salary: ~€3,700–€3,900
- Employers must budget an additional 28%–31% on top of gross salary for social security contributions, with slight 2026 rate adjustments. Most CBAs also require 14 salary payments per year (including holiday and Christmas bonuses), typically taxed at favorable rates.
- Key 2026 updates include expanded protections for “employee-like” freelancers (freie Dienstnehmer), including a four-week statutory notice period and potential CBA inclusion. For non-EU hiring, the Red-White-Red Card salary threshold for Key Workers is €3,225 gross per month.
- Overall, Austria offers a stable, high-quality labor market, and an EOR provides a compliant, efficient solution for international hiring.
Complete Guide to Hiring Employees, Payroll, and Compliance in Austria
Hiring employees in Austria offers access to a growing, skilled, and cost-effective workforce, but navigating local employment laws, payroll rules, and tax obligations can be challenging for foreign companies. An Employer of Record (EOR) in Austria allows businesses to legally hire and manage employees without establishing a local legal entity.
With an EOR, your team members are employed in full compliance with Austrian labor law, while you retain control over daily work, performance management, and team structure. The EOR handles employment contracts, payroll processing, tax filings, statutory benefits, and ongoing compliance, reducing risk and administrative overhead.
This approach is particularly suited to companies expanding into Europe, building distributed teams, or testing the Austrian market before committing to a permanent local presence.
Hiring Employees in Austria: Market Overview
Austria has emerged as an attractive hiring destination for international companies seeking cost-effective talent in Europe, particularly for remote and distributed teams.
Austria’s Workforce and Talent Strengths
Austria has a young and increasingly educated workforce, with a strong pipeline of graduates in technology, engineering, business administration, and finance. The country has invested heavily in digital skills and vocational education, supporting the growth of IT services, outsourcing, and shared service centers.
The workforce is familiar with international business environments, especially companies operating across Europe.
Common Roles Companies Hire For
International employers frequently hire in Austria for roles such as:
- Software developers and QA engineers
- IT support specialists and systems administrators
- Customer support and call center agents
- Finance and accounting professionals
- Operations, sales support, and back-office roles
Many of these positions are well-suited for remote or hybrid work, making Austria an attractive hub for global teams.
Language Proficiency and Business Culture
Austria’s workforce is highly multilingual. English proficiency is strong, particularly among younger professionals and those in tech, customer service, and business services. German is the official language, while Italian and other regional languages are common in border areas and international business contexts.
The Austrian business culture is professional and relationship-oriented, with growing adoption of remote collaboration tools and international management practices, making integration into global teams smooth.
Cost Advantages Compared to Western Europe
While Austria’s wages are higher than those in Eastern Europe, employment costs remain competitive compared to Western Europe. Salaries, social contributions, and overall employment expenses allow companies to access high-quality talent while controlling costs, particularly in technical and service-based roles. This balance of cost and skill makes Austria an appealing nearshore or offshore hiring location.
Why Austria Is Attractive for Remote Teams
Austria operates in the Central European Time Zone (GMT+1), providing excellent overlap with most European business hours. Combined with reliable internet infrastructure and a growing culture of remote work, Austria is an ideal base for distributed teams serving Europe and beyond.
How to Hire Employees in Austria
Companies looking to hire in Austria have three main options: setting up a local entity, using an Employer of Record (EOR), or hiring independent contractors. Each approach differs in control, cost, speed, and compliance responsibility.
- Setting Up a Local Entity (GmbH)
For long-term expansion with large local teams, creating a GmbH provides full legal and operational control.
- Set-up: 4–8 weeks; minimum share capital €35,000 (foundation privilege allows €5,000 cash contribution initially)
- Responsibilities: Employment contracts, payroll, taxes, social contributions (~28–31%), compliance with labor law and CBAs
- Drawbacks: High upfront costs, slower hiring, increased internal compliance risk
- Employer of Record (EOR) in Austria
An EOR legally employs staff on your behalf, handling payroll, contracts, taxes, social contributions, and CBA compliance while your company directs day-to-day work.
- Best for: Quick market entry, remote hiring, scaling teams efficiently, and minimizing compliance risk
- Speed: Employees onboarded in 2–5 days without entity setup costs
- Critical 2026 update: EORs must hold a labor leasing license (Arbeitskräfteüberlassung), and cross-border oversight has increased
- Hiring Independent Contractors
Ideal for short-term or specialized projects, contractors manage their own taxes and social contributions.
- Risk: Misclassification can lead to penalties and back taxes
- 2026 update: “Employee-like” freelancers (Freie Dienstnehmer) now have statutory notice periods and potential inclusion in CBAs, narrowing cost-saving gaps
Learn More on Hiring Independent Contractors in Austria
Using an Employer of Record in Austria
An Employer of Record (EOR) is a third-party organization that legally employs workers in Austria on behalf of a foreign company. The EOR assumes responsibility for local employment compliance, while the hiring company maintains full control over the employee’s daily tasks, performance management, and role scope.
This structure allows companies to hire employees in Austria without establishing a local legal entity, while remaining fully compliant with the Austrian Labor Code, tax regulations, and social security requirements.
This model allows companies to hire employees in Austria without establishing a local legal entity, ensuring full compliance with Austrian labor law, tax regulations, and social security requirements.
Legal Employer vs Operational Control
Under an EOR arrangement:
- The EOR is the legal employer, managing contracts, payroll, taxes, and statutory benefits.
- The hiring company retains operational control, including assigning work, conducting performance reviews, managing reporting lines, and applying internal policies.
This separation ensures legal compliance while allowing employees to integrate seamlessly into your team.
Who Should Use an Employer of Record in Austria
An EOR in Austria is ideal for:
- Startups entering the Austrian market for the first time
- Scaleups expanding distributed or remote teams
- Companies hiring small to mid-sized teams without plans to establish a local entity
- Businesses seeking to reduce employment compliance risk
Common Use Cases
Typical scenarios for using an Employer of Record in Austria include:
- Entering the Austrian market without registering a local entity
- Hiring remote employees for European operations
- Rapidly scaling technical, IT, or customer support teams
- Employing talent while testing long-term business viability
Using an EOR in Austria provides speed, flexibility, and compliance assurance, making it one of the most efficient solutions for international companies hiring locally without the administrative and legal burdens of establishing a subsidiary.
What an Employer of Record Does in Austria
An Employer of Record (EOR) in Austria handles all legal and administrative employment responsibilities, allowing companies to focus on operations while remaining fully compliant with Austrian labor laws and regulations.
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Legal Employment and Contracts
The EOR drafts and maintains employment contracts that comply with Austrian labor law, ensuring correct employee classification, lawful terms, and proper documentation under Collective Bargaining Agreements (CBAs).
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Payroll Processing and Tax Withholding
The EOR manages monthly payroll, calculates gross-to-net salaries, withholds income tax, and ensures timely payment to employees in euros, in line with Austrian tax regulations.
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Social Security and Statutory Benefits
Employer social contributions, typically 28–31% of gross salary, are calculated, filed, and paid by the EOR for pension, health, unemployment, and accident insurance. Mandatory benefits, including 13th and 14th-month salaries, are also managed.
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Leave Tracking and Compliance
The EOR monitors statutory leave entitlements such as annual leave, sick leave, maternity/paternity leave, and public holidays, guaranteeing employees receive their full legal rights.
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Work Permits and Visas
For non-EU hires, the EOR supports Red-White-Red Card applications and other residence or work permits, ensuring all immigration requirements are met.
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Termination and Severance Support
The EOR handles terminations in line with Austrian labor law, including notice periods, severance calculations, and proper procedural documentation, minimizing legal risk.
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Ongoing Labor Law Monitoring
Austrian labor law evolves frequently, particularly to align with European Union standards. The EOR continuously monitors legal changes and updates employment practices to maintain compliance.
Using an Employer of Record in Austria ensures companies can hire quickly, scale efficiently, and navigate complex employment regulations without the administrative burden of a local entity.
Employment and Labour Laws in Austria
Understanding Austrian employment laws is crucial for compliant hiring. An Employer of Record in Austria helps businesses adhere to statutory requirements while protecting both employer and employee rights.
Employment Contracts
Language Requirements
Employment contracts must be written in German or provided in a bilingual format. If the contract is drafted in another language, an official translation may be required to ensure legal validity.
Mandatory Clauses
Contracts must include:
- Identification of the employer and employee
- Job title and detailed description
- Start date and contract duration
- Salary and payroll frequency
- Working hours and overtime rules
- Leave entitlements, including annual, sick, and parental leave
- Notice period and termination conditions
Contract Types
Permitted contracts under Austrian law include:
- Indefinite (permanent) contracts – standard for most full-time roles
- Fixed-term contracts – for project-based or temporary work
- Part-time contracts – proportional hours with full statutory protections
- Probationary contracts – usually up to one month, allowing termination without notice
Using an Employer of Record in Austria ensures that all contracts comply with local labor laws, Collective Bargaining Agreements (CBAs), and mandatory statutory protections, reducing legal risk and administrative burden for international companies.
Payroll, Taxes, and Employer Costs in Austria
Hiring employees in Austria requires compliance with local payroll regulations, progressive income tax, and mandatory social security contributions. Whether hiring directly or via an Employer of Record in Austria, payroll must be accurate and timely.
Payroll Frequency
Salaries are generally paid monthly in euros. Employers or an EOR are responsible for withholding income tax and employee social contributions before payment.
Minimum Wage
Austria has no national statutory minimum wage. Wages are set by industry-specific Collective Bargaining Agreements (CBAs), which are regularly updated. Most entry-level roles in 2026 start above €2,000 gross per month, though some sectors like retail or hospitality may begin slightly lower.
Income Tax – 2026 Progressive Rates
Austria applies a progressive income tax, withheld at source:
- 0%: Up to €13,539 (tax-free allowance)
- 20%: €13,539 – €21,992
- 30%: €21,992 – €36,458
- 40%: €36,458 – €70,365
- 48%: €70,365 – €104,859
- 50%: €104,859 – €1,000,000
- 55%: Above €1,000,000
These brackets reflect 2026 adjustments to combat “cold progression” due to inflation.
Employer Social Contributions
Employers contribute 28–31% of gross salary, including:
- Pension and social security (~21%)
- Health insurance
- Unemployment insurance
- Ancillary costs like Municipal Tax (3%) and Family Burden Equalization Fund (3.7%)
Maximum contribution basis: Contributions apply only to monthly earnings up to €6,930; income above this is exempt.
Employee Deductions
Employees contribute a portion of their salary toward social security and health insurance, which is withheld alongside income tax.
13th & 14th-Month Salaries
Most CBAs mandate 13th and 14th-month salaries (holiday and Christmas bonuses). The first €620 of each payment is tax-free, with the remainder taxed at a reduced flat rate of 6%.
Total Employment Cost
The full cost of employment in Austria includes:
- Gross salary
- Employer social contributions
- Payroll administration
- Statutory benefits (13th/14th-month salaries)
- EOR service fees, if applicable
For small to mid-sized teams or companies testing the market, using an Employer of Record in Austria is often more cost-effective than establishing a local entity while ensuring full compliance.
Employee Leave and Statutory Benefits in Austria
Austrian labor law provides strong employee protections through statutory leave entitlements and social benefits. Whether hiring directly or through an Employer of Record in Austria, employers must comply with all legal obligations.
Annual Leave
- Employees are entitled to 25 working days (5 weeks) of paid annual leave per year for a standard five-day workweek.
- After 25 years of service, entitlement increases to 30 working days (6 weeks).
- Public holidays: Austria has 13 statutory holidays. If a holiday falls on a weekend, it is generally not replaced with a substitute day off.
Sick Leave
- Employers must provide 100% of salary for 6–12 weeks, depending on tenure.
- This is followed by 4 weeks at 50% pay.
- Only after the employer’s statutory obligation is exhausted does the national social security system (Krankengeld) cover additional sickness benefits.
Maternity Leave (Mutterschutz)
- Statutory leave is 16 weeks (8 weeks before and 8 weeks after birth).
- Extended to 12 weeks after birth for C-sections or multiple births.
- Payment is provided by Social Security, not the employer.
- Termination during maternity leave is prohibited.
Paternity Leave (“Daddy Month”)
- Fathers are entitled to one month (28–31 days) of leave, which is unpaid by the employer.
- Fathers can claim the Family Time Bonus from social security (~€1,700 total).
Other Statutory Leave
- Parental and childcare leave
- Bereavement leave
- Care leave: 1–2 weeks to care for sick relatives (paid by employer)
- Marriage leave and other short-term leaves under specific circumstances
13th & 14th-Month Salaries
- Not part of the national Labor Code but mandated by nearly all Collective Bargaining Agreements (CBAs), covering ~98% of employees.
- These payments (holiday and Christmas bonuses) are effectively mandatory for most Austrian workers.
Learn More about Probation Period in Austria
Work Permits and Visas for Foreign Employees
Foreign nationals working in Austria must comply with immigration and employment regulations. Using an Employer of Record in Austria can simplify compliance and reduce administrative burden for international companies.
Who Needs a Permit?
- Non-Austrian nationals working in Austria for more than three months generally require both a work permit and a residence permit.
- EU/EEA citizens do not need a work permit but must register with local authorities via a Registration Certificate (Anmeldebescheinigung) within four months of arrival.
Types of Visas and Permits
| Permit Type | 2026 Salary Requirement | Key Feature |
| Red-White-Red (RWR) Card | €3,465 / month (Other Key Workers) | Points-based system (minimum 55–70 points) |
| EU Blue Card | €55,678 / year | Requires a 3-year degree; no points system |
| Job Seeker Visa | N/A | Highly qualified workers may stay 6 months to find employment if reaching 70+ points |
| Settlement Permit | €1,308.93 / month | Required for non-work stays >6 months |
Employer Responsibilities
Employers of foreign nationals are responsible for:
- Sponsoring visa and permit applications
- Submitting accurate documentation to the authorities
- Renewing permits on time
- Ensuring ongoing legal compliance
How an Employer of Record Supports Compliance
An Employer of Record in Austria:
- Acts as the legal employer for permit applications
- Handles all documentation and liaises with authorities
- Ensures foreign employees remain legally employed throughout their assignment
Using an EOR protects companies from non-compliance penalties, simplifies hiring across borders, and accelerates onboarding for remote or local roles.
Termination, Notice Periods, and Severance in Austria
Employment termination in Austria must strictly follow labor law procedures to avoid disputes, penalties, or claims for unfair dismissal. Using an Employer of Record in Austria ensures compliance and proper process.
Valid Grounds for Termination
- Ordinary dismissal (Kündigung): No specific reason is legally required.
- Immediate dismissal (Entlassung): Only permitted for serious misconduct (e.g., fraud, gross negligence, breach of duty).
- Other grounds: Redundancy, restructuring, or contract expiration.
Notice Periods by Tenure (Indefinite Contracts)
| Length of Service | Employer Notice Period |
| 0–2 years | 6 weeks |
| 2–5 years | 2 months |
| 5–15 years | 3 months |
| 15–25 years | 4 months |
| Over 25 years | 5 months |
These unified notice periods apply to all employees, replacing older, tiered systems.
Notice periods can still be extended by Collective Bargaining Agreements (CBAs).
Severance Rules – “Abfertigung Neu”
- Employees hired after 2002 are covered by the new severance system (“Abfertigung Neu”).
- Employers contribute 1.53% of the monthly gross salary to an external severance fund (Mitarbeitervorsorgekasse).
- Employees can claim this fund after 3 years of contributions if terminated or leave by mutual consent.
- Lump-sum severance payments are generally no longer paid directly by the employer.
Probation and Freelance Notice
- Probation period: Maximum of 1 month; during this time, either party can terminate the contract without notice.
- Freelance notice (freie Dienstnehmer): 4–6 weeks, depending on tenure and contractual agreements.
Unjust Dismissal Risks
- Employees in firms with 5+ staff are protected against socially unjustified dismissal.
- Challenges can result in reinstatement or compensation, often based on salary earned during the proper notice period.
How an Employer of Record Supports Compliance
Using an Employer of Record in Austria ensures:
- Correct notice periods and procedural adherence
- Proper contributions to severance funds
- Compliance with Austrian labor law, CBAs, and probation rules
- Reduced legal risk for international companies
Why Use an Employer of Record in Austria Instead of a Local Entity
Using an Employer of Record offers several advantages over setting up a local subsidiary.
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Speed to Hire
- Employees can be onboarded in days rather than months.
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Cost Efficiency
Avoids incorporation costs, legal fees, and ongoing entity maintenance.
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Compliance Risk Reduction
Employment, payroll, and labor law compliance are handled by local experts.
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Scalability
Teams can be scaled up or down easily without restructuring a legal entity.
Austria EOR vs Local Entity vs Contractors
When hiring in Austria, companies have three main options: Employer of Record (EOR), setting up a local entity, or using independent contractors. Each option differs in cost, speed, compliance, and control.
| Factor | EOR | Local Entity | Contractors |
| Time to Hire | Fast; no local entity needed; employees onboarded in days | Slow; entity registration can take weeks to months | Fast, but onboarding depends on contract and project setup |
| Cost | Monthly service fees typically range from $199 to $1,000 per employee, plus salary and benefits. | High upfront costs: setup fees, payroll, taxes, accounting, and ongoing compliance | Salary only, but risk of misclassification penalties |
| Compliance | Fully managed by the EOR, including contracts, payroll, taxes, social contributions, and CBAs | Employer is fully responsible for Austrian labor law, payroll, taxes, social contributions, and CBA compliance | High risk; misclassifying an employee as a contractor can lead to fines, back taxes, and legal disputes |
| Control | Hiring company retains operational control (daily tasks, performance) | Full control over operations, HR, and internal policies | Limited control; contractors work independently and cannot be treated like employees |
| Scalability | Easy to scale up or down across roles and locations | Requires entity expansion per location and role | Flexible for short-term projects, but scaling carries compliance risk |
Key Takeaways for Austria
- EORs are ideal for international companies seeking quick market entry, legal compliance, and workforce flexibility without setting up a local entity.
- Local entities are suitable for long-term, large-scale operations where full control is necessary.
- Contractors work best for short-term projects or specialized skills, but careful classification is critical due to stricter Austrian labor and freelance reforms in 2026.
Getting Started with an Employer of Record in Austria
Using an Employer of Record (EOR) in Austria enables international companies to onboard staff quickly, stay fully compliant with Austrian labor law, and focus on core operations rather than administrative tasks.
1. Define Roles and Hiring Needs
Before engaging an EOR, clarify the positions you need to fill:
- Role specifications: Job title, responsibilities, reporting structure.
- Skill requirements: Technical expertise, language proficiency (German and English), and relevant certifications.
- Hiring timelines: Determine when employees are needed and how quickly you plan to scale.
- Employment type: Full-time, part-time, or project-based.
This ensures the EOR can target suitable candidates and prepare compliant contracts aligned with your requirements.
2. Choose an EOR Provider
Selecting the right EOR is crucial for compliance and smooth operations. Consider:
- Local expertise: Knowledge of Austrian labor law, Collective Bargaining Agreements (CBAs), tax rules, and social security contributions.
- Service coverage: Payroll, benefits administration, visa/work permit support, termination management.
- Pricing: Monthly service fees (typically $199–$1,000 per employee), percentage of payroll, or setup costs.
- Reputation: Client reviews, responsiveness, and track record in Austria.
The right EOR balances reliability, cost efficiency, and service scope.
3. Sign the Agreement
Formalize your relationship:
- Define responsibilities: Who manages payroll, contracts, and compliance?
- Outline service scope: Recruitment, benefits, visas, and termination handling.
- Agree on fees, payment terms, and reporting.
- Clarify termination and exit procedures.
A structured agreement protects your business and ensures transparency across the employment lifecycle.
4. Onboard Employees
The EOR manages all onboarding steps:
- Employment contracts: Drafted per Austrian labor law, including probation, leave, and termination clauses.
- Payroll setup: Salaries, deductions, and social contributions configured for monthly processing.
- Benefits enrollment: Health insurance, pension contributions, statutory leave, and other entitlements.
- Work permits & visas: For foreign hires, the EOR ensures proper documentation and compliance with immigration rules.
- Orientation: Employees receive company policies, guidelines, and introductions to culture.
5. Run Compliant Payroll
Once onboarded, the EOR ensures payroll and compliance are fully managed:
- Monthly salary payments: Accurate and on schedule.
- Tax & social security remittance: Income tax withheld and employer contributions filed with authorities.
- Reporting: Detailed payroll reports, statutory filings, and updates on Austrian labor law.
- Ongoing support: Contract amendments, salary adjustments, promotions, and terminations handled compliantly.
Key Benefits:
Using an EOR in Austria allows businesses to scale quickly, reduce compliance risk, and focus on growth, while giving employees a legally secure and structured employment experience.
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FAQs About Hiring Employees in Austria
1. What is an Employer of Record (EOR) in Austria?
An Employer of Record in Austria legally employs staff on your behalf, handling contracts, payroll, taxes, social security, and compliance. Your company maintains full control over daily work, performance, and reporting, while the EOR ensures employees are fully compliant with Austrian labor laws and CBAs.
2. Do I need a local entity to hire in Austria?
No. Using an EOR in Austria allows you to hire employees without setting up a local company, saving time, reducing costs, and avoiding complex administrative and legal requirements.
3. How does payroll and taxation work in Austria?
Payroll is monthly. Employers or an EOR withhold income tax and employee social contributions, pay employer social security, health, and unemployment contributions (~28–31%), and administer statutory benefits such as 13th/14th salaries under CBAs.
4. Can foreign employees work in Austria?
Yes. Non-EU/EEA nationals need work and residence permits. An EOR in Austria manages applications, liaises with authorities, and ensures full compliance with immigration rules, including Red-White-Red Cards and EU Blue Cards.
5. When should I use an EOR instead of hiring contractors in Austria?
Use an EOR for full-time, long-term roles requiring payroll, benefits, and labor law compliance. Contractors are suitable for short-term or project-based work, but misclassification can lead to fines, back taxes, and legal disputes.
