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Hiring in Austria
Background checks in Austria
Hire employees in Austria
Language requirements in Austria
Corporate presence requirements and payroll setup in Austria
Easily hire employees in Austria with our EoR solution
Hiring employees in Austria typically requires a lot of time, work, and resources. In most circumstances, you’ll need to set up a local legal entity through which to hire workers, which can be a time-consuming process. There are also various expenses to consider, such as the cost of incorporation, payroll taxes, social security contributions, and more.
Plus, once you’ve found the right people for the job; you’ll need to ensure your employment contracts and practices are in line with EU and Austrian labour laws — which are constantly changing. There is an easier way: hiring talent through an employer of record, or EoR.
An employer of record (EoR) is an organisation that hires employees on behalf of other organisations. When you engage workers through an EoR, the EoR becomes those workers’ official employer for legal and tax purposes. They also typically provide HR services like payroll, benefits administration, and onboarding support.
When you use an employer of record in Austria, the EoR will handle things like payroll, taxes, social security, benefits, and labour law compliance entirely on your behalf. This enables businesses to easily and quickly hire Austrian talent without worrying about compliance with Austrian labour laws and regulations or getting tied up in the legal and administrative side of hiring.
Working with an EoR can also be beneficial for a company’s workers since they benefit from a smooth and compliant HR experience that’s in line with their expectations. The EoR will ensure employees have access to the statutory benefits they’re entitled to, and act as their point of contact for any HR questions or concerns.
In Austria, an employer of record (EoR) is often referred to as an ‘Arbeitnehmerüberlassung’ or ‘Überlassung von Arbeitskräften’, which translates to ‘labour leasing’ or ‘employee leasing’. There are some specific rules that apply to employers of record in Austria that you should be aware of before engaging one.
Companies engaging in labour leasing must have a specific licence issued by the Public Employment Service Austria (Arbeitsmarktservice Österreich or AMS). They must also maintain specific records and comply with reporting requirements. Businesses looking to work with an employer of record in Austria should ensure any provider they choose meets these legal requirements.
Whether or not you use an employer of record to hire talent in Austria, it’s a good idea to have an understanding of the labour laws, regulations, and standard practices that apply there. This allows you to both ensure your operations are compliant and give your Austrian team the employee experience they expect and deserve. Read on for everything you need to know about hiring employees in Austria — with or without an EoR.
Like all countries, Austria has its own set of rules, regulations, and norms that apply to employment. Companies hiring in Austria should familiarise themselves with the basics before engaging employees.
Austria has strong labour laws that protect workers and set limits on what employers can do. Some of the most important pieces of legislation you should be aware of before hiring in Austria include:
Many employees in Austria are trade union members, and many are covered by collective bargaining agreements made between groups of employers and employees. These agreements may apply across an entire industry and set the rules on things like working hours, minimum wages, and job categories. It’s important for employers hiring in Austria to understand the collective agreements that apply to their employees so they can ensure compliance.
There are three main types of contracts that can be used when hiring in Austria, based on the type of engagement:
Employment contracts in Austria can be either written or verbal. If no written contract is provided, employees and independent contractors must receive a statement of terms and conditions called a Dienstzettel immediately upon commencement of the employment relationship. There are specific rules on the information the Dienstzettel must contain.
Employees in Austria are taxed on a progressive scale with rates from 20–50% depending on their income level. Employers must withhold this income from employees’ wages and pay it to the relevant tax authorities. Both employers and employees in Austria pay social security contributions, which cover things like sickness, unemployment, pensions, and accident insurance.
Employers often conduct background checks on candidates they are considering hiring. This allows them to better assess a candidate’s suitability for a role and verify information gathered during the recruitment process. However, there are certain rules and restrictions that apply to background checks in Austria, which employers must be aware of.
The only type of background check that is legally required for all employees in Austria is a right-to-work check. Employers are responsible for verifying that their employees have permission to work in the country. Employees from Switzerland and the European Economic Area (EEA) automatically have the right to work in Austria, while those from third countries require a work permit.
Here are some other types of background checks that employers can carry out in Austria based on the specific circumstances at hand:
Criminal records checks and credit checks are only permissible for certain roles in Austria and are subject to proportionality requirements. Employers must obtain the consent of the candidate before conducting any type of background check in Austria. While written consent is not explicitly required by law, obtaining it is a good idea for documentation and compliance purposes.
There are also certain types of background checks that are explicitly prohibited or severely limited. First, employers can’t access a candidate’s medical history or require them to provide medical information unless it’s specifically related to their ability to carry out a role. Background checks that could lead to discrimination, including those based on age, gender, ethnicity, religious beliefs, or sexual orientation, are also forbidden.
Before hiring employees in Austria, it’s important to consider whether it’s actually the right engagement structure for your business. For example, if you want to engage workers on a permanent basis to do work that’s related to your core business activity, you’ll probably need to engage a full-time or part-time employee. In other circumstances, it may be more beneficial to hire an independent contractor instead. Read on for more details about the different alternatives to hiring employees in Austria.
Here are the main options available if you want to engage workers in Austria:
Here are some other types of workers you may come across if you hire employees in Austria:
German is the official language of Austria and the most widely spoken by far. Croatian, Slovenian, and Hungarian are official languages of autonomous populations in some regions.
Third-country nationals who want to live and work in Austria usually have to prove that they have some German language skills. They usually need to demonstrate at least A1 level German on the Common European Framework of Reference for Languages (CEFR). This usually means obtaining a certificate from the Austrian Integration Fund (Österreichischer Integrationsfonds or OIF), though some other certificates may be accepted.
People living in Austria may also sometimes need to prove their German language skills to extend their residence permit. This is part of the Integration Exam. Whether or not it’s a legal obligation, it’s a good idea to have at least some level of German proficiency if you want to live and work in Austria.
There are no statutory requirements concerning the language of employment documents in Austria, as long as the employee understands the agreement. However, it’s recommended that the agreements be in German (or bilingual in German and another language in case of any disputes. In the latter case, the contract should include a provision that the German version is the prevailing one in case of any differences.
English is taught as the first foreign language at most schools in Austria. In general, the country boasts a high level of proficiency, ranking ninth worldwide and eighth in Europe according to the EF English Proficiency Index.
Foreign entities can engage employees in Austria, subject to proper payroll registration and certain business and corporate tax considerations. Once properly registered, employers must withhold PAYE taxes and social security contributions and remit them to the appropriate authorities.
Here are the steps to follow if you want to set up payroll in Austria:
Different rules and requirements apply to foreign entities wanting to hire and run payroll in Austria. For many businesses, the simplest solution is to outsource payroll to a provider like an employer of record (EoR). This allows you to quickly and easily hire Austrian employees without the hassle of setting up payroll.
Employers in Austria must withhold income tax from their employees’ wages and pay them to the tax authorities. The deadline for payments is the 15th of the following month. Employees pay taxes at rates from 20–55% depending on their income level. Lower rates apply to additional payments, such as the 13th and 14th salary, as long as the amount paid is less than one-sixth of the employee’s total income. Additional payments of up to EUR 620 are also tax-exempt.
In addition, all employers, including foreign ones, are required to contribute to the Family Burdens Equalisation Fund (FLAF) at a rate of 3.9%. This is a special fund set up to help citizens with the cost of having a family. Employers that are members of the Austrian Chamber of Commerce have to pay an additional contribution of between 0.3% and 0.42% depending on the state where they are based.
Lastly, there is also a municipal payroll tax of 3% of the total monthly wages and salaries paid. This only applies to employers with permanent establishment in Austria, so may not impact foreign businesses.
Both employers and employees in Austria must make contributions into the social security system. The total rates payable (split between employers and employees) are as follows:
Employers must file a social security return declaring the amount withheld by the 15th of each month and pay it to the social security authorities by the 15th of the following month.
Hiring employees in Austria usually means setting up a legal entity, which can be costly and time-consuming. Employers can avoid this hassle by working with an Employer of Record (EoR), like CXC.
Through our EoR solution, you can confidently hire employees in Austria, without worrying about compliance issues. We’ll handle everything from payroll to benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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