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Employer of record in Austria

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.

What is an employer of record?

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.

Using an employer of record in Austria

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.

Restrictions on employer of record providers in Austria

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.

Hiring in Austria without an employer of record

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.

Hiring in Austria

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.

Labour laws in Austria

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:

  • The Employees Act (Angestelltengesetz).
  • The Temporary Employment Act (Arbeitskräfteüberlassungsgesetz).
  • The Working Time Act (Arbeitszeitgesetz).
  • The Holiday Act (Urlaubsgesetz).
  • The Employment Protection Act (Arbeitnehmerschutzgesetz).

Trade unions and collective bargaining agreements in Austria

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.

Employment contracts and agreements in Austria

There are three main types of contracts that can be used when hiring in Austria, based on the type of engagement:

  • Regular employment contracts (Arbeitsvertrag): For full-time or part-time employees.
  • Freelance contracts (Freier Dienstvertrag): For independent contractors.
  • Service exchange contracts (Werkverträge): For the completion of a specific task.

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.

Taxes and social security in Austria

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.

Background checks in Austria

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.

Required background checks in Austria

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.

Other possible background checks in Austria

Here are some other types of background checks that employers can carry out in Austria based on the specific circumstances at hand:

  • Employment history: This is a common type of background check in Austria, used to confirm a candidate’s previous employment and job performance.
  • Education history: Again, this is a common type of background check. It involves verifying the validity of the candidate’s academic qualifications.
  • Criminal records: Criminal records checks are common for sensitive roles or those involving vulnerable populations such as children. Carrying out a criminal background check in Austria means requesting a criminal record certificate (Strafregisterbescheinigung).
  • Credit report: This is a less common type of background check in Austria, which is typically only permitted for roles involving significant financial responsibility. Restrictions apply.
  • Social media: Social media checks are less common in Austria than in some other countries due to privacy concerns. However, they can be performed with the candidate’s consent.

Restrictions on background checks in Austria

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.

Hire employees in Austria

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.

Main hiring options in Austria

Here are the main options available if you want to engage workers in Austria:

  • Employee: Employees are workers engaged through an employment contract, which can be either written or verbal in Austria. They may be hired on a permanent or fixed-term basis and can work either part-time or full-time hours. It’s illegal to discriminate against employees on the basis of their part-time or fixed-term status.
  • Independent contractor: Independent contractors or freelancers are independent workers who are not employees of the companies they work for. They may work for multiple companies at the same time or move from one company to another on a series of short contracts. In Austria, contractors may be engaged either directly or through a personal services company.
  • Agency worker: Agency workers are hired through an intermediary agency, usually on a temporary basis. In Austria, agency workers are employees of the agency they are leased out by and enjoy specific rights and protections under Austrian employment law. They have the right to equal treatment to employees with regard to pay and other working conditions.

Other types of workers in Austria

Here are some other types of workers you may come across if you hire employees in Austria:

  • Minimally employed workers: These are employees whose monthly income doesn’t exceed €551,10 (in 2025). They are covered by accident insurance and must be registered with the health insurance provider by the employer.
  • Seasonal workers: Seasonal workers may be hired on short-term contracts for part of the year. There are specific collective treaty provisions that apply to seasonal workers in the hotel and catering trade.
  • Apprentices: Apprentices are trainees engaged to learn a trade. In Austria, they receive full insurance protection, including sickness, accident, unemployment, and pension insurance. They also benefit from special protection against dismissal.
  • Voluntary workers: Voluntary workers in Austria have the same status as trainees. They have no right to claim remuneration and are under no obligation to perform work.

Language requirements 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.

Language requirements for working in Austria

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.

Language requirements for employment documents 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 language in Austria

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.

Corporate presence requirements and payroll setup in Austria

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.

Steps to set up payroll in Austria

Here are the steps to follow if you want to set up payroll in Austria:

  • Register with the local tax authority: Businesses must register within one month of starting business activities, usually with the tax authority closest to their main location. The business will then be issued with an employer tax ID, which is needed to withhold and pay income tax.
  • Register with the social security authority: The next step is to register with the social security authority, which can be done online. The business will be issued with a social security ID to be used for declarations and payments to social security.
  • Set up a payroll account for each employee: Employers must register each employee with the tax and social security authorities before they start work. They must set up a payroll account for each employee, which is used for income tax purposes.

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.

Tax considerations when running payroll in Austria

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.

Social security contributions in Austria

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:

  • Health insurance: 7.65%.
  • Unemployment insurance: 5.9%.
  • Pension contribution: 22.8%.
  • Accident insurance: 1.1%.
  • Miscellaneous: 1.6%.

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.

Easily hire employees in Austria with our EoR solution

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.

Compliantly hire workers anywhere with CXC

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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