Employing a worker in Austria

Published Date: September 17, 2021

With the immediate benefits of economic growth, a central location, and excellent transport links throughout Europe, Austria is a great choice for businesses and investors looking to enter the European market. In this post, we provide some information on employing a worker in Austria.

Capital GES created our postcard series to help businesses that are considering expansion and employing global staff. In this postcard series, we provide helpful tips on international employment. Below, we discuss employment law in Austria.

Austria Overview

For companies looking to expand into Europe, Austria is a great choice.

Austria has a reputation as one of the top business locations in Europe with over 300 multinational businesses having their headquarters located there. Key sectors that generate investor interest include food production, mechanical and steel engineering, chemicals, and automotive. As with all members of the EU, Austria offers businesses access to the EU single market of over 450 million customers as well as a large domestic market of 42 million inhabitants.

Employing a worker in Austria – Employment Laws to know

However, expanding into an unfamiliar country can be challenging and Austria is no different. Therefore, it is vital to have local knowledge when expanding a business and employing workers in Austria. Below, we discuss the most common questions asked by clients regarding employment in Austria.

1. Contracts

Can I trial a worker using a fixed-term employment contract, as I am not sure whether it will work out in the long term?

Fixed-term contracts are available in Austria. However, Austrian legislation requires that they can only be used in limited situations and must have a clearly defined termination date. In Austria, fixed-term contracts can only be allowed for single-use and up to a maximum of five years. No renewals are permitted. To ensure your worker stays fully compliant in Austria, it is best to discuss your contract options with a local partner.

2. Termination Rules and Costs

What do I need to know about termination and severance pay in Austria?

Terminations are often complex and should be considered with local experts before any notice is issued. Austria does not allow at-will termination of employment for employers; contracts may be terminated by mutual agreement or unilaterally for due cause (serious cause, unfit for the role, extinction of the role). As a result of this complexity, terminations are often a negotiated process.

Terminations are effective at the end of the calendar quarter or when stipulated in the employment agreement, either at the end of a calendar month or on the 15th of the month after notice ends. Payment in lieu of notice is not permitted.

Notice Periods

In Austria, the employer can terminate an employee by giving a minimum of six weeks’ notice when the employment relationship has lasted up to two years, increasing according to the length of employment up to five months for employment lasting 25 years or more.

Severance Pay

Throughout employment, employers contribute 1.53% of the employee’s gross salary to a severance fund. On termination, the employee can choose to be paid out the accrued amount or simply transfer the fund to a new employer who will continue to contribute.

3. Statutory Benefits

What are the statutory employee benefits in Austria?

Statutory paid holiday

In Austria, employees are entitled to 25 days of paid leave. Public holidays are not included.

Maternity

In Austria, mothers are entitled to 16 weeks of maternity leave. Maternity leave starts eight weeks before birth and extends up to eight weeks after the baby is born. During maternity leave, employees receive an allowance equal to the average net salary calculated over the previous three full calendar months before the beginning of maternity leave. This allowance is paid by the Social Security Scheme.

Paternity

In Austria, fathers who have been employed for at least six months can take paternity leave lasting between 28 and 31 days. This leave must be taken during the first 91 days after the birth. During this period, the paternity benefit is paid as a per day rate paid by the Social Security Scheme.

Parental

In Austria, after the maternity leave period, mothers can take extended parental leave until the child turns two years old. The minimum period of parental leave is two months.

Mothers and fathers can share childcare responsibilities and receive parental pay, but not at the same time. Eligible parents can receive the childcare allowance through a childcare benefit account.

Sick Pay

In Austria, employees who are absent from work due to sickness or injury have a statutory entitlement to sick pay from their employer. Employees are entitled to full pay during an initial period of sickness absence, the duration of which depends on the length of service with the employer.

For the first six weeks of sickness, the employer has to pay the whole salary and for further four weeks only 50%, the rest is paid by the social insurance.

There is a three-day waiting period, after which the benefit would be paid for up to 26 weeks and potentially extended to up to 52 weeks (provided the employee has been insured for a minimum period of six months). Should the employee require sick leave again within six months of a previous leave that exceeded the initial six to twelve-week period, pay will be reduced to 50%.