Employee benefits in Austria: All you need to know

Austria is an alluring target for international employers due to its highly-educated labor market and a reputation for skilled professionals in the sectors of professional services, financial services, and information technology. The Austrian Business Agency reported that the nation’s ICT sector is now a €36.6 billion (USD 41.38 billion) market, spurred by its local research initiatives and funding programs. IT outsourcing alone is forecasted to reach USD 1.825 billion by the end of 2021.

If you’re looking to expand your hiring horizons to Austria, you must understand the local legal requirements, especially those relating to regulatory compliance and employee benefits.

There are no laws specifically dealing with outsourcing talent in Austria. There are, however, several stringent laws that could apply to the transactions and activities involved in outsourcing — including the EU Data Protection and Copyright laws. Running afoul of the EU’s strict regulations will lead to harsh penalties and fines.

Additionally, rounding out your contracts with a benefits package that meets and exceeds candidate expectations not only ensures compliance but also guarantees the attractiveness of your job offers to highly qualified Austrian talent.

As an experienced employer of record with entities all over the world, Remote knows that managing a competitive and compliant benefits package across multiple countries (including Austria) can be simple, inexpensive, and scalable. We want to make it easy for you to understand your obligations as an employer of Austrian talent.

In this guide, we’ll explain the mandatory benefits you must provide in Austria as well as additional perks you can offer that will give your business an edge in the local market. We’ll focus on the following key areas:

• Who is entitled to benefits in Austria?

• Statutory and common employee benefits

• Supplemental benefits to consider for Austrian employees

• How to set up and manage benefits for international employees

Who is entitled to benefits in Austria?

All professionals classified as employees and workers are entitled to benefits in Austria, with some minor differences between them.

Employees and workers in Austria are differentiated by the nature of their work: workers typically perform skilled manual labor, whereas employees perform office work or commercial, or more demanding noncommercial, services. Different rules apply to workers and employees based on their industry, but generally, there is an effort to apply the same set of labor laws to both classifications.

Unlike workers and employees, those classified as independent contractors are generally not entitled to benefits. What differentiates employees or workers from independent contractors is primarily based on personal dependence — or how much of the way the employees perform their tasks is controlled by the employer.

It’s important to understand this delineation. If you inadvertently misclassify employees as independent contractors and thereby withhold benefits that they are entitled to, you may be liable to pay back everything you missed at a great cost to the company. This is outside of the additional associated fines, penalties, and legal costs involved.

(For more detailed information about understanding this concept, be sure to read our dedicated guide to misclassification.)

Benefits for Austrian contractors

In some cases, it may make sense to offer certain benefits to long-term contractors. Just because benefits aren’t mandated, doesn’t mean you shouldn’t still provide equitable compensation to contractors.

If you value your contractors, benefits can build strong trust and connection with your business, especially in a remote workforce. You do still need to be careful of triggering permanent establishment or misclassification dangers with the type of benefits you provide.

Value-based benefits like paid time off, flexible working hours, and parental leave provisions can often keep you on the safe side of this legislation (more on this in our guide to offering benefits to international contractors).

An employer of record (EOR) like Remote should be able to give you more specific advice to minimize associated risks according to the employment legislation of Austria (or any other nation).

Statutory employee benefits in Austria

Statutory benefits, also known as mandatory benefits, are entitlements that employers are obligated to provide to their employees by law. Common examples include benefits like paid annual leave, parental leave, worker's compensation insurance, and paid sick leave.

When it comes to statutory benefits for employees and workers, either all or none of the related Austrian labor laws apply. In a few cases — for instance, when personal dependence is not established and the relationship relegates the professional as a quasi-subordinate — some specific laws may apply.

The differences between employees and workers when it comes to benefits generally relate to:

• Sick pay

• Reasons for absences

• Remuneration dates

• Notice periods and dates

• Reasons for premature contract cancellation

Additionally, specific clauses in collective bargaining agreements or contracts may also be different.

Overtime

Maximum overtime in Austria is two hours a day or 10 hours a week unless specific regulation, depending on industry or job classification, permits otherwise. To allow for flexibility in working hours for roles that require a lot of standby duty (e.g., night shift duty physicians), overtime can be extended to a maximum of four hours per day up to 20 hours per week.

Employees can choose to be paid overtime at a 50% surcharge either by cash or as time off. Thus, every overtime hour is charged at 150% of the normal contract rate, or it entitles the employee to an hour and a half of time off.

Annual leave in Austria

Austrian employees and workers on a typical five-day workweek are entitled to 25 paid leave days annually. After 25 years of employment, this is increased to 30 paid leave days. The country celebrates 13 public holidays on which employees are also paid in full, aside from being guaranteed 24 hours of uninterrupted rest periods (i.e., a full day needs to pass before being called into work again).

Employees working six days from Monday to Saturday are entitled to 30 paid leave days annually, which increases to 36 paid leave days after 25 years of employment.

Insurance

All employees in Austria are covered by social insurance, which spans health, accident, maternity, pension, and unemployment benefits among others.

All insured persons are entitled to some, but not all, of the benefits social insurance covers. These are funded by income-related contributions as well as support from the government. Social insurance contributions are based on income with a cap of €5,220 per month — the more employee earns, the more they contribute.

Social insurance calculated at the highest bracket (i.e., a monthly income of €5,220) works out to 39.35% of employee salary, split between the employer contribution (21.23%) and employee contribution (18.12%).

Austrian maternity and parental leave

Women are entitled to eight weeks of pregnancy leave before childbirth and eight weeks of maternity leave afterward, which can be increased to 12 weeks for high-risk instances (i.e., C-section or premature or multiple births). During this time, they must receive monetary maternity benefits.

They are also entitled to benefits in kind, such as consultations with physicians and midwives and the provision of medical devices and medication.

If the child was born before November 1, 2023, both parents are entitled to parental leave until the child's second birthday.

If the child was born on or after November 1, 2023, the rules are slightly more complex:

• If only one parent takes parental leave, it can last for up to 22 months

• If both parents take parental leave alternately, it can last for up to 24 months

• If there is an overlap of one month where both parents are on parental leave, the limit is 23 months

Parental leave can be split twice. For example, if both parents are eligible, the mother might take the first and last eight months, and the father the second eight months (i.e., mother, father, mother). Alternatively, the mother might just take parental leave for the first year, and the father the second.

Note that for single parents and couples of whom one parent is not entitled to parental leave (i.e., they are self-employed), the limit is 24 months. So a self-employed mother might take the first year, for instance, and then the eligible father might take the second.

Employers must be notified of the parent's intention to take leave in advance.

In addition, new fathers can also take a protected "father's month" (Papamonat), provided they live in a shared household with the other parent and the child. Companies do not have to pay the employee during this leave, but the government provides "bonuses" of:

• €23.91 per day (or €741.21 for the month) if the child was born before August 1, 2023

• €47.82 per day (or €1,482.42 for the month) if the child was born on or after August 1, 2023

• €52.46 per day (or €1,626.26 for the month) if the child was born on or after January 1, 2024

It's also now possible for parents to request parental part-time work, up until the child's eighth birthday. The specifics of this arrangement are calculated on a case-by-case basis, but to obtain this status, employees must cut their hours by at least 20% (at a minimum of 12 hours per week).

We strongly recommend providing additional parental leave to Austrian employees to maintain a globally consistent parental leave provision. This benefit will be met with loyalty and commitment in return.

In Austrian culture, family connections are strong and the immediate family unit tends to be very close. As a result, any additional provisions aimed at assisting with parental care are so highly valued by employees.

Pension and retirement contributions

Pension contributions are shared. The employer contributes 12.55% of the employee salary and the employee contributes 10.25% of their salary.

Employer contributions are tax-deductible business expenses, while employee contributions are income-related expenses, which are taxed less.

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Supplemental benefits in Austria

You must provide statutory employee benefits to satisfy required regulatory compliance, but growth-focused employers should also provide supplemental benefits to attract, motivate, and retain the best local talent.

Remote cares about providing perks and benefits to enable your global team to enjoy security, stability, and work-life balance. Our team of HR specialists and global benefits experts are constantly working with our customers to create the most competitive local benefits packages to attract top talent.

Offering the bare minimum won’t cut it in almost any international talent market. Workers today are seeking out additional perks now that remote work is readily available with businesses across the world (we explain in more detail in our values-based benefits guide).

Private Health Insurance

Austria has a high-quality public healthcare system, which is paid for through salary deductions or free for those with low income or who are unemployed. There is also a private healthcare system, which offers no wait times and greater optionality when it comes to physicians or hospitals. It also ensures more comfortable care, like a private or double room in a hospital. Private insurance is typically used as a supplement to the public system.

Forward-thinking employers can bolster the provisions of Austria’s social insurance programs with a strong private health insurance plan. You should strongly consider this benefit to give your employees access to premium coverage.

Private insurance inclusions can range from dental to optical coverage as well as other specialized care that the public sector may not offer. This will help employees pay for care such as emergency room visits, hospital stays, outpatient surgery, and other extra costs.

Offering health coverage and additional insurance benefits (like dental insurance, vision insurance, and life insurance), can be an effective way to build trust with new hires and separate your offer from that of a competitor.

Value-based benefits to attract remote workers

As more employees moved toward remote or hybrid working solutions over the past couple of years, the demand for employer-provided support for telecommuting has increased.

Recent regulation that entered into practice last April 2021 in Austria not only allowed flat rate non-taxable allowances for offices operated within private homes but also required employers to either provide remote employees ergonomic home office provisions or lump sum compensation to cover the necessary costs.

Home office stipends and personal development programs are indeed highly preferred benefits. Allowances to compensate for the likely increased cost of internet, electricity, and phone contracts will also help to provide specific support for Austrians who are working from home.

Additional perks can also act as powerful motivators for star candidates to join and stay with a given company. We’ve gathered a short list below for you to consider:

• Personal learning budget

• Therapy or coaching allowances

• Mentorship programs

• Volunteering days

• Birthday leave

• Meal and travel expenses

• Gym or health club membership

Flexibility in work hours

Remote work has also shown that the regular nine-to-five grind can be replaced by a bit more flexibility. This indeed reflects in national law in Austria, where overtime may be extended by an additional two hours per day for specific job functions with a lot of standby duty.

The provision of flexible work hours in a contract adds value towards work-life balance, which again is continuously changing alongside remote and hybrid work environments.

Providing cost-effective benefits packages to remote workers

The size of your business shouldn’t prevent you from sourcing international talent either. Even if you’re a smaller business looking to employ Austrians (or any other international workers), you can still develop a competitive AND affordable benefits plan.

Bundling supplementary and value-based benefits into a job offer always comes with key considerations in terms of cost-effectiveness. This is especially true for businesses of smaller scale that want to work with remote employees in Austria but may struggle to remain competitive in the job market and thus lose out on providing benefits.

Home office support stipends and supplementary insurance coverage notwithstanding, you can tweak your benefits package to suit the nature of the work required from your remote workers to include benefits such as more paid time off, or even, assistance with basic needs such as groceries and food.

There are also more traditional approaches like stock options or profit-sharing, which lend themselves well to responsibilities with high ownership and impact.

The key is to spend less on vanity perks and focus on benefits that let employees live the lives they want — which is made possible by their situation as remote professionals. You can read our guide to affordable perks small businesses can offer remote teams to learn more.

How to set up and manage benefits for international employees

Complex international hiring as well as managing payment and benefits for global workers is a challenging task because the processes involved are incredibly difficult to manage internally.

You will need a solution that allows you to stay compliant with all of the local labor laws in each country of operation.

Instead of building a fully-owned local legal entity with a specialist HR function in each new market, an employer of record (EOR) provides a cost-effective, fast, and secure alternative to help you grow your team across borders.

When should you use an employer of record?

If you don’t have an established process to manage the complicated parts of scaling global hiring In Austria, or any other country – an EOR like Remote will give you immediate relief.

Remote’s EOR service gives you the advantage of dedicated local employment experts that can offer the insight you need to create a strong benefits package, a compliant employment contract, and a competitive offer to your candidate.

Remote manages the complicated parts of international employment. The combination of Remote’s simple software hub and our team of global HR experts combine to organize all the tiny details of managing a distributed team.

Our team of global employment experts handles the complexities of running your global HR operations in the backend and our software puts everything in one dashboard where you can:

• Manage payroll and time off

• Handle local employment taxes

• Stay compliant with statutory benefits

• Offer competitive and equitable global compensation packages

• Scale your global team faster

You can learn more about how Remote simplifies international hiring so you can scale your distributed team faster.

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