Product Updates — 7 min
What do startups GoStudent, Refurbed, and Bitpanda have in common? They’re Austrian unicorns (valued at $1 billion) that have grown out of the country’s rapidly growing technology landscape that includes over 2,600 startups founded in the country since 2009. In other words, there’s more to Austria than lederhosen, schnitzel, and good coffee.
Austria is home to at least 109,000 registered software developers who form the core of a fast-growing technology industry valued at $3.7 billion which draws multinational companies like Amazon, Oracle, Microsoft, and Google to Vienna.
If you’re looking to hire talent in Austria as your company scales internationally, you’ll need an employer of record to help you set down roots and stay compliant with relevant employment regulations.
In this article, you’ll learn how to hire employees in Austria and navigate Austrian labor laws using an EOR record. We’ll also show you how to choose the right EOR for your needs.
An employer of record can help you ensure you’re in compliance with Austrian labor laws — if you choose a provider that has the infrastructure required to set you up to hire in Austria. But there are so many options out there that it can get difficult to figure out which one is best equipped to help you hire internationally. But not if you have a checklist of requirements a potential EOR provider should be able to deliver before you opt to work with them.
Step 1: Weigh up the pros and cons of each potential partner
First, an EOR should help you set up a local entity that authorizes you to hire and manage employees in Austria. An employer of record serves as your local partner that helps you:
Stay compliant with local labor laws and handle country-specific taxes and levies
Onboard and offboard employees through an easy-to-use interface
Manage various HR processes that can be used to manage salaries, raises, benefits, and payroll taxes
Secure your intellectual property and internal data
Manage payroll and ensure employees are paid on time
Step 2: Take the time to select the most appropriate EOR service provider
Using the checklist of features we mentioned above, you can proceed to vet each option on your list of potential EOR providers to figure out how well they meet your needs, with questions like:
Do they offer strong data security protections? Do they secure ownership of the intellectual property produced by our employees?
Can they guarantee they’ll stay on top of any emerging regulations and help us stay compliant?
Can we integrate with the rest of our HR stack?
A good employer of record provider should address all the requirements listed above at a good price. It’s essential to make sure that the potential EOR owns its local entity in Austria, rather than depend on third-party companies. Learn more about why it's always preferable to use an owned-entity EOR rather than a partner-dependent provider.
Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers
An employer of record is only as good as what their past and existing users say about their experience working with them. Make sure you review third-party review sites, client testimonials, and online press coverage to get a feel of their operations and how they treat their clients.
Social proof can come from remote working communities, Trustpilot, and even your network on LinkedIn. Reading through reviews (especially from customers within your industry) will help you figure out how well an employer of record will meet your own needs.
Step 4: Ensure that the EOR solution for Austria will provide a best-in-class employee experience
An employer of record will serve as an extension of your brand to your workers, and consequently, late salaries and a poor user experience may reflect badly on your company. This is why your EOR should be committed to providing a positive and engaging experience for your employees every step of the way.
An employer of record should demonstrate that they can pay salaries on time, resolve employee issues quickly, and onboard and offboard employees seamlessly.
Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package
Salaries for remote roles can vary wildly depending on local cost of living, skill level, and market rates. For instance, data scientists in Austria earn roughly $68,000 annually, while their counterparts in San Francisco can expect to earn double that or over $130,000 per year.
How do you figure out what to pay? How do you even advertise jobs with competitive rates that will draw potential employees to you? An employer of record can help you to ensure you’re paying fair, livable salaries that factor in the local cost of living, market rates, and skill level to compensate your team fairly. Additionally, a good EOR should have the local knowledge to offer global benefits factoring in the specific labor laws of the country, and the individual’s role, experience, and skills.
Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business
Patents and intellectual property help bolster profits and can secure leverage when a company is going public or getting acquired. An EOR should ensure that your employment contracts specify that employees willingly transfer any intellectual property they produce with your resources to avoid lengthy litigation.
Additionally, an ideal employer of record should offer enhanced data protection for your HR and financial data to protect your company’s interests.
An employer of record helps you open a local entity in Austria so that you can hire and pay workers in compliance with Austrian labor law. The biggest benefit of using an EOR for your international hiring is that you save the time, money, and hassle of employing workers yourself.
Additionally, an EOR can handle the HR and administrative work of managing employees, including employment agreements, onboarding and termination procedures, benefits administration, payroll taxes, and most importantly, ensures compliance with Austrian employment laws and regulations. Using an EOR can help you:
Maintain a local entity that’s required to hire in Austria
Issue contracts to employees and contractors, spelling out salaries, benefits, vacations, contract terms, etc.
Manage payroll and ensure your employees get paid on time
Classify employees and contractors correctly
Manage terminations to ensure employees and contractors are only let go as labor laws provide
Pay any required levies, dues, and taxes, in line with local requirements
Generally, EOR costs can range from $599 to $2,000 per employee per month. But the cost usually varies depending on the kind of features and services required, the number of workers you’d like to hire, and their location.
Legacy EOR operators that support a large network of countries typically charge hefty enterprise rates. Smaller EOR providers may cost less, but may not offer the complete suite of services required for your needs. You also have to check whether they offer a robust data security protection and compliance standards like their well-established counterparts.
Alternativelt, Remote offers a comprehensive employer of record solution that’s designed to help you hire internationally, manage salaries and benefits and stay compliant with local labor rules. You get an entire global HR platform at an affordable, flat fee.
Learn how Remote compares to both legacy employers of record and younger startups and see how you can get the best solution for the best price.
Employment in Austria is governed by rules across several federal laws, such as:
The Employees Act (Angestelltengesetz)
The Temporary Employment Act (Arbeitskräfteüberlassungsgesetz)
The Working Time Act (Arbeitszeitgesetz)
The Holiday Act (Urlaubsgesetz), and
The Employment Protection Act (Arbeitnehmerschutzgesetz)
A significant proportion of Austria’s workforce are registered trade union members and may be covered by some form of collective agreement that regulates the minimum wage within their industry.
Understanding how Austrian labor laws work will help you choose an employer of record that’s well-positioned to support your needs to hire Austrian employees in accordance to existing labor laws.
Written and verbal contracts are equally valid under Austrian law and there are three main types of service contracts recognized under the law, namely:
Regular employment contracts (Arbeitsvertrag) that cover full-time employees
Freelance contracts (Freier Dienstvertrag) for independent contractors, and
Service exchange contracts (Werkverträge)
Written employment contracts should contain:
The employer’s name and address
The employee’s name and address
Date of commencement
Role classification within the organization
Benefits and bonuses
Monthly pay date
Annual leave entitlement
Normal daily and weekly working hours
An acknowledgment of any applicable collective agreements
Contract terms and notice periods
Employers are required to:
Factor in any outstanding collective agreements while paying employees’ salaries
Pay a fair and reasonable salary
Protect employees from any form of discrimination due to race, religion, nationality, ideology, political affiliation, sex, financial, social, or physical condition
Provide a safe and healthy working environment
Notify employees well in advance before they’re let go
Provide the vacation and leave entitlements required by law
Austrian employees are taxed at a progressive tax rate ranging from 20% to 55% based on income.
Employer payroll taxes come in at 18.12%, covering pensions (12.55%), health insurance (3.78%), unemployment (3%), accident insurance (1.2%), Austria’s severance fund (1.53%), and miscellaneous (0.85%).
Austrian law provides for several statutory benefits and entitlements employers are required to provide in addition to paying a liveable wage, such as maternity benefits, sick leave, etc. Remote’s guide to hiring in Austria explains in detail how you can factor these benefits and perks into your strategy as you plan to expand into Austria.
Female employees are entitled to 16 weeks of paid maternity leave starting eight weeks before delivery, with the possibility of taking extended childcare leave for up to two years.
Fathers are entitled to one month’s unpaid leave off work following their partner’s delivery.
Austria’s Sick Pay Act provides for fully paid sick leave for at least six weeks and up to twelve weeks a year for employees who’ve been working for 25 years or more.
Employees are entitled to 13 paid public holidays, and 25 days of paid vacation annually every year.
Austria provides universal healthcare coverage funded by payroll deductions, although businesses can still set up their employees with white-glove private health insurance as a premium benefit.
Austria’s pension fund guarantees retirees a pension funded by mandatory contributions by employers and employees (12.55% and 10.25% respectively).
Check out our guide to employee benefits in Austria for detailed information on the statutory benefits you must provide, as well as additional perks to attract top talent in the country.
Remote can help you design and provide competitive benefits for your contractors and employees, no matter where they’re located so that you can build a stronger workforce that sticks for the long term.
Austria permits at-will employment, and employers are only required to provide six weeks to five months’ prior notice before dismissing employees.
Misclassifying your employees in Austria can lead to fines, penalties, losing your company’s intellectual property, and an outright ban on doing business there.
Employees can be distinguished from independent contractors based on their integration into the employer’s organization, the degree of autonomy over their work, and the duration of their engagement with an employer.
To mitigate misclassification risks, it’s a good idea to partner with an EOR who can help distinguish between your Austrian employees and contractors and figure out how you can comply with any relevant rules.
Austria balances employer-friendly regulations with sufficient labor protections designed to prevent abuses. But trying to hire in Austria without an employer of record can lead to a host of legal and financial consequences.
But international hiring doesn’t have to be complicated. Especially if you’re partnering with a trusted, reliable employer of record service like Remote. Remote makes it easy for you to hire from Austria, and gives you the time and freedom to focus on growing your business. Use Remote’s EOR to:
Manage payroll efficiently and ensure workers are paid on time
Stay compliant with changing local regulations
Own a dedicated legal entity that authorizes you to hire in Austria
Secure rights to your intellectual property and protect your data from exposure
Classify your employees appropriately
Remote is designed to help companies scale without getting tangled up with complicated rules and regulations or getting slapped with fines. Learn more about how you can take your global expansion to the next level with Remote. If you’re ready to onboard employees in Austria, get started with our employer of record services today!
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