Hire employees in Austria
Everything a foreign company needs to know before employing people in Austria: whether you need an entity, what an employee really costs once 14 salary installments and 29.5% to 32.5% on-costs are in, how ÖGK payroll works, which leave is mandatory, and why Probemonat caps, quarterly notice dates and Kollektivvertrag rules catch foreign employers out. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first, answered directly. Detail follows further down the page.
Do I need a local Austrian entity to hire?
No. Foreign companies can engage talent in Austria through three routes:
- Employer of Record. Dryft Global employs the person through compliant local infrastructure. Dryft issues the Dienstzettel/Dienstvertrag under AngG and AVRAG, remits ÖGK contributions, DB/DZ surcharges, Kommunalsteuer and BV-Kasse, and carries primary statutory employer liability. You direct the day to day work.
- Direct local entity (GmbH or branch). You incorporate, register with the Commercial Register and ÖGK, join the applicable Kollektivvertrag classification and run Austrian payroll yourself.
- Independent contractor. Lawful only for a genuinely independent specialist without operational subordination. See the contractor section below.
When should I use an EOR instead of setting up an Austrian GmbH?
An EOR makes commercial sense when you are:
- Onboarding people in about 1 to 2 weeks rather than waiting on GmbH formation, banking and ÖGK affiliation.
- Testing Vienna, Graz, Linz or Salzburg with a small engineering, industrial or life-sciences team before committing to a permanent presence.
- Avoiding 14-salary payroll, BV-Kasse activation and works-council consultation mechanics while you still decide whether Austria is a permanent hub.
A local GmbH becomes the right answer when headcount grows sustainably, when customers require an Austrian contracting party, or when you want direct Betriebsrat and KV participation.
What does an employee actually cost beyond salary?
Total employer statutory surcharges typically run 29.5% to 32.5% above gross for pay up to the ASVG ceiling. That stacks employer social security of about 21.03%, AUVA accident insurance 1.10%, Family Equalization Fund (FLAF/DB) 3.70%, Dienstgeberzuschlag 0.34% to 0.39%, Kommunalsteuer 3.00% and BV-Kasse severance fund 1.53% from month two. On top, Austria pays salary in 14 installments (12 months plus Urlaubszuschuss and Weihnachtsremuneration), which raises annual cash exposure by about 16.67% versus a 12-month quote. Full breakdown below.
How difficult is termination in Austria?
Ordinary dismissal does not need US-style cause, but procedure and dates matter. Probation (Probemonat) is capped at one month; any longer agreement is void. Employer notice for white-collar staff runs from 6 weeks under 2 years of service to 5 months at 25 years or more, and by default expires only on a calendar quarter-end unless the contract allows the 15th or month-end. There is no unilateral payment in lieu of notice. In establishments with a works council, employees with 6 months' service can challenge socially unjustified dismissals.
Can Dryft Global legally employ my team in Austria?
Yes. Dryft supports employment in Austria through compliant local infrastructure. We issue the AVRAG documentation, classify under the correct Kollektivvertrag, run ÖGK and surcharge remittances, activate BV-Kasse from month two, and administer notice dates and Betriebsrat consultation where required, while you direct the work.
Hiring routes compared
Here is how the three routes stack up on speed, presence, cover and risk.
| Factor | Direct entity (GmbH) | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Speed to onboard | Weeks for GmbH, bank and ÖGK | About 1 to 2 weeks | 1 to 5 days, high misclassification risk |
| Local entity required | Yes, Austrian GmbH or branch | No, employed through Dryft's local infrastructure | No, direct commercial agreement |
| 14 salaries and KV | You configure Sonderzahlungen and Verwendungsgruppe | Fully managed through Dryft payroll | Not applicable until reclassification |
| BV-Kasse / severance | You remit 1.53% from month two | Held and remitted by Dryft | Missing remittances evidence employment |
| Permanent establishment risk | Direct Austrian tax presence | Substantially mitigated for non-sales-closing roles | High if the contractor binds you |
| Termination exposure | You observe notice dates and Betriebsrat rules | Managed by Dryft under AngG / ArbVG | Claims convert to continuous employment |
| Best fit | Sustained headcount and local contracting | Market testing and initial headcount | Discrete project work only |
What an employee costs in Austria
Quote total cash, not twelve monthly salaries. The 13th (Urlaubszuschuss) and 14th (Weihnachtsremuneration) installments are standard, often tax-advantaged for the employee, and must sit in every cost model.
| Component | Employer share | Notes |
|---|---|---|
| Employer social security | ~21.03% | Pension, health, unemployment shares capped at ASVG ceiling |
| Accident insurance (AUVA) | 1.10% | Fully employer-funded |
| Family Equalization Fund (FLAF/DB) | 3.70% | Employer surcharge |
| Dienstgeberzuschlag (DZ) | 0.34% to 0.39% | Varies by province |
| Kommunalsteuer | 3.00% | Municipal payroll tax |
| BV-Kasse (severance fund) | 1.53% from month 2 | Satisfies Abfertigung Neu liability |
| Statutory on-cost | ~29.5% to 32.5% | Of gross up to contribution ceiling |
| 14th-salary cash effect | +~16.67% vs 12 months | Urlaubszuschuss + Weihnachtsremuneration |
| Illustrative all-in | ~EUR 88k to 92k on EUR 60k | Guide worked example before benefits |
For an employee on EUR 60,000 base annual gross (paid as 14 installments), budget roughly EUR 88,000 to 92,000 all-in once statutory surcharges are in. Ask us for a country-specific cost model with current ASVG ceilings and the correct KV applied.
Payroll and tax
Austrian payroll runs monthly with Sonderzahlungen in the summer and winter cycles. File the monthly mBGM data return and remit withheld taxes, ÖGK contributions, DB/DZ surcharges and municipal tax on the statutory calendar. Every employee receives an itemised Lohnabrechnung. Employee social security is about 18.07% capped.
Statutory minimum wage
There is no single nationwide statutory minimum wage. Binding pay floors come from the applicable Kollektivvertrag and Verwendungsgruppe. Marginal employment (geringfügige Beschäftigung) sits under a 2026 monthly earnings threshold of EUR 551.10, with limited insurance cover.
Working time
Standard full-time is commonly 40 or 38.5 hours per week under the KV. Work including overtime generally may not exceed 12 hours per day or 60 hours per week. Overtime carries a statutory minimum 50% premium (or 1:1.5 time off); night, Sunday and holiday overtime often attracts 100% under the KV. Daily rest is 11 consecutive hours.
Leave and mandatory benefits
- Paid vacation. 30 working days on a 6-day week, or 25 working days / 5 full weeks on a 5-day week. Rises to 36 / 30 days after 25 years of service. Cash payout during ongoing employment is void; payout is only lawful at termination.
- Public holidays. 13 nationwide Feiertage. Good Friday is not a statutory holiday; employees may take it as a personal holiday deducted from leave with three months' written notice.
- Sick pay. Employer continued pay for illness under AngG / EFZG schedules, with longer cover for occupational accidents (commonly 8 weeks, up to 10 for long service).
- Maternity (Mutterschutz). Absolute employment ban 8 weeks before expected birth and 8 weeks after (12 for premature, multiple or caesarean births).
- Paternity (Papamonat). Fathers may take 1 month of unpaid leave within the first 8 weeks after birth, supported by Familienzeitbonus.
- Care leave. Up to one regular working week per year paid to care for a sick close relative.
Termination and notice periods
During the one-month Probemonat either party may end the contract immediately without stating reasons, if notice is given before the probation month ends. After that, white-collar employer notice depends on completed service:
| Completed service | Statutory employer notice |
|---|---|
| Less than 2 years | 6 weeks |
| 2 to 4 years | 2 months |
| 5 to 14 years | 3 months |
| 15 to 24 years | 4 months |
| 25 years and over | 5 months |
- Notice dates. Default expiry is calendar quarter-end. Contract for expiry on the 15th or last day of any month, or you are locked into quarterly exits.
- No unilateral PILON. Releasing someone immediately without serious cause keeps the contract alive through the notice period as Kündigungsentschädigung.
- Works council. Notify the Betriebsrat at least one full week before issuing dismissal notice, or the dismissal is void.
- BV-Kasse. Monthly 1.53% remittances satisfy Abfertigung Neu; no separate classic severance stack for post-2003 hires.
- Special protection. Pregnant employees and mothers to 4 months post-birth, and other protected categories, need authority approval for ordinary dismissal.
Can I use independent contractors?
Only for genuinely independent specialists. If the person works under managerial subordination, uses company equipment, keeps fixed hours and lacks genuine entrepreneurial risk, ÖGK and the labour courts can reclassify the arrangement as employment. Reclassification triggers retroactive employer on-costs in the 29.5% to 32.5% band, 14-salary accruals, BV-Kasse arrears and possible fines. An EOR is the compliant alternative for anyone who works like an employee.
The legal framework in brief
Austria is an EU and Schengen member in the Eurozone. Employment is heavily shaped by Kollektivverträge on top of statute:
- Employees Act (AngG) and ABGB. White-collar and general civil-code employment rules, including Probemonat and notice.
- Working Time Act (AZG) and Vacation Act (UrlG). Hours, overtime, rest and annual leave.
- AVRAG. Written essential terms (Dienstzettel) implementing EU Directive 2019/1152.
- ArbVG. Works council formation, consultation and dismissal protection.
- ASVG / ÖGK, AUVA, FLAF, BV-Kasse. Social insurance and severance-fund architecture.
- Mutterschutzgesetz and GDPR / DSG. Maternity protection and employee data limits.
Where the talent is
Austria combines industrial engineering, automotive suppliers, life sciences and a strong Vienna services hub. German is the language of contracts, KV classifications and most statutory filings; English is common in multinationals and startups. CET / CEST aligns with Central Europe.
| Region | Talent and industry concentration |
|---|---|
| Vienna | HQs, professional services, fintech, international organisations, startups |
| Graz | Automotive, mobility, engineering, university research |
| Linz | Steel, industrial tech, digital and creative industries |
| Salzburg and Innsbruck | Tourism tech, regional industry, alpine logistics |
All-In compensation is common for managerial, sales and senior technical roles, but it is tightly policed. The contract must state the gross base salary for standard hours without overtime, and the employer must run a year-end Deckungsprüfung comparing total all-in pay with KV minimum base plus actual overtime premiums. If hours exceed the cushion, the difference is due immediately.
Establishments with at least five permanent employees with voting rights may form a Betriebsrat. Where one exists, monitoring systems, disciplinary codes and performance pay often need a Betriebsvereinbarung, and dismissal without the one-week pre-notification is void. Non-competes are capped at one year, need adult consent, and are enforceable only above a remuneration threshold tied to the ASVG ceiling (around EUR 4,100+ monthly base).
Telework requires a bilateral written agreement; it cannot be ordered unilaterally. The employer must provide necessary hardware and connectivity or pay a documented flat-rate allowance, and remote work from agreed locations remains covered by statutory occupational accident insurance. Tax-exempt Telearbeitspauschale payments are available within statutory daily caps. Final payroll on exit (Endabrechnung) must include salary to the last day, pro-rated 13th and 14th salaries, and Urlaubsersatzleistung for untaken leave.
Austria Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step. Built from Dryft's own onboarding checklist for Austria.
- Step-by-step implementation checklist, from EOR vs GmbH selection to first payroll
- 14-salary (Urlaubszuschuss / Weihnachtsremuneration) configuration
- KV Verwendungsgruppe classification and All-In Deckungsprüfung notes
- ÖGK, FLAF/DB, DZ, Kommunalsteuer and AUVA remittance map
- BV-Kasse 1.53% activation from month two
- Probemonat one-month cap and quarter-end vs 15th/month-end notice clauses
- Betriebsrat one-week pre-dismissal consultation checklist
- AVRAG Dienstzettel mandatory terms list
This guide is general information, not legal, tax or immigration advice. Austrian employment, tax, social insurance and Kollektivvertrag rules change through statute, KV rounds and court interpretation. Confirm current figures with a qualified adviser or with Dryft before acting. Last reviewed September 2026.
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