Hiring at a Glance

Austria is a highly structured EU employment market where compliance is driven by detailed statutory rules plus collective bargaining agreements (CBAs) that often set stricter standards for hours, pay, and entitlements. As a baseline, normal working time is 8 hours/day and 40 hours/week under the Working Time Act framework, and many CBAs provide shorter weekly hours. Austria also allows flexibility, but within firm caps: weekly working time including overtime must not exceed 60 hours, and the average weekly working time must not exceed 48 hours over a 17-week reference period.

Paid annual leave is standardized and generous: employees are entitled to five calendar weeks of paid leave per working year, which translates to 25 working days on a five-day week (or 30 working days on a six-day week). After 25 years of service, the entitlement rises to six weeks.

Payroll compliance in Austria is technically dense. Employee income tax is progressive, with 2026 brackets beginning at 0% up to EUR 13,539, then 20%, 30%, 40%, 48%, 50%, and 55% above EUR 1,000,000.  Social security is also material: PwC’s 2026 summary shows total compulsory social security of ~39.05% on regular pay (employer 20.98%, employee 18.07%) up to a maximum assessment base of EUR 6,930/month for current payments, with special payment bases treated differently.

An Employer of Record (EOR) in Austria becomes the legal employer and handles employment contracts, payroll withholding, social security registrations/remittances, and monthly wage-tax filings—allowing foreign companies to hire without building an Austrian payroll/compliance function from day one.

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Key characteristics of talent market

Austria’s talent market is concentrated in Vienna, Graz, Linz, Salzburg, and regional industrial clusters, with strong pipelines in engineering, manufacturing, life sciences, and professional services. The market is compliance-reliable but operationally strict: employers are expected to maintain clear records for working time (including overtime), leave balances, and payroll components. The “real work” is not hiring—it is consistently executing payroll and statutory submissions correctly, especially in CBA-covered environments where the CBA can add obligations on top of the legal baseline.

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Most In-Demand Skills in 2026

Demand in Austria remains high for technology and advanced industrial skills. Employers commonly compete for software engineers (cloud, data platforms, cybersecurity), data analysts/scientists, and IT infrastructure specialists, alongside industrial automation and mechatronics profiles supporting manufacturing and energy transition programs. In parallel, there is sustained need for regulated operational roles—finance controllers, payroll specialists, HR operations, and compliance professionals—because Austrian wage tax + social insurance processing is non-trivial and errors can compound quickly month over month.

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Top Universities Supplying Talent

Austria’s hiring pipeline is supported by a mix of research universities and strong applied sciences institutions. In practice, employers sourcing engineering, computer science, and technical talent frequently recruit from major Vienna institutions and regional technical hubs (e.g., Vienna and Graz), alongside Universities of Applied Sciences (FHs) that produce work-ready graduates for IT, engineering, and business operations. (University selection is typically role-dependent: R&D-heavy roles skew toward research universities, while implementation/operations roles often skew toward FH pipelines.)

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Salary Benchmarks for Roles

Austrian salaries are typically benchmarked in EUR and vary materially by city (Vienna premium), sector (industrial vs services), and CBA coverage. For cost modeling, the biggest budgeting difference versus many countries is the statutory overlay: beyond gross salary, employers must account for employer social security costs (about 20.98% on regular pay up to the EUR 6,930/month assessment base).

Because wage tax is progressive and social security has caps and special treatment for certain payments, accurate “gross-to-net” modeling requires payroll-grade calculations rather than simple annual salary comparisons.

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Employer of Record vs Legal Entity Setup in Austria

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To legally hire employees, a company must

A company hiring directly (without an EOR) must be able to operate as an Austrian employer and execute the core compliance stack:

• Employment documentation: Issue a compliant contract and apply the correct CBA where the role/industry is covered.
• Working time controls: Enforce Austrian working time rules—baseline 40 hours/week, with overtime and maximums managed within the 60-hour weekly cap and 48-hour average over 17 weeks.
• Leave administration: Track and grant annual leave at the statutory level of five weeks per working year (25 days on a five-day week), increasing to six weeks after 25 years.
• Payroll setup: Register and remit social insurance, and run wage-tax withholding and monthly wage-tax reporting under Austrian rules.

An EOR assumes these obligations as the legal employer and typically already has the payroll infrastructure, CBA mapping, and statutory filing workflow in place.

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Cost of Entity Setup

If you form an Austrian GmbH, current rules set the minimum share capital at EUR 10,000, and at least EUR 5,000 must be paid in upon incorporation.  While incorporation itself can be straightforward, ongoing cost is driven by accounting/tax administration, payroll operations, and employment compliance—especially CBA administration and monthly wage-tax deadlines.

For many foreign companies, an EOR is used until there is enough stable headcount to justify internalizing Austrian payroll, HR administration, and ongoing filings.

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What Hiring Through an EOR Means in Austria

An Employer of Record (EOR) in Austria becomes the legal employer registered before the Finanzamt Österreich (Tax Authority) and the Österreichische Gesundheitskasse (ÖGK), while the employee works exclusively for your company. You manage daily responsibilities and performance, but the EOR assumes all statutory employer obligations under Austrian law.

Employment in Austria is governed primarily by:

• Angestelltengesetz (Salaried Employees Act)
• Allgemeines Bürgerliches Gesetzbuch (ABGB – Civil Code provisions on employment)
• Arbeitszeitgesetz (Working Time Act)
• Urlaubsgesetz (Annual Leave Act)
• Collective Bargaining Agreements (Kollektivverträge)
• EU labour and working-time directives
• General Data Protection Regulation (GDPR)

Foreign companies cannot legally employ workers in Austria without:

• Establishing an Austrian legal entity or branch
• Registering with the tax office (Finanzamt)
• Enrolling employees with Austrian social insurance (ÖGK)
• Managing payroll tax withholding (Lohnsteuer)
• Complying with sector-specific collective agreements

An EOR provides this full employer infrastructure without requiring incorporation of an Austrian company.

An EOR in Austria handles:

• German-language, Labour Law-compliant employment contracts
• Payroll processing in EUR
• Income tax (Lohnsteuer) withholding
• Social insurance contributions
• Mandatory 13th and 14th salary payments
• Paid leave and public holiday compliance
• Overtime and working-time monitoring
• Works council coordination (if applicable)
• Termination handling and severance compliance
• Labour inspection coordination

This model is ideal for companies that want to hire in Austria without directly managing EU compliance, collective bargaining rules, and strict termination procedures.

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Risk Involved in Both Models

Austria follows strict EU labour protections and has strong employee safeguards, particularly around working time and termination.

Key characteristics:

• Mandatory written employment terms
• Collective agreements covering most industries
• Mandatory 13th and 14th salaries
• Strong works council rights in larger companies
• Strict notice and termination protections
• Comprehensive social insurance coverage

Compliance failures can result in:

• Fines from labour authorities
• Retroactive social insurance payments
• Tax penalties
• Court-ordered compensation
• Invalid termination rulings

Austria is considered a highly regulated, employee-protective jurisdiction.

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EOR Vs. Entity: When to use What?

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Why an EOR Is the Most Efficient Way to Hire in Austria

Austria is a stable EU economy with strong sectors in manufacturing, automotive, engineering, financial services, and technology. However, hiring is governed by collective agreements, high social insurance contributions, and formal termination protections.

An EOR is not simply a payroll processor. It is the legal employer recognized by Austrian authorities, responsible for:

• Collective agreement compliance
• Social insurance reporting
• Payroll tax filings
• 13th and 14th salary administration
• Working-time and leave compliance
• Termination execution

This allows foreign companies to operate in Austria without assuming direct employer compliance risk.

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#1. EOR Manages Austrian Social Insurance Contributions

Austria has a comprehensive social insurance system covering:

• Pension insurance
• Health insurance
• Unemployment insurance
• Accident insurance
• Family benefits

Employer contributions are significant (approximately 20–23% of gross salary), while employees contribute roughly 18%.

Errors can lead to:

• ÖGK audits
• Retroactive payment demands
• Interest and penalties
• Administrative fines

An EOR ensures accurate contribution calculation, withholding, and reporting.

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#2. EOR Handles Income Tax (Lohnsteuer) Withholding

Austria applies progressive personal income tax rates.

The EOR ensures:

• Correct tax bracket application
• Proper payroll tax deductions
• Annual wage reporting compliance
• Employee tax documentation issuance

Incorrect withholding can result in:

• Tax audits by Finanzamt
• Employer liability for unpaid tax
• Financial penalties

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#3. EOR Controls Working Time and Mandatory Salary Compliance

Austrian law mandates:

• Standard 40-hour workweek (often 38.5 hours under collective agreements)
• Maximum working hour limits
• Overtime premium payments
• Minimum 25 days annual leave
• 13th and 14th salary (holiday and Christmas pay)
• Public holiday observance

Violations may trigger:

• Labour inspection fines
• Wage claims
• Overtime disputes

An EOR ensures:

• Leave tracking compliance
• Overtime documentation
• Accurate bonus and special payment processing

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#4. EOR Minimizes Termination Risk

Termination in Austria requires:

• Statutory or contractual notice periods
• Collective agreement consideration
• Works council notification (if applicable)
• Anti-discrimination compliance
• Proper documentation

Improper termination can result in:

• Court-ordered reinstatement
• Compensation awards
• Extended notice obligations

An EOR manages termination procedures to reduce litigation risk.

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EOR vs. PEO in Austria: How to Decide the Right Hiring Model?

In Austria, a PEO arrangement does not eliminate employer liability.

Under a PEO model:

• The client remains the legal employer
• The client must establish an Austrian entity
• The client registers with social insurance authorities
• The client bears collective agreement compliance risk

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Payroll, Taxes, and Monthly Compliance

Austria payroll compliance is built around monthly wage tax withholding (Lohnsteuer) plus social insurance remittances.

• Income tax (employees): Progressive 2026 rates starting at 0% up to EUR 13,539, then 20%, 30%, 40%, 48%, 50%, and 55% above EUR 1,000,000.
• Social security: Employer 20.98% and employee 18.07% on regular pay (total 39.05%) up to EUR 6,930/month assessment base for current payments (special payments have different treatment).
• Payment deadlines: Austria’s government business portal notes the 15th is the key tax date; wage-related taxes/charges are due by the 15th of the following month.

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Salary Structure: Where Most Compliance Issues Begin

In Austria, compliance issues usually begin where compensation and timekeeping become “non-standard”:

1. Overtime and working time averaging: Employers may comply in a single week but fail the 48-hour average over 17 weeks rule, especially with peak-load teams.
2. CBA misapplication: Misclassifying an employee into the wrong collective agreement group can distort minimum pay, working time rules, and allowances.
3. Social insurance base handling: Not applying the monthly assessment cap correctly (or treating special payments incorrectly) can create under/over-withholding and correction risk.
4. Leave accrual errors: Austria’s leave is “five calendar weeks,” not simply “20 days,” and the entitlement mechanics (and long carry/expiry logic) must be tracked accurately.

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What Monthly Payroll Operations Actually Involve

Monthly payroll in Austria is a repeatable but detail-heavy workflow. Employers calculate gross pay (base + variable components), validate working time and overtime eligibility, and then compute statutory deductions: employee social insurance plus wage-tax withholding using the progressive tables.  Employer social insurance is calculated on top of gross wages (within the relevant assessment bases), payslips are issued, and net salary is paid.

Finally, the employer remits payroll-related taxes and charges by the statutory deadline—typically the 15th of the following month for wage-dependent taxes/charges—while maintaining audit-ready documentation (time records, payroll registers, and proof of remittance).

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Step-by-Step Onboarding Process With an EOR in Austria

Hiring in Austria requires tax registration, social insurance enrollment, and compliance with collective agreements.

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1. Verify EOR Registration with Authorities

Confirm registration with:

• Finanzamt Österreich
• Österreichische Gesundheitskasse (ÖGK)

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2. Identify Applicable Collective Agreement

Determine salary thresholds and benefit requirements.

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3. Determine Contract Type

Austria recognizes:

• Indefinite contracts
• Fixed-term contracts (limited use cases)

Improper fixed-term usage may create permanent employment claims.

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4. Validate Salary and Minimum Standards

EOR ensures compliance with:

• Collective agreement minimum salary
• Special payment obligations (13th/14th salary)

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5. Calculate Total Cost-to-Company

Includes:

• Employer social insurance contributions
• Special salary payments
• Severance exposure
• Payroll taxes

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6. Draft Labour Law-Compliant Contract

Contract must include:

• Role and responsibilities
• Work schedule
• Compensation terms
• Collective agreement reference
• Termination provisions

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7. Register Employee with Social Insurance

Registration must occur before employment begins.

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8. Establish Payroll and Leave Systems

EOR sets up:

• Monthly payroll processing
• Special payment accrual
• Leave and overtime tracking

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9. Immigration Compliance (If Applicable)

For non-EU nationals:

• Red-White-Red Card coordination
• Residence and work permit management

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10. Execute First Payroll

Includes:

• Salary payment
• Social insurance contributions
• Payroll tax reporting

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11. Ongoing Compliance Management

EOR oversees:

• Monthly payroll filings
• Social insurance updates
• Labour inspections
• Collective agreement updates

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12. Termination and Settlement Handling

EOR manages:

• Notice compliance
• Severance calculation
• Final settlement documentation
• Works council coordination

Termination disputes are one of the primary employer risks in Austria.

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Build Your Austria Team with Bolto EOR

Hiring in Austria requires careful management of collective agreements, high social insurance contributions, and strict termination rules.

Bolto’s Employer of Record model absorbs:

• Austrian Labour Law complexity
• Social insurance compliance risk
• Payroll tax obligations
• 13th and 14th salary administration
• Termination and litigation exposure

This allows you to expand into Austria without establishing a local entity or inheriting direct employer liability.

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Full Legal Employer Coverage in Austria

Bolto becomes the legal employer before:

• Finanzamt Österreich
• Österreichische Gesundheitskasse (ÖGK)
• Labour authorities
• Austrian labour courts

Bolto manages:

• Employment contracts
• Payroll and statutory filings
• Social insurance reporting
• Collective agreement compliance
• Termination execution

You manage employee performance. Bolto manages legal risk.

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Built for Fast Market Entry and Flexible Exit

With Bolto EOR:

• Hire within weeks
• Avoid Austrian company registration
• Skip tax and social insurance setup
• Exit without entity liquidation procedures

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Transparent Cost Structure

Bolto provides:

• Clear statutory cost breakdowns
• Visibility into social insurance and special salary obligations
• Predictable EOR service fees
• No hidden compliance liabilities

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End-to-End Employee Lifecycle Management

Bolto manages:

• Contract drafting
• Payroll processing
• Social insurance and tax compliance
• Leave and special payment administration
• Termination handling

You never interact directly with Austrian labour authorities.

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Designed for Risk-Controlled Expansion in Austria

Austria enforces strict penalties for:

• Social insurance underpayment
• Collective agreement violations
• Improper termination
• Payroll tax non-compliance

Bolto enables compliant hiring in Austria while shielding your company from direct employer liability exposure.