How to Use An Employer of Record in
Austria

Austria requires employers to register with the Österreichische Gesundheitskasse (ÖGK) within seven days of hire, contribute 21.23% to social security, and comply with sector-specific collective bargaining agreements (Kollektivverträge) that cover 95% of the workforce. An Employer of Record becomes the legal employer of your staff in Austria, handling all statutory obligations, registrations, and payroll while you retain full operational control and can start hiring within 10 business days. The EOR removes the risk of miscalculating your statutory contribution rates, missing mandatory registration deadlines, or failing to comply with one of Austria's 1,000+ collective agreements.

What Is an Employer of Record in Austria?

An Employer of Record in Austria is a third-party organisation that becomes the legal employer of your staff under Austrian law, handling all statutory obligations, payroll, and compliance while you retain full operational control. The EOR issues employment contracts, registers employees with government authorities, withholds taxes, and manages termination procedures. You direct the work, set performance expectations, and manage the employee's role, while the EOR owns the legal employment relationship.

The EOR model operates within Austria's employment law framework, governed primarily by the Angestelltengesetz (Salaried Employees Act) and Arbeitsvertragsrechts-Anpassungsgesetz (AVRAG). Contracts must be in writing, include mandatory clauses on salary, working hours, and notice periods, and comply with the relevant Kollektivvertrag for the employee's sector. Employees are entitled to 13th and 14th month salary payments as standard, five weeks of annual leave, and protection under strict termination rules. The EOR ensures your contracts meet these requirements and reflect the correct collective agreement terms.

Under this split, you retain day-to-day management, assign tasks, and evaluate performance. The EOR owns payroll processing, income tax withholding via the Finanzamt, social security contributions to the ÖGK, employment contract issuance, and all termination procedures including severance calculations. You never need to register a legal entity or build an in-country HR function.

How Does an Employer of Record Work in Austria?

An EOR in Austria handles the entire employment lifecycle, from contract preparation to payroll and termination. The process starts with defining the role and ends with the EOR managing all statutory obligations on your behalf. Here's how it works in practice.

Step 1: Define Role and Terms

You provide the job description, salary, and benefits you want to offer. The EOR checks the role against the applicable Kollektivvertrag to confirm your proposed salary meets the sector minimum. Austria has over 1,000 collective agreements, each setting mandatory minimums for different roles, so this step ensures you don't underpay. The EOR also confirms whether the employee falls under the Angestelltengesetz or other sector-specific legislation.

Step 2: EOR Compliance Check

The EOR verifies that your terms comply with Austrian law, including the 2026 minimum wage of €2,000 gross per month for full-time employees. They confirm working time limits under the Arbeitszeitgesetz (40 hours per week standard, 48 hours maximum including overtime). The EOR also classifies the role correctly to determine the right social security contribution rates and whether the employee qualifies as a salaried employee or blue-collar worker.

Step 3: Employment Contract Preparation

The EOR drafts a written employment contract in German, as required under Austrian law. Mandatory clauses include job description, salary (including 13th and 14th month payments), working hours, notice period, and the applicable Kollektivvertrag. Contracts are governed by the Angestelltengesetz or AVRAG. Fixed-term contracts are permitted but require objective justification and cannot exceed five years in total duration. The maximum probation period is one month, extendable to three months by collective agreement.

Step 4: Government Registrations

The EOR registers the employee with the Österreichische Gesundheitskasse (ÖGK) within seven days of the start date, as required by law. They also notify the Finanzamt for income tax purposes and register with the relevant accident insurance provider (AUVA). Late registration with the ÖGK can result in fines and backdated contribution demands. The EOR ensures all registrations are completed before the employee's first day.

Step 5: Payroll in Local Currency

The EOR processes monthly payroll in euros, the only permitted currency for Austrian employment. They withhold income tax (Lohnsteuer) at progressive rates from 0% to 55%, plus the solidarity surcharge where applicable, and remit it to the Finanzamt. Employee social security contributions of 18.12% are deducted, and employer contributions of 21.23% are added. The EOR transfers net salary to the employee and remits all statutory payments to the ÖGK and Finanzamt by the 15th of the following month.

Step 6: Ongoing Compliance Management

The EOR handles mandatory annual leave allocation of five weeks (25 working days), rising to six weeks after 25 years of service. They administer sick leave, which is fully paid by the employer for up to 12 weeks. The EOR files monthly Lohnzettel (payroll reports) with the Finanzamt and quarterly reports with the ÖGK. They monitor changes to collective agreements, which are updated annually, and adjust payroll accordingly. The EOR also ensures compliance with the Arbeitnehmerschutzgesetz (Employee Protection Act) and data protection obligations under the GDPR as implemented by the Datenschutzgesetz.

Step 7: Termination and Severance

Austria requires just cause or notice for termination, governed by the Angestelltengesetz and the applicable Kollektivvertrag. Notice periods vary by length of service and collective agreement, typically ranging from six weeks to five months for white-collar employees. Severance (Abfertigung) is mandatory after three years of continuous service, calculated at two monthly salaries after three years, three monthly salaries after five years, and rising to 12 monthly salaries after 25 years. The EOR calculates severance, provides notice, issues termination documentation, and makes all final payments including unused leave. Procedural compliance is critical, as wrongful dismissal claims are common and costly.

Employment Laws and Compliance an Employer of Record Handles in Austria

When you hire through an EOR in Austria, they take on full compliance responsibility so you don't need to build an in-country HR function. The EOR monitors changes to legislation, collective agreements, and statutory rates, and adjusts payroll and contracts accordingly.

• Employment Contracts: All contracts must be in writing and in German, governed by the Angestelltengesetz or AVRAG. Mandatory clauses include job description, salary, working hours, notice period, and the applicable Kollektivvertrag. Failure to provide a written contract can result in fines of up to €2,180 per violation and exposes you to employee claims for contractual ambiguity.
• Payroll Tax and Withholding: The EOR withholds income tax (Lohnsteuer) at progressive rates from 0% to 55% and remits it to the Finanzamt by the 15th of the following month. They also deduct employee social security contributions of 18.12% and file monthly Lohnzettel reports. Late or incorrect filings result in penalties, interest charges, and potential audits by the Finanzamt.
• Social Security and Pension: Employers contribute 21.23% of gross salary to the Österreichische Gesundheitskasse (ÖGK) for health, pension, unemployment, and accident insurance. Registration must occur within seven days of hire. Non-compliance results in fines, backdated contribution demands, and employee claims for lost pension entitlements. The EOR ensures timely registration and monthly contributions.
• Statutory Leave Entitlements: Employees receive five weeks (25 working days) of annual leave, rising to six weeks after 25 years of service, plus 13 public holidays. The EOR tracks accruals, administers leave requests, and ensures unused leave is paid out on termination. Failure to provide statutory leave can lead to claims before the Arbeits- und Sozialgericht (Labour and Social Court).
• Termination and Severance: Termination requires just cause or notice under the Angestelltengesetz, with notice periods set by length of service and the Kollektivvertrag. Severance (Abfertigung) is mandatory after three years, ranging from two to 12 monthly salaries. The EOR calculates severance, issues termination notices, and ensures procedural compliance to avoid wrongful dismissal claims, which can cost six months' salary or more.
• Working Time Regulations: The Arbeitszeitgesetz sets a standard 40-hour week, with a maximum of 48 hours including overtime and a mandatory 11-hour daily rest period. Overtime is paid at a 50% premium or 100% for work on Sundays and holidays. The EOR tracks working time, ensures overtime payments, and maintains records. Violations can result in fines of up to €10,000 and prosecution by the Arbeitsinspektorat.
• Health and Safety Compliance: The Arbeitnehmerschutzgesetz requires employers to conduct workplace risk assessments, provide safety training, and appoint safety officers for workplaces with more than 50 employees. The EOR ensures your obligations are met, coordinates with the Arbeitsinspektorat, and maintains safety documentation. Non-compliance can result in fines, work stoppages, and liability for workplace injuries.
• Data Protection and Privacy: Austria implements the GDPR through the Datenschutzgesetz, requiring employers to process employee data lawfully, maintain records, and report breaches to the Österreichische Datenschutzbehörde within 72 hours. The EOR ensures payroll data is processed in compliance, maintains GDPR-compliant records, and handles data subject access requests. Violations can result in fines of up to €20 million or 4% of global turnover.
• Collective Agreements: Over 95% of Austrian employees are covered by a Kollektivvertrag, which sets mandatory minimums for salary, working hours, overtime rates, and benefits. Agreements are updated annually, typically in January. The EOR identifies the correct collective agreement for each role, ensures compliance with its terms, and implements updates. Underpayment relative to the Kollektivvertrag exposes you to employee claims and fines.
• 13th and 14th Month Salary: Austrian employment law requires payment of a 13th month salary in November or December and a 14th month salary in June or July, each equal to one monthly salary. These payments are taxed at a reduced rate of 6%. The EOR calculates and disburses these payments on time. Failure to pay results in employee claims and damages.

How Much Does It Cost to Use an Employer of Record in Austria?

Using an EOR in Austria involves two cost components: the EOR service fee and statutory employer on-costs. Statutory costs are fixed by Austrian law and apply whether you hire through an EOR or your own entity. Playroll's EOR service fee starts from $399 per employee per month, billed separately from payroll costs. The service fee covers contract preparation, government registrations, payroll processing, compliance monitoring, and ongoing support.

Let's look at an example that includes a base salary and the EOR service fee.

The EOR service fee covers all compliance management, payroll processing, government filings with the Finanzamt and ÖGK, contract updates, and ongoing support for your team. You pay one predictable fee per employee without needing to build an in-country HR or payroll function.

Employer of Record vs Setting Up an Entity in Austria

Deciding between an EOR and establishing your own entity in Austria depends on your hiring scale and long-term commitment. Foreign companies typically register a GmbH (Gesellschaft mit beschränkter Haftung), which requires €35,000 in share capital (half payable upfront), notarised articles of association, and registration with the Firmenbuch and Finanzamt. Realistic setup time is 8 to 12 weeks, with legal and notary costs ranging from €5,000 to €10,000. Ongoing compliance includes annual financial statements, tax filings, and maintaining a registered office address.

For companies hiring fewer than 15 employees in Austria, an Employer of Record is almost always the faster and more cost-effective route.

Playroll also supports your long-term growth through its Global Entity Setup product, which handles entity incorporation and local payroll in 120+ countries so you can transition from EOR to your own compliant entity in Austria when the time is right, without switching providers or rebuilding your HR processes.

How Long Does It Take to Hire Someone in Austria Through an Employer of Record?

You can hire an employee in Austria through an Employer of Record in 10 to 15 business days from contract signature to the employee's first working day.

• Stage 1: Contract preparation and signing (2 to 3 business days): The EOR drafts a compliant employment contract in German, including all mandatory clauses and the correct Kollektivvertrag terms. Timing depends on how quickly you and the employee review and sign. If you request custom clauses or need to negotiate terms, this can add 1 to 2 business days.
• Stage 2: Government registrations (3 to 5 business days): The EOR registers the employee with the Österreichische Gesundheitskasse (ÖGK) within seven days of hire, as legally required, and notifies the Finanzamt and AUVA. If registration is not completed before the start date, you face fines, backdated contribution demands, and potential insurance coverage gaps. The EOR ensures all registrations are submitted well before the employee begins work.
• Stage 3: Payroll configuration and first cycle (2 to 3 business days): The EOR configures payroll, sets up the employee in the system, and confirms tax and social security details with the Finanzamt and ÖGK. Austria operates monthly pay cycles, so if the employee starts mid-month, their first payslip will reflect prorated salary and contributions. The EOR processes this automatically.
• Stage 4: Austria-specific requirements (1 to 2 business days): If the role requires specific insurance coverage under a sector Kollektivvertrag or additional safety registrations under the Arbeitnehmerschutzgesetz, the EOR coordinates these. This step typically runs in parallel with government registrations and does not extend the overall timeline unless specialized approvals are needed.

The timeline can extend if your proposed salary is below the Kollektivvertrag minimum and requires renegotiation, if the employee has a complex immigration status requiring additional documentation, or if you request custom contract clauses that need legal review. Delays in obtaining signed documents from the employee can also add 2 to 5 business days.

By comparison, setting up a GmbH in Austria takes 8 to 12 weeks before you can hire your first employee, not including the time to establish payroll, register with the ÖGK and Finanzamt as an employer, and build internal compliance processes.

How Playroll's Employer of Record Process Works in Austria

Playroll handles the entire employment lifecycle in Austria, from contract to payroll to compliance.

1. You define the role

You tell us who you want to hire, their salary, role, and start date. We check your terms against the applicable Kollektivvertrag and Austrian minimum wage to confirm compliance.

2. We prepare the contract

Playroll drafts a compliant employment contract in German, governed by the Angestelltengesetz, including mandatory clauses on salary, working hours, notice period, and 13th and 14th month payments. We send it to you and the employee for review and signature.

3. We onboard and go live

Within 10 to 15 business days, we register the employee with the Österreichische Gesundheitskasse (ÖGK), Finanzamt, and AUVA, configure payroll, and process their first payment. The employee receives their contract, payslip, and all onboarding documentation in German.

4. We manage compliance

Playroll handles monthly payroll, tax withholding, social security contributions, leave administration, and updates to collective agreements. If your hiring grows to where a local entity makes sense, Playroll can handle that too through our global entity setup service, so you can transition without switching providers.