Hiring in Austria

Overview

Austrian employer social contributions run ~21–22% on capped earnings, but Kollektivverträge mandate 13th and 14th month payments that push annual cost to ~14 months of salary. Termination uses the Abfertigung Neu MVK fund (1.53%/month) rather than lump-sum severance for post-2003 hires. For teams under 10, EOR beats a €35,000-capital GmbH and 450+ collective agreement classifications.

Collective agreements (Kollektivverträge) cover roughly 98% of all employees in Austria, one of the highest coverage rates in Europe. Even if the EOR’s entity isn’t a member of an employers’ association, the applicable Kollektivvertrag for the employee’s sector sets binding minimum standards on pay, working hours, overtime rates, and notice periods. You don’t choose whether a Kollektivvertrag applies; the employee’s job function and the EOR’s entity classification determine it automatically.

Setting up a GmbH in Austria requires €35,000 minimum share capital (at least €17,500 paid up), notarization, registration with the Firmenbuch (commercial register), and a local managing director. Total formation cost runs €5,000–€10,000 in professional fees plus the share capital. Timeline: 3–6 weeks. EOR is the clear winner for teams under 10.

Key Employment Facts

Employer Cost

The combined effective employer burden, social contributions plus Sonderzahlungen, lands around 38–40% above base monthly gross when annualized. That puts Austria firmly in the upper tier of European employer costs, comparable to France and above Germany.

Statutory Benefits

Austria mandates a comprehensive suite of benefits that are largely non-negotiable, the applicable Kollektivvertrag sets the floor regardless of what any individual contract says.

Annual leave: 25 working days minimum (30 days after 25 years of service). Leave must generally be taken within the same calendar year or carried over by written agreement.

Sonderzahlungen (13th and 14th salary): Mandatory under virtually all Kollektivverträge. The holiday bonus (Urlaubsgeld) is paid before summer leave; the Christmas bonus (Weihnachtsgeld) by November or December. Each equals one month’s gross salary. Both are taxed at a flat 6% rate (up to one-sixth of annual gross), a significant tax advantage employees treat as a core entitlement, not a discretionary perk.

MVK (Abfertigung Neu): Employer contributes 1.53% of monthly gross salary into the employee’s Mitarbeitervorsorgekasse (portable severance fund) from the second month of employment onward. The amount is portable and belongs to the employee regardless of how the relationship ends.

Sick leave: 6 to 12 weeks of full paid sick leave per year depending on tenure, increasing with service years. The employer pays directly; the Krankenkasse (health fund) reimburses partially after week 4.

Parental leave (Karenz): Up to 24 months of protected parental leave per parent. The state pays Kinderbetreuungsgeld (childcare benefit), the amount and duration vary by model chosen. The employer must hold the position for the duration.

Working time: Standard workweek under most Kollektivverträge is 38.5 hours, not 40. The Arbeitszeitgesetz caps daily hours at 12 and weekly hours at 60 with averaging. Written time records are legally required.

Work Visas and Immigration

EU/EEA nationals have free movement rights and can work in Austria without a work permit, EOR onboarding for EU/EEA nationals takes 3–7 business days. Non-EU nationals require a Rot-Weiß-Rot Karte (Red-White-Red Card), Austria’s main skilled worker immigration route.

The Rot-Weiß-Rot Karte is points-based, assessing qualifications, language skills, work experience, and the salary offer. The salary threshold for most skill categories is approximately €2,700/month gross (2025). The EOR sponsors the application as legal employer. Start immigration at least 3 months before the intended start date, formal assessment takes 6–12 weeks, and document preparation adds several weeks before submission. The Austrian Embassy in the applicant’s home country processes the initial visa; the Rot-Weiß-Rot Karte is then issued after arrival.

Choosing an EOR for Austria

Provider fees, entity models, and onboarding SLAs change frequently. See our ranked shortlist: Best EOR for Austria.

Termination Rules

Austria’s Abfertigung Neu system fundamentally changes the termination cost calculation compared to most European countries. Since 2003, there is no lump-sum severance triggered by termination. Severance cost is fixed at 1.53% of gross salary contributed monthly to the MVK throughout the employment relationship, the obligation ends when contributions stop, and no additional payout is due on termination regardless of tenure. (Employees hired before 2003 may remain on the old Abfertigung Alt system, which can require up to 12 months’ salary on dismissal, ask your EOR to check.)

Notice periods are set by the Angestelltengesetz and the applicable Kollektivvertrag. Employer notice periods start at 6 weeks for the first two years and scale to 5 months after 25 years of service. Notice must commence at the end of a calendar quarter (March 31, June 30, September 30, December 31), giving notice mid-quarter effectively extends it to the end of the next quarter. Employee resignation notice is 1 month ending on the last day of a calendar month.

The one-month probation period allows termination by either party without notice or reason. After probation, employees with 6+ months of service can challenge dismissal on grounds of social hardship (Kündigungsanfechtung) before the labor court (Arbeits- und Sozialgericht). Courts can order reinstatement or compensation. Budget 2–3 months of fully loaded salary for a clean post-probation termination: notice period pay, unused vacation payout, and pro-rated Sonderzahlungen. Unjustified dismissals can cost significantly more if litigated.

Frequently Asked Questions

Are the 13th and 14th months optional if I raise monthly salary?

No under virtually all Kollektivverträge. Urlaubsgeld and Weihnachtsgeld must be paid as separate Sonderzahlungen. Netting them into monthly pay does not satisfy the agreement. Budget ~16.67% extra annually on top of the ~21–22% social stack.

How does Abfertigung Neu change exit cost versus Germany?

For post-2003 hires, Austria replaces lump-sum severance with a 1.53% monthly MVK contribution. You still owe notice (often to quarter-end) plus pro-rated bonuses. That is usually cheaper and more predictable than a German Aufhebungsvertrag, but notice timing can stretch cash. See Hiring in Germany.

What should I budget for a €5,000 Vienna hire?

Roughly €1,050–1,100 social (within cap) plus ~€833 for 13th/14th accrual and ~€76 MVK, landing near €6,950–7,100/month before EOR fees. Compare Hiring in Switzerland for a higher-salary, lighter-termination neighbor.

How long does a Rot-Weiß-Rot Card take?

Plan ~6–12 weeks after a complete file, plus document prep. EU/EEA hires still start in days through EOR. Provider shortlist: .

When does a GmbH beat EOR?

Around 8–12 employees. Privileged formation can start near €10,000 capital for 10 years, but you still need a Steuerberater and KV-compliant payroll. Below that, EOR usually wins.

Sources

• Austrian Social Insurance (ÖGK)
• Federal Ministry of Labour
• Rate verification: eorHQ methodology

Related Decision Pages

• Hiring in Germany : Germany’s social security costs and how the GmbH setup compares
• Hiring in Switzerland : Swiss flexibility versus Austrian collective agreement rigidity
• Top EOR reviews
• Hiring your first international employee