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Employment in Austria

Various statutes regulate Austrian labor relations and the individual rights and duties of employer and employees. The most important source is the Austrian Constitutional Act on Industrial Relations, which provides a framework regulating the interaction between employees and employers. On top of that, almost all employers and employees are subject to collective bargaining agreements.

Key points on employment in Austria

There are several key areas to be aware of within the Austrian employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    Contracts of employment in Austria must state a mutual obligation upon employer and employee, which consists not only in providing services once, but implies a conduct which prevails for some time. There is no specific form required for a contract of employment; this means that it can be concluded orally, in writing or through conclusive action. If the employment contract is not put into writing, the newly-hired employee must be given at least information in written form, outlining his most important rights and responsibilities.

Employee Entitlements

Information Explanation
Medical Leave ?

The principle of continued remuneration ensures that in the event of sickness, industrial accident and occupational illness and during rest cure and convalescence leave, employees’ remuneration will continue to be paid. How long one continues to be paid mainlydepends on the seniority, and different regulations may apply for white-collar workers and manual workers.

After continued remuneration, one receives sick pay from the health insurance provider. The amount of sick pay depends on the earnings in the last month before the illness and the amount of continued remuneration paid. As an employee one is obliged to inform the employer as soon as one becomes incapacitated for work.


Employment Termination

Information Explanation
Termination of Employment ?

Individual termination may be unilateral, subject to a notice period or by mutual consent. It usually does not require any cause or any specific form.

According to Austrian labor law, an employer must comply with a scale of notice periods for termination of an employee’s employment, which may be lengthened under the terms of a collective bargaining agreement or individual employment agreement.

For salaried employees, the legal term of notice amounts to:

Year of service and Period of notice

1st and 2nd year = 6 weeks

3rd – 5th year = 2 months

6th – 15th year = 3 months

16th – 25th year = 4 months

after 26th year = 5 months.

An employer can immediately dismiss the employee for reasons of insubordination, disloyalty and other types of gross misconduct, or in case of violation of the duty of good faith. If an employer issues a notice of dismissal, the employment will normally end immediately.

However, the employee will be entitled to either full payment for the notice period applying to ordinary termination, or to have the termination cancelled, if he or she initiates and wins a claim under the rules for protection against termination.

Where an employer wishes to terminate or dismiss a protected class of employee it may normally only do so with good cause and where a labor court has approved the termination. The principal protected groups are: members of and candidates to the Works Council, pregnant employees up to four months after giving birth, employees on maternity leave and working parental part-time, employees doing their prescribed military service and disabled employees.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Austria. For companies, which intend to employ their staff directly through their incorporated Austrian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Austria.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Austria.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Austria

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Austria

– the company needs help with tax, employment, immigration and payroll compliance in Austria

Shield GEO can contract directly with the company to employ and payroll their staff in Austria. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.



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