Austria's wage floors, working hours, and notice periods come from sector-specific collective agreements (Kollektivverträge), not a national minimum wage law. They cover roughly 98% of private-sector workers. In return, employers get one of Europe's most productive, low-corruption labor markets, with deep talent in engineering, finance, and manufacturing.

Overview

Austrian employment law is built around a mix of federal statutes, sector-level collective bargaining agreements (Kollektivverträge, or CBAs), and, in larger companies, works council agreements. Roughly 95 to 98% of Austrian employees are covered by a CBA, and CBAs routinely set terms that are more generous than the statutory minimums, including pay scales, working hours, and additional leave.

Before you draft a single offer letter, you need to identify which CBA applies to the role. It's determined by the employer's registered trade association membership (Fachverband) and the nature of the work, not by company preference. Getting this wrong is one of the most common compliance mistakes international employers make in Austria.

The other structural feature to plan for is the 14-salary year. Austrian employees don't receive 12 equal monthly payments. Almost every CBA includes a holiday bonus (Urlaubsgeld) paid around summer and a Christmas bonus (Weihnachtsgeld) paid around November, on top of the 12 regular monthly salaries. Budget for this from the first offer, not after the first payroll run.

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Employment Contracts

Austrian law doesn't require a written employment contract for validity, but a written Dienstzettel (service note) is mandatory. Within one month of the start date, the employer must give the employee a written statement covering:

• Employer and employee names and addresses

• Start date (and end date, if fixed-term)

• Job title, duties, and place of work

• Applicable collective agreement

• Initial salary, payment frequency, and any special payments

• Working hours

• Notice period and probation terms

• Annual leave entitlement

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Most employers issue a full written employment contract that doubles as the Dienstzettel, which is best practice and reduces disputes later.

Fixed-term vs. indefinite contracts. Indefinite contracts are the default and the norm. Fixed-term contracts are legal but tightly restricted: a single fixed-term contract is fine, but chaining multiple consecutive fixed-term contracts (Kettenverträge) without an objective justification (such as project work or seasonal need) risks being reclassified by a court as an indefinite contract.

Probation period. Austrian contracts commonly include a probation period (Probezeit) of up to one month. During probation, either party can end the relationship immediately, without notice and without giving a reason. There's no severance obligation during probation. Once the month passes, standard statutory notice periods apply immediately.

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Working Hours and Overtime

The Working Time Act (Arbeitszeitgesetz) sets the statutory baseline at 8 hours per day and 40 hours per week. In practice, most CBAs set shorter normal hours, commonly 38 to 38.5 hours per week, so check the applicable CBA rather than assuming the statutory maximum.

Flexibility. Daily hours can be extended to 9 or 10 hours under certain arrangements (for example, to enable a four-day week or flexitime/Gleitzeit models), provided the weekly average stays within legal limits.

Overtime. Work beyond the normal daily or weekly hours (whichever is shorter: statutory, CBA, or contractual) counts as overtime. Key limits:

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Employees can refuse overtime that would push them past 10 hours in a day or 50 hours in a week, without needing to give a reason. Overtime pay rates and whether time off in lieu is offered instead of a cash premium are often set by the CBA, so confirm sector-specific terms before finalizing compensation structures.

Breaks and rest. Employees are entitled to a 30-minute break after 6 consecutive hours of work, and generally to at least 11 hours of rest between shifts. Sunday and public holiday work is restricted outside specific sectors (hospitality, healthcare, emergency services, etc.) and typically carries premium pay if permitted.

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Minimum Wage

Austria has no single statutory national minimum wage. Pay floors are set at the sector level through collective bargaining agreements, and virtually every industry has one.

• In 2026, most CBA entry-level minimums fall in the range of roughly €1,800 to €2,000+ gross per month, paid across 14 salary installments a year (12 monthly payments plus the holiday and Christmas bonuses).

• Because CBA minimums are quoted per month but paid 14 times, the annual floor is meaningfully higher than "monthly rate × 12." A €1,900 CBA minimum, for example, works out to €26,600 gross per year, not €22,800.

• CBA minimums are renegotiated annually, typically in autumn, with the metalworking sector (Metallindustrie) traditionally setting the pattern that other sectors follow.

• An employment contract cannot legally pay below the applicable CBA minimum, even if both parties agree to it. This is enforceable through the labor courts, and employers who underpay against the applicable CBA face fines.

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Identify the correct CBA for the role before making an offer. The WKO Collective Agreement Database (wko.at/kollektivvertrag) and the Austrian Trade Union Federation (ÖGB) publish current rates by sector.

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⚠️ Underpaying against the applicable CBA is an administrative offense under the Wage and Social Dumping Prevention Act (LSD-BG), and penalties are significant: up to €20,000 for reporting or documentation violations, up to €40,000 for obstructing a wage audit, and up to €250,000 for underpayment (rising to €400,000 in severe, high-value cases). This applies to Austrian and foreign employers alike, including those posting workers into Austria.

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Payroll and Taxes

The 14-salary structure. Austrian payroll runs on 12 regular monthly salaries plus two special payments: the Urlaubsgeld (holiday bonus, usually paid around June/July) and the Weihnachtsgeld (Christmas bonus, usually paid around November). This is standard under nearly all CBAs, not just a bonus at the employer's discretion.

Income tax (Lohnsteuer). Austria uses a progressive wage tax withheld monthly by the employer. For 2026, the brackets are:

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Taxable income is gross salary minus social security contributions and standard deductions. Brackets are indexed to inflation each year to offset "bracket creep," except the top 55% band, which is fixed.

Special payments get favorable tax treatment. The holiday and Christmas bonuses aren't taxed at the regular progressive rates. The first €620 per year is tax-free, and most of the remainder is taxed at a flat 6% (up to a cap tied to the "Jahressechstel," roughly one-sixth of annual regular pay), with higher flat rates applying only to unusually large special payments. This is a structural reason Austrian net pay tends to look better than the headline marginal rates suggest.

Filing and remittance. Employers withhold income tax and remit it to the tax office (Finanzamt), along with social security contributions, by the 15th of the following month.

Family tax credit. Employees with children can claim the Familienbonus Plus, worth up to €2,000 per child per year, directly against their tax bill. It's usually applied via the annual tax return but can also be factored into monthly withholding if the employee requests it through their employer.

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Social Security Contributions

Austria's social insurance system (ASVG) funds health insurance, pension, unemployment, and accident coverage, split between employer and employee. For 2026:

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Note: Employer-side figures published across sources sometimes appear closer to 20.98% depending on whether they include or exclude regional chamber levies (Vienna and other states add small DZ surcharges of a few tenths of a percent). Confirm the exact employer rate with the Austrian Health Insurance Fund (ÖGK) or a local payroll provider at the time of hiring, since regional add-ons can shift the total slightly.

Contribution ceiling. Contributions apply only up to the monthly maximum assessment base (Höchstbeitragsgrundlage), which is €6,930/month for 2026 (€13,860 annually for the special payments cap). Earnings above this ceiling aren't subject to further social security contributions, though income tax still applies.

Beyond ASVG, employers also owe:

• Municipal tax (Kommunalsteuer): 3% of gross payroll

• Family Burden Equalization Fund (FLAF/DB) contribution: 3.7% (reduced from 3.9%, effective January 1, 2025)

• Chamber of Commerce surcharge (DZ): a small province-dependent add-on, roughly 0.32% to 0.42% of gross payroll

• Vienna-specific transport levy (Dienstgeberabgabe): €2 per employee per week, for employers based in Vienna

• Mandatory severance fund contribution (Abfertigung neu, discussed below): 1.53% of gross salary

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Adding these on top of ASVG, total non-wage labor costs typically run 28% to 31% above gross salary (higher in Vienna once the transport levy is included). Use this range for budgeting, not the ASVG rate alone.

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Leave Entitlements

Annual leave. Governed by the Urlaubsgesetz (Holiday Act):

• Statutory minimum: 5 weeks per year (25 working days for a standard 5-day week, or 30 working days for a 6-day week).

• After 25 years of continuous service with the same employer, this rises to 6 weeks (30 working days for a 5-day week).

• Full-time and part-time employees have the same entitlement; part-time leave is simply pro-rated to actual working days.

• In the first 6 months of employment, leave accrues pro-rata (roughly 2.08 working days per completed month). Full entitlement applies from month 7 onward.

• Leave that goes unused can generally be carried over, but expires after a statutory ceiling of about 2 years from when it was earned.

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Sick leave. Governed by the Continued Pay Act (Entgeltfortzahlungsgesetz). The employer pays full salary during illness for a period that scales with tenure, then half salary for a further period, before the ÖGK (health insurance) takes over:

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A medical certificate is generally required, especially for absences longer than 3 days.

Maternity leave (Mutterschutz). 16 weeks total: 8 weeks before the expected due date and 8 weeks after birth (extended to 12 weeks after birth for premature births, multiple births, or a C-section). Employees cannot work during this protected period, by law. The employer pays no salary during Mutterschutz; the employee receives Wochengeld (maternity benefit) directly from the ÖGK, based on average earnings over the prior 13 weeks.

Paternity leave (Papamonat). The non-birthing parent can take one month (28 to 31 continuous days), starting from the second day after birth through the end of the mother's protected maternity period. If the mother isn't eligible for Mutterschutz (for example, she's self-employed or unemployed), the equivalent leave can be taken over 8 weeks after birth (extended to 12 weeks for multiples, premature birth, or C-section). It's unpaid by the employer, but the employee can claim a family time bonus (Familienzeitbonus) through social security. The employee must notify the employer at least 3 months before the expected due date.

Parental leave (Elternkarenz). Either parent can take unpaid parental leave following the maternity protection period, in blocks of at least 2 months. The maximum duration depends on how it's split:

• If only one parent takes it: until the child turns 22 months

• If both parents alternate, each taking at least 2 months: until the child turns 24 months (one month of overlap between parents is permitted the first time they switch)

• For single parents, or where the other parent isn't entitled to leave (for example, they're self-employed): up to 24 months

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The mother must notify the employer during her maternity leave; the father must notify within 8 weeks of the birth. Employees are protected against dismissal throughout Elternkarenz and for 4 weeks after it ends. A state childcare allowance (Kinderbetreuungsgeld) is payable during this time, separate from employer payroll, under a choice of income-based or flat-rate models. Parents can also request reduced hours (parental part-time work) up to the child's 8th birthday under certain conditions.

Other statutory unpaid or partially paid leave. Austrian law also recognizes several narrower leave categories employers should be aware of:

• Care leave (Pflegefreistellung): paid time off to care for a sick child or close family member, or in the event of a household member's illness

• Family hospice leave (Familienhospizkarenz): unpaid leave to accompany a dying relative or care for a seriously ill child, with income support available under certain conditions

• Child rehabilitation leave: up to 4 weeks per year, unpaid, to accompany a child under 14 during inpatient rehabilitation

• Education leave (Bildungskarenz): unpaid leave for approved training programs, by agreement with the employer

• Extended care leave: an additional 1 week per year, unpaid, once ordinary care leave is exhausted, for children under 12 requiring ongoing care

• Military/civilian service leave: job-protected unpaid leave for compulsory service obligations

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Public holidays. Austria observes 13 nationwide public holidays annually, applied uniformly across all 9 federal states (no regional variation), including New Year's Day, Epiphany, Easter Monday, Labour Day (May 1), Ascension Day, Whit Monday, Corpus Christi, Assumption Day, National Day (October 26), All Saints' Day, Immaculate Conception (December 8), Christmas Day, and St. Stephen's Day.

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Employee Benefits

Beyond statutory minimums, most Austrian employers offer benefits shaped heavily by CBA norms and candidate expectations:

• Meal vouchers or subsidized canteens, common in office and industrial settings alike

• Public transport subsidies (Klimaticket contributions), especially in Vienna and other cities with strong transit networks

• Supplementary private health insurance, since public healthcare via ÖGK is comprehensive but private cover reduces wait times for elective care

• Company pension contributions (Pensionskasse), on top of the statutory ASVG pension

• Additional annual leave beyond the statutory minimum, increasingly common as a retention lever

• Home office / hybrid work stipends, formalized under the 2021 Home Office Act, which requires a written agreement covering equipment and expense reimbursement for remote work arrangements

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None of these are legally mandatory outside CBA requirements, but they're frequently expected by mid-career and skilled candidates, particularly in Vienna's competitive tech and professional services market.

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Termination Requirements

Austrian termination law is layered: the Angestelltengesetz (Salaried Employees Act) and the General Civil Code (ABGB) set statutory minimums, and CBAs frequently extend them.

Notice periods (employer-initiated, ordinary termination). Since October 2021, notice period rules are unified for white-collar and blue-collar employees:

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Termination generally takes effect at the end of a quarter unless the contract or CBA allows termination on the 15th or last day of a calendar month instead, which is common practice.

Employee-initiated resignation. Employees generally must give 1 month's notice, typically effective at month-end, unless the contract specifies otherwise.

Probation period. During the probation month, either party can terminate immediately without notice or cause.

Summary dismissal (Entlassung). Immediate dismissal without notice is only permitted for serious cause, such as fraud, persistent neglect of duties, breach of confidentiality, or criminal conduct. The bar is high, and an unjustified summary dismissal is typically treated by courts as an ordinary termination, entitling the employee to full notice pay and potentially severance.

General protection against dismissal. In establishments with 5 or more employees and a works council, the employer must inform the works council in advance of a proposed dismissal. Employees can also challenge a dismissal in court if it unfairly harms their personal or economic interests, even without a works council in place.

Specially protected categories. Dismissal is restricted or requires special procedure for employees who are pregnant or on maternity leave, on paternity or parental leave, temporarily unfit for work due to illness, performing compulsory military or civil service, minors under 18, or caring for a sick child or family member during protected care leave. Terminating someone in one of these categories without following the correct procedure exposes the employer to real legal risk, and it's worth checking status before initiating any dismissal.

After termination. Employees who lose their job generally become eligible for unemployment benefit (Arbeitslosengeld) through the AMS, provided they've contributed to unemployment insurance for at least 52 weeks in the last 24 months (or 26 weeks in the last 12 months for those under 25). This is a state benefit, not an employer cost, but it's useful context when discussing termination terms with departing employees.

Severance pay (Abfertigung). Austria runs a funded severance system called Abfertigung neu, applicable to all contracts starting from January 1, 2003:

• The employer contributes 1.53% of gross monthly salary into a dedicated employee provision fund (Mitarbeitervorsorgekasse, or MVK) every month, from the first month of employment.

• This is portable: if the employee changes jobs, the accumulated fund balance moves with them rather than resetting.

• The employee can access the accumulated amount as a lump sum or transfer under specified conditions, generally after 3 years of contributions, typically at the end of employment.

• Contracts predating 2003 may still fall under the older "Abfertigung alt" system, which works differently and is a direct employer-paid lump sum based on final salary and tenure; this is increasingly rare for new hires but relevant if you're acquiring a workforce with legacy contracts.

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Mass layoffs. Collective redundancies trigger advance notification obligations to the Austrian Labor Market Service (AMS) and consultation duties with the works council, under separate mass-dismissal rules.

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Hiring Through an Employer of Record (EOR)

For companies without an existing Austrian entity, setting up local registration, CBA classification, ASVG enrollment, and 14-salary payroll from scratch is a significant undertaking, especially for a first hire or a small team.

An Employer of Record lets you hire in Austria without establishing a local entity. The EOR becomes the legal employer on paper, handling the employment contract, payroll, tax withholding, ASVG registration, and Abfertigung neu contributions, while you continue directing the employee's day-to-day work. This is typically the fastest route to compliant hiring when you're testing the market, hiring a small number of specialists, or need to move quickly without waiting on entity setup.

If you already have or plan to establish an Austrian entity and have in-house or local HR and payroll capacity, a Professional Employer Organization (PEO) or direct Global Payroll service may be a better fit, since you retain the legal employer role while outsourcing administrative compliance. Knit offers both EOR and PEO models, so the right choice depends on your entity status, headcount, and how much HR infrastructure you want to build locally versus offload.  

To determine which option best fits your needs, reach out to our team for guidance.

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Frequently Asked Questions

Does Austria have a national minimum wage?

No. Pay floors are set by sector-level collective bargaining agreements, which cover roughly 95–98% of employees. Always check the CBA that applies to the specific role and industry.

How many salary payments does an Austrian employee receive per year?

14: 12 regular monthly payments plus a holiday bonus (Urlaubsgeld) and a Christmas bonus (Weihnachtsgeld), standard under nearly all CBAs.

What's the standard probation period in Austria?

Up to 1 month, during which either party can end the employment immediately without notice or cause.

How much annual leave are employees entitled to?

A statutory minimum of 5 weeks, rising to 6 weeks after 25 years of continuous service with the same employer.

Can I terminate an employee without cause?

Yes, ordinary termination doesn't require a stated reason in most cases, but you must observe the correct statutory or CBA notice period, and employees at companies with 5+ staff and a works council have additional procedural protections.

Do I need a local entity to hire in Austria?

Not necessarily. An Employer of Record can legally employ staff on your behalf without you setting up an Austrian entity, which is often the faster route for an initial hire or small team.

What's the Abfertigung neu severance contribution?

A mandatory employer contribution of 1.53% of gross monthly salary into a portable employee provision fund, paid from month one of employment, separate from any notice-period obligations.

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This guide is for general informational purposes and reflects Austrian employment law and payroll figures as of 2026. Collective bargaining agreement terms, tax brackets, and contribution rates change periodically. Employers should confirm current figures with the relevant Fachverband, the WKO Collective Agreement Database, the ÖGK, or qualified local legal counsel before finalizing hiring or payroll decisions.

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