People enjoy many advantages when working in Austria, also when working in Austria as a foreigner, not least because the rights of employees in Austria are exceptionally well protected by labour laws. This is reflected, amongst other things, by the second lowest strike rate in the world and the excellent relations between employees and employers.
Best Working Conditions in Austria
According to the World Competitiveness Yearbook, Austria is ranked ninth in the world with respect to the cooperation between employers and employees. Austria is even rated fifth globally when it comes to employee commitment to the company and employee motivation.
The interests of employees in Austria are represented by the Austrian Chamber of Labour and the trade unions. They are part and parcel of Austria’s social partnership and responsible for negotiating salary and pricing issues with the Austrian Federal Economic Chamber and the Chamber of Agriculture. Trade unions also negotiate collective agreements on an annual basis on behalf of employees. These agreements regulate the minimum wage standards and working conditions. An employee automatically belongs to the Chamber of Labour, whereas it is necessary to submit an application to the trade union in order to become a member.
Furthermore, many companies have their own work councils. These work councils may be established on the basis of works council elections once the company grows to have at least five employees who are not family members. The works council is authorised to conclude works agreements, to participate in the dismissal, layoff and transfer of employees as well as to take part in supervisory board meetings.
Types of employment relationships in Austria
The rights and obligations of employees in Austria depend on the type of employment relationship.
In this regard, a distinction is made between:
- Employment contract
- Freelance contract
- Service contract or parasubordinate employment.
The Austrian employment contract
The employment contract in Austria contains all the rights and obligations of employees and employers above and beyond those stipulated in the applicable and legally valid collective agreement. First and foremost, the employer is obliged to pay the employee’s stipulated salary, whereas the employee is obliged to render the agreed-upon services.
There are no formal requirements with respect to concluding an employment contract. For this reason, the agreement need not necessarily be in written form, but can also be concluded either orally or by means of a “conclusive action”, for example when work is commenced and subsequently paid for without the objection of the employer.
However, in order to legally safeguard a person’s rights, it is recommended to conclude a written employment contract before the beginning of the employment relationship. In contrast to a written employment contract, the employer is legally required to issue a notice of employment. This document containing the main rights and obligations of the employee must be given to the employee immediately after her or his work in Austria on behalf of the employer begins.
Contracts concluded with trainees/apprentices comprise the exception. In this case, it is absolutely necessary to conclude a written apprenticeship contract.
Normal working hours and rest periods
In the case of full-time work, normal working hours in Austria amount to eight hours per day and 40 hours per week. Additional working hours are considered to comprise overtime and are paid with a 50 percent surcharge or with the right to take compensatory time off.
Starting in September 2018, in some cases it is now permissible to work up to twelve hours per day and 60 hours per week. However, over a four-month period, the average weekly working time must not surpass 48 hours per week. In the case of a four-day working week. It is possible to work ten hours per week in order to achieve the normal stipulated working time of 40 weekly working hours. Moreover, normal working time can be extended within the context of flexible working time models, for example when spreading working time over a specified period or within the context of flexible working hours (flexitime). However, in several industries the collective agreements specify a reduction of the legally prescribed weekly working hours.
Normal working hours are reduced in cases of part-time employment in Austria. In this case, the salary paid per hour of work in Austria remains the same and is oriented to the valid collective agreement on a pro rata basis.
Other working hours apply, for example, in the case of seasonal work or marginal employment in Austria (if, regardless of the number of working hours, the salary paid does not exceed EUR 446.81 per month).
Normal working hours involve actual working time less the specified rest periods. Starting with a daily working time exceeding six hours per day, employees are obliged to take a break of at least 30 minutes.
Vacation entitlement in Austria
For each year of work in Austria, employees are entitled to at least five weeks of paid vacation (30 working days). This applies to both full-time employment as well as part-time and marginal employment in Austria.
Depending on the distribution of working hours, this corresponds to
- 25 working days of vacation for a five-day working week,
- 20 working days of vacation for a four-day working week,
- 15 working days of vacation for a three-day working week,
- 5 working days of vacation for a one-day working week.
The entitlement to vacation increases to 36 working days after 25 years of service. This includes working time on behalf of other employers (if longer than six months), times of self-employed activity (if longer than six months) and up to five years serving as a development worker. Periods of training/education at higher schools of general education medium-level or higher-level vocational schools. The upper limit can be extended from five to seven years if the training/education time and previous period of employment coincide.
Unused holiday entitlement expires after two years.
Termination of employment
Notice periods and dates for terminating employment are stipulated by collective agreements and works agreements. Otherwise, the Salaried Employees Act or the Austrian General Civil Code applies. In principle, a distinction is made between the termination of employment by the employee or employer, depending upon who actually decides to end the employment relationship. The notice of termination of the employment relationship can be carried out orally, in written form or by a conclusive action, for example when the employer hands over the working documents to the employee.
The term “termination date” is not, as one might tend to believe, the day on which the notice of termination is formally declared, but the last day of the employment relationship. In contrast, the notice period represents the period of time between the notice of termination and the termination date.
The employment relationship encompassing all specified rights and obligations applying to both the employee and the employer continues to be valid during the notice period, which begins on the day after the notice of termination is given. If the employer does not comply with the stipulated notice period, the employee is entitled to a severance payment corresponding to the remuneration the employee would have received up until the time in which the employment relationship would have been properly ended.
Up until 1 January 2021, different regulations regarding notice periods still apply for wage earners (workers) and salaried employees:
In cases of a salaried employee dismissed by the employer, notice periods depend on the length of service:
- 1-2 years of service: 6 weeks
- 3-5 years of service: 2 months
- 6-16 years of service: 3 months
- 17-26 years of service: 5 months
In cases of a salaried employee giving notice of termination
As a rule, if no other agreements have been made, the notice period is one month, in which case the employment relationship can be terminated in each case on the last day of the calendar month. On the basis of an agreement, this notice period can be extended to a maximum of six months, in which case the notice period must always be shorter than the notice period applying to the employer:
In cases of workers dismissed by the employer
Similarly, according to valid collective agreements, the notice period is also usually staggered in accordance with the length of employment. For sectors in which there is no collective agreement, the agreements stipulated in the employment contract apply. If the employment contract does not contain any stipulations with respect to the notice period, the Austrian Commercial Code applies. It specifies a fourteen-day notice period.
Under certain conditions, the dismissal of an employee can be contested. However, in this case it is necessary to comply with the stipulated deadlines. For this reason, it is important to contact the works council, Chamber of Labour or the respective trade union immediately after the notice of termination has been pronounced or received.
The freelance contract
If a freelance contract is concluded instead of an employment contract, the freelancer rendering a specified service should be aware of the following differences compared to being hired as an employee on the basis of an employment contract:
- Freelancers are not bound by instructions and do not have to comply with specified working hours.
- They can also arrange to be represented.
- They can choose their place of work themselves.
- They can or must use their own work materials or equipment.
- They do not have to provide a guarantee of success.
- They are generally not paid by the hour.
- They are not personally insured or are only insured to a very limited extent.
If the monthly remuneration is above the marginal earnings threshold (2019: EUR 446,81), the freelancers are also registered by the employer and subsequently insured. They benefit from health, accident, unemployment and pension insurance, but enjoy less protection under labour laws than employees. They are only entitled to protection against dismissal, paid vacation, a leave of absence and special payments if a corresponding agreement has been concluded. If notice periods and termination dates are not specified in the freelance contract, the Austrian General Civil Code (ABGB) applies. Freelancers are considered to be independent contractors and must pay an income tax once a stipulated annual level of income is reached. For this reason, freelancers are required to apply to the tax office for a tax identification number.
A service contract specifies the rendering of a defined work in return for remuneration. In contrast to employees and freelancers, a guarantee of success is ensured.
Contract employees are personally and economically independent, are not integrated in the organisation of the commissioning party and can arrange to be represented. They must use their own work materials and equipment and must register with and have themselves insured by the Social Security Institution for Trade and Industry (Sozialversicherungsanstalt der gewerblichen Wirtschaft - SVA). The contractual obligation arising as a result of the service contract automatically ends when the agreed-upon work has been rendered.
Contract employees are frequently independent contractors practising a trade and who are thus tradespeople. For this reason, they require a business license.
New self-employed persons
Independent contractors who do not require a business license to carry out their professional activities and who do not catty out their work as freelancers are considered to be new self-employed persons. Examples include authors, appraisers, translators etc. They are also obliged to have mandatory pension, health and accident insurance and in addition have to pay into the Employee Provident Fund. There are specific rules which apply to unemployment insurance for new self-employed persons.
In any case, self-employed persons with service contracts have to register themselves with the Social Security Institution for Trade and Industry.
Marginally employed workers
Employees and freelancers who income is below the marginal earnings threshold (2019: EUR 446.81) are considered to be marginally employed workers. They must be provided with accident insurance by their customers or contractors. Health and pension insurance are possible on a voluntary basis. An application for such must be submitted by the marginally employed workers themselves to the responsible Regional Public Health Insurance Fund.