What are Employee Benefits?
Employee benefits are defined as non-wage compensation provided to employees as part of the employment contract alongside their regular salaries or wages. Employee benefits are either required by the country's law or provided willingly by the employer.
From the point of view of an employee, a reasonable compensation package increases the significance of the value they receive from their work and help protect their health and that of their families. Contrarily, from an employer’s perspective, a well-structured compensation package helps maintain a good business by providing employees with stable working conditions.
With vast globalization and companies looking at large scale expansions, a well-thought-out compensation and benefits policy is crucial for attracting new applicants.
Compensation Laws in Austria
Austria does not have a regional or national minimum wage because of collective bargaining agreements (CBAs). The CBA is necessary to stipulate a minimum wage for your respective industry. However, if there are no collective bargaining agreements, Austria's compensation and benefits policy should be carefully created by the employer.
Employee compensation and benefits in Austria should adhere to the Austria compensation laws that state:
- ~Suppose, an employer stipulates a lower salary than what is stated in the applicable CBA. In that case, the clause or contract will be void, and the employer has to pay penalties set out in the Austrian Anti-Wage and Social Dumping Act. Thus, employees and employers can agree to a salary higher than the minimum wage structure.
- ~Employees in Austria generally work eight hours a day and 38 or 40 hours a week. Additional work hours are compensated at 50% of the employee's normal rate and 100% for the weekend and night shifts.
- ~A maximum of 20 overtime hours per week is permitted in Austria. However, every week's average working time cannot exceed 48 hours in an average 17-week period.
- ~In the case of mass redundancies, the employer must notify the local Public Employment Service (AMS) branch at least 30 days before the termination. The notice mentioned above is required when terminating -
- ~~Five employees in a business which has between 20 to 100 employees.
- ~~5% of the employees in a company with 100 to 600 employees.
- ~~30 employees in a company with more than 600 employees.
- ~~Five employees who have reached 50 years of age.
How to Design an Employee Benefits Program for Employees in Austria?
A carefully designed employee benefits program should have clear goals, be realistic and meaningful, and be competitive. These steps will help you learn more about the basics of creating an impactful employee benefits policy.
Step 1: Determine a clear goal for your benefits package
Before building a benefits program, you must first identify its purpose. This will guide you in designing and establishing a good benefits program for your compensation package in Austria. The key objective of your employee compensation policy in Austria should be:
- Attracting and maintaining talent.
- Catering to the needs of the employees.
- Increasing employee value proposition.
- Creating an industry-standard policy within a budget.
- Ensuring compliance with the national and international laws.
Step 2: Include meaningful benefits in your policy
The benefits that you include in your employee benefits in Austria should have beneficial elements to your employees. Having an idea about what your employee wants is essential for designing your benefits policy.
You can also analyze your compensation package's annual and projected cost by referring to the existing benefits. A well-crafted policy will increase your employee’s productivity while nurturing their loyalty towards your company.
Step 3: Conduct surveys
Your compensation and benefits policy in Austria should be based on the needs of your employees. A great way to learn more about the specific needs and demands of the employees is by conducting surveys to gather information about the benefits from the employee’s perspective.
After conducting the survey, you can analyze your employee’s responses and create a benefits package that meets their expectations. The best way to get the most out of your employees in a stable work environment is to create a winning compensation policy that aligns with your employee’s needs.
Step 4: Create a financially stable compensation structure
With your company’s needs and goals in mind, you can create your new employee compensation and benefits policy in Austria. Organize the benefits based on your survey analysis and prioritize them. You can use this information to estimate the cost of providing benefits. Depending on your goals, you can create either a minimal plan covering all the needs or an extensive plan, provided you have the budget for it.
If you are modifying an already existing plan, you can find under-used offerings and eliminate them to reduce the cost of your policy.
Step 5: Evaluate your employee benefits
To address your benefits program efficiently, you can hold periodic exaltation programs to assess the program that can help you learn more about your policy's impacts on your employees and your company’s objectives.
Types of Guaranteed Benefits in Austria
Employers provide various mandatory benefits that adhere to the rules and regulations of the country. Some of the guaranteed employee benefits in Austria that you should also provide are -
Austria does not have a statutory minimum wage. However, the government has set a national minimum wage to €1,500 for full-time employees. Austria has adopted this minimum wage, far more than most European countries. The compensation structure in Austria includes basic pay, overtime, incentives, and compensations for overtime.
All employees in Austria acquire a social security number that gives them access to the insurance benefits available to Austrian citizens. Social security covers pensions, education, maternity, work accidents, survivors benefits, parental benefits, and medical benefits for employees in Austria.
Healthcare and sick days
Austria’s social insurance covers health insurance that enables employees to receive free medical treatments. Apart from this, employees are covered under accident insurance. Moreover, employees in Austria are entitled to sick days based on the length of their employment: - 6 weeks for one year of employment; 8 weeks for 2-15 years of service; 10 weeks for 16-25 years of employment; 12 weeks for 26+ years of service. Accident insurances provide coverage for occupational illnesses and workplace accidents.
Maternity, paternity, and parental leaves
Austria's maternity benefits are provided over 16 weeks. Expectant mothers are given eight weeks off before the child's due date and eight weeks after the birth. In addition, employees are entitled to two weeks of parental leave, or they can simply opt for reduced working hours until the child is four years of age, subject to the employer’s understanding.
Mothers and fathers qualify for the childcare allowance, ranging from the child's first year until they are three years old.
Currently, Austria’s retirement age is 60 for women and 65 for men. However, the government had decided to adjust the retirement age for both men and women to 65. The public pension system of Austria is a pay-as-you-go (PAYG) program. This system is financed by the employers and currently working employees. To be eligible for the Austria state pension, a citizen must have 180 months of paid contributions, and the larger the contribution, the greater the pension amount.
Employee Benefits for Expatriates
Expats in Austria are not guaranteed compensation and employee benefits, but they are entitled to several employee benefits that they can claim. Some of these benefits are:
- ~Social security number
- ~Maternity leave
- ~Sick leave
- ~Nursing care
- ~Unemployment benefits
- ~Old-Age benefits
- ~Protection from discrimination at work
How are Employee Benefits Taxed in Austria?
The Austrian social insurance scheme includes health, unemployment, accident, and pension plans. This scheme is financed through the contribution of both the employee and the employers. The employee’s contribution amounts to 18.12% of the gross income. In addition, there is a maximum contribution limit of EUR 5,550 per month in regular payments. The rates for these special payments amount to 17.12%, and EUR 11,100 is set as the maximum contribution base for special payments.
The employer’s contribution is around 21.23% and in specific amounts to 20.73%.
Foreign employees file their income tax returns when they have a taxable income of more than EUR 2,000 from a taxable source. In the case of lower income, no tax return filing is required if specific conditions are met, and taxation in another country or state can be proved.
A mandatory 1.53% of the monthly gross salary contributes to the pension fund.
The income tax chart of Austria provides an in-depth review of the minimum and maximum taxable income. The minimum taxable income in Austria is a 25% tax on income between €11,101 to €8,000, and the maximum taxable income is 55% on an income of €1,000,000 and above.
Restrictions for Austria Benefits and Compensation
The biggest restriction for compensation and benefits policy in Austria is the incorporation process. Maintaining proper working conditions and keeping employees satisfied can be an overwhelming and time-consuming job. Plus, you must always stay updated with the rules and regulations of the country you are operating in.
If all this seems too much of a hassle, you can outsource your compensation and benefits policy in Austria to Multiplier. Our experts can handle these hassles, allowing you to focus on administration and business development.
Supplemental Benefits for Employees in Austria
Besides the benefits mentioned above, employee benefits in Austria also cover additional or options benefits such as :
- ~Flexible working hours
- ~Education loans and retraining allowances
- ~1 – 3 days paid leave for bereavement or marriage
- ~Life assurance
- ~Early retirement pensions
- ~Widower’s or widow’s pension
How Can Multiplier Help With Benefits Management in Austria?
Your compensation and benefits package in Austria should be created keeping in mind the needs of your employees. The employer must design and manage all employee benefits in Austria according to its laws and regulations. Since this can often get challenging, many employers partner with third-party service providers to create an industry-standard compensation package in Austria.
Multiplier is a global employment solutions provider that can help you navigate Austria’s laws and regulations. Our locally-based teams of experts will assist and guide you in the local regions and ensure that your company follows the proper rules set by the government of Austria. Thus, you can focus entirely on business growth while we take care of your payroll management, employee onboarding, and much more!
Frequently Asked Questions
What is the minimum wage in Austria?
Austria has no minimum wage; however, as of 2020, the government has stated that the minimum Austrian salary is €1,500.
What are some benefits available to ex-pats in Austria?
Ex-pats are entitled to a social security number, sick leaves, nursing care, pensions, and old-age benefits.
What are the income tax rates in Austria?
The government imposes a 25% tax on incomes between €11,101 to €18,000; 35% tax on €18,001 to €31,000; 42% tax on €31,001 to €60,000; 48% tax on €60,001 to €90,000; 50% tax on €90,001 to €1,000,000; and 55% tax on €1,000,000 and above.