Like most members of the European Union, Austria has a comprehensive employment policy ensuring broad rights, protection, and benefits for all employees in the country. The labor code of Austria is well-structured, easy to follow, and combines Austrian and European Union legislation elements. This results in the formulation of unique rules, such as collective bargaining agreements and legally binding contracts (oral or written) representing the mutual agreement between employers and employees.
As a country that prides itself on ensuring a solid work-life balance for its employees and residents, the Austrian labor law has many public holidays and holiday benefits.
The main acts and legislations that make up the Austria law include:
- The white-collar workers’ statute
- Work statute on working time
- Statute on paid vacation
- Labor protection act
- Hours of rest act
Apart from these statutory regulations, employment contracts are governed by collective agreements, as mentioned above. Some of these are legally binding oral agreements and can cover employees who are not a part of a trade union.
Who is Covered by the Employment Act?
The Austrian labor law covers all private-sector employees, dependent workers, foreign nationals, and government employees from Austria and the European Union. Moreover, the labor code of Austria also has extensive provisions for expats.
Under the Austrian labor law, a foreign national does not belong to any country included in the European Economic Area. This covers the EU nations along with Iceland, Liechtenstein, and Norway. An employment or work permit or Red-White-Red card from the regional employment office is essential for a person to work in Austria. These permits are valid for one year.
The labor regulations in Austria also have various provisions for foreign employees posted in Austria by their employers for a temporary work period. These provisions include their right to minimum wage and adherence to the working hours in Austria labor law.
However, some rules of the labor code of Austria do not apply to management-level employees in Austria. Management level employees handle managerial responsibilities within the company, such as hiring, terminating, training, etc.
The Austrian labor laws also cover all type of employment, which includes:
- Full-time employees
- Part-time employees
- Independent contractors and freelancers
In Austria, written employment contracts or appointment letters are not mandated by Austrian labor law. This means that employees can enter into employment based on an oral agreement. As per the labor code of Austria, collective verbal agreements are enough to establish the minimum working conditions that balance out the interests of both parties.
Austria labor law mandates that an employer cannot change the terms of the oral employment agreement unilaterally unless both parties have explicitly agreed upon that at the time of the contract. Moreover, the labor act rules in Austria also state that when an employer wishes to alter the employment terms but cannot agree with the employee, termination of employment with altered conditions is an option.
This means that the employee’s current contract is terminated, and a new agreement with the changed terms and conditions is drafted. However, their employment is terminated if the employee does not accept this new contract.
Alternatively, two types of employment contracts exist in Austria, which includes:
- Fixed-term contract: A fixed-term contract is when an employment contract has a fixed start and end date. This contract is commonly offered to an independent contractor or a part-time employee.
- Indefinite contract: An indefinite employment contract only has a fixed start date. Most full-time employees are offered an indefinite contract.
Key Provisions of the Act
The key provisions under Austria’s labor code extensively cover wages and salaries, working hours, benefits and leaves, rights and protection, and termination laws. Read on for more details:
Wages and salaries
Surprisingly, the Austrian labor law provides no country-wide minimum wage. Instead, industry-specific collective agreements decide the minimum salaries of employees. When there is no applicable collective agreement, the employer and employee mutually agree on the minimum salary via an employment contract.
Under the labor code of Austria, an employee earns approximately €48,000 per annum on average. According to most surveys, the highest salaries are in finance, law, management, and IT. However, banking, water supply, energy, and oil industries also pay well.
Interestingly, under the Austrian labor law, an employee receives a monthly salary of 14 times yearly.
Under the labor code of Austria, a standard 8-hour workday with lunch breaks is provided by law. In most countries, the standard working hours are from 9 am to 5 pm. However, Austrians sometimes choose to start and end their day earlier. Moreover, the labor regulations in Austria set a limit of 48 hours for a working week and detailed provisions for overtime, holidays, and remuneration for weekend work. However, these provisions are subject to change based on the applicable collective bargaining agreements.
The social security system in Austria
The social security system in Austria is a highly beneficial and contribution-based system supporting gainfully-employed employees and their dependents. It is overseen by the Federal Ministry of Labor, Social Affairs, and Protection in Austria. This social security covers:
- Parental benefits
- Benefits for disabled workers, accident-affected workers, and survivors.
Under amendments to the Austria labor law that came into effect in January 2020, the contribution of the employees and the employers are 18.12% and 21.32% of the gross salary, respectively.
Paid and unpaid leave under the Austria Labor Law
Holiday pay in Austria
Under the labor code of Austria, employees enjoy one of the world’s most generous leave policies. Every employee is entitled to 25 days of annual paid holiday. This number increases to 30 for employees who have been in the service for over 25 years. Austria also has 13 public holidays, which are paid leaves for employees. The labor act rules in Austria further state that employees must receive their holiday remunerations before starting the holiday. In addition, employees who work beyond normal hours, such as night work or weekend work, can avail of compensatory annual leave.
Parental rights and maternity & paternity leave in Austria
The labor code of Austria upholds the parental rights of employees and prioritizes the health and recovery of the mother. Under labor regulations, pregnant women cannot work eight weeks before the due date, and mothers are not allowed to work eight weeks after giving birth. In cases where the woman has a cesarean, premature delivery, or multiple babies, the post-delivery leave is extended to 12 weeks.
Moreover, the Austrian labor law protects employees from termination or dismissal during the two-year shared parental leave in Austria and up to 4 weeks after this leave period ends. In terms of cash benefits, parents can either choose a flat-rate scheme where mothers are paid apart from their income or a different scheme where they receive benefits on their income for up to a year after childbirth. This benefit is available only to parents who reside together in Austria.
Thus, offering maternity leave in Austria is important. Keeping in tune with this, working women in Austria receive a cash benefit. Employees insured under the mandatory social insurance system and working for three months or more in a company receive 100% of their average pay during maternity leave, regardless of their nationality or residence. Working fathers are also entitled to one month of unpaid shared paternity leave in Austria as family time.
The labor code of Austria provides for statutory sick pay entitled to employees absent from work due to health concerns. This sick pay can cover the employee’s full salary for 6 to 12 weeks, which covers half pay for up to 4 weeks. Additionally, employees who are ill even after this period are entitled to a sickness benefit equal to 50% of their pay from their employers as part of the mandatory social insurance system. The benefit amount increases to 75% of the pay in the case of dependents.
There are no legal rules or provisions governing unpaid holidays under the Austrian labor law. However, the two parties can mutually agree on the terms of unpaid holidays in the verbal employment contract. Since 2020, the labor code of Austria has incorporated a provision that now allows unpaid holidays or part-time work without the employer’s consent if the employee has sick dependents to care for. However, this is only applicable when the employer has more than five employees working in the company and the employee taking the leave has worked for three months or more. Further, the labor act rules in Austria account for care leave allowance for the employee, funded by the state.
Worker rights, protection from discrimination, and health and safety at the workplace
Austria has adopted and adheres to the 1965 UN Convention on the Elimination of All Forms of Racial Discrimination. As such, Austria boasts of strong anti-discrimination legislation as part of the Austrian labor law to ensure that the constitutional provision of equality is upheld. Furthermore, criminal protection from hate crimes has also been more robust over the past decade.
Austria’s efforts to effectively detect and curb cyber hate crimes and support the victims are particularly commendable. Further, Austria’s 2017 Roma strategy to combat antiziganism, the Integration Act, which facilitates the integration of expats and immigrants into the nation, and the labor market also shows the labor code of Austria’s commitment to ensuring equal and fair employment rights and opportunities to all.
Austria’s Safety and Protection of Health at Work act makes employers responsible for ensuring high safety standards and implementing preemptive health and safety rules at work. If needed, the employer must consult with a health and safety expert while the Labor Inspectorate oversees this entire process for compliance.
Termination of an employment contract in Austria
There are four ways in which termination of an employment contract happens under the Austrian labor law:
- Dismissal, wherein an employer must provide a good reason for dismissing the employee. This happens verbally or in writing and with immediate effect. The notice period is six weeks and two weeks for white-collar and blue-collar workers. In case of unjust dismissal, the employee can challenge it or complain to the labor and social security court.
- Voluntary exit, wherein an employee resigns on their own accord, having given notice to the employer. The notice period can range from 6 weeks to 3 months depending upon the duration of employment. Upon resignation, the labor code of Austria mandates that the employer give the departing employee authorized documents on salary statement, employment certificate, confirmation of work, final settlement, etc.
- Redundancy, wherein any private sector employee who has contributed to their fund for over three years can ask for severance upon termination by the employer, except for cases of voluntary resignation or termination due to wrongful behavior.
- Retirement, where a male employee has reached the age of 65, and a female employee at 60 can retire with a pension. The employee must contribute to the fund for a minimum of 15 years to get the pension. The Austrian labor law states that employees working beyond their stipulated retirement age must receive a bonus.
Several penalties exist in the Austrian labor law for employers to pay in case of non-compliance with any of the key provisions of the labor code. For example, if the employer fails to abide by the minimum wage as decided in the employment contract, the employer must pay the penalty. Similarly, if an employer fails to keep appropriate payment records or is found to be discriminating based on age, race, or gender, heavy penalties follow.
Compliance Strategies for Employers
In Austria, employers must strictly adhere to the country’s laws and regulations. Failing to do so incurs heavy fines and penalties. Here are some ways in which employers can ensure better compliance:
- Hiring a Compliance Manager with the sole responsibility of effectively managing employees and human resources and ensuring that all the statutory laws and rules of the collective agreement of their employment are complied with.
- Outsourcing to a firm that specializes in ensuring compliance
How Can Multiplier Help?
Hiring from competitive labor markets such as Austria can be relatively complex. Therefore, outsourcing compliance tasks to a global PEO service is one of the best approaches for your growing business.
We will help your company be compliant with all tenets of the Austrian labor laws, draft and manage verbal or written contracts, build effective benefit schemes for employee retention, payroll management, and much more.
Multiplier can be your one-stop solution for all HR needs in Austria!