Employer of Record (EOR) & PEO Services in Austria: 2026 Hiring Guide

Expanding into Austria usually means choosing between two fast paths: an Employer of Record (EOR) that hires your team on your behalf under its own Austrian entity, or a Professional Employer Organization (PEO) model that co-employs staff alongside a local partner. For most companies testing the Austrian market or hiring a handful of specialists in Vienna, Graz, or Linz, an EOR is the faster route — you can have someone legally employed and paid within days, without registering a GmbH, opening an Austrian payroll account, or navigating the country’s dense web of sector-level collective agreements on your own.

This guide covers what it actually costs to employ someone in Austria in 2026, how EOR and PEO compare, what trips up employers on probation periods and severance, and how the Red-White-Red Card and EU Blue Card work for non-EU hires.

EOR vs PEO in Austria: Which Fits Your Hiring Plan

An Employer of Record becomes the legal employer of your Austrian hire. It issues the Dienstzettel (the written statement of employment terms Austrian law requires), runs payroll through its own registered entity, remits social security and wage tax to the correct Austrian authorities, and carries the compliance liability if something is done incorrectly. You direct the person’s day-to-day work; the EOR handles the employment relationship itself.

A PEO arrangement is a co-employment model: you and the PEO share employer responsibilities, which usually still requires you to hold some form of local registration or a more limited oversight structure. In markets like Austria, where there’s no simplified “PEO-only” registration pathway, most international companies default to EOR rather than PEO specifically because it removes the need for any Austrian legal presence at all.

The practical rule of thumb: use EOR if you want to hire in Austria with zero local entity and be operational within days; consider a direct GmbH only once you have enough headcount, physical presence, or local revenue to justify the cost and lead time of incorporation.

Timeline to Hire in Austria: EOR vs. a GmbH

Hiring through an EOR in Austria typically takes a few business days from signed offer to a compliant start date — enough time to draft the Dienstzettel, register the employee with the Austrian health insurance fund (ÖGK), and set up payroll. Incorporating a GmbH, by comparison, involves notarizing the articles of association, depositing minimum share capital, registering with the Firmenbuch (commercial register), obtaining a tax number, and separately registering as an employer with social security — a process that commonly takes four to eight weeks even when nothing goes wrong, and considerably longer if the first attempt is delayed by missing paperwork.

Employer Payroll Costs in Austria (2026)

Austria’s statutory employer on-costs are higher than many Western European markets, and they’re made up of several separate contributions rather than one flat payroll tax. On top of gross salary, employers in 2026 should budget for roughly 29–30% in mandatory employer contributions, built from:

• Social security (ASVG): about 20.4% employer share, split across pension insurance (12.55%), health insurance (3.78%), unemployment insurance (2.95%), and accident insurance (1.10%) — contributions are capped at a monthly social security ceiling of €6,930 in 2026.
• Dienstgeberbeitrag (DB) and DZ surcharge: roughly 3.7–3.9% combined, funding the family burden equalization fund.
• Kommunalsteuer: a flat 3% municipal tax on gross payroll.
• Abfertigung Neu contribution: 1.53% of gross salary paid monthly into the employee’s Mitarbeitervorsorgekasse (severance/pension fund) from the second month of employment — this applies to essentially all contracts signed since 2003 and effectively replaces lump-sum severance liability with an ongoing funded contribution.
• Housing promotion contribution (Wohnbauförderungsbeitrag): around 0.5%, varying slightly by province.

On income tax, Austria indexes its brackets annually for “cold progression.” For 2026, the employee-side brackets run from 0% up to €13,539 of annual income, 20% up to €21,992, 30% up to €36,458, 40% up to €70,365, 48% up to €104,859, 50% up to €1,000,000, and 55% above that (the top rate is a temporary measure currently legislated through 2029). None of this is deducted from the employer’s cost — it’s withheld from the employee’s gross pay — but it directly affects net-pay conversations with candidates, since Austria’s effective tax burden surprises many first-time hiring managers used to flatter systems elsewhere.

None of the above is tax or legal advice — exact figures vary by sector, collective agreement, and province, and should be confirmed for the specific role before finalizing an offer.

Austria Has No National Minimum Wage — Here’s What That Means

Unlike most EU member states, Austria has never legislated a single statutory minimum wage. Instead, pay floors are set through roughly 450 sector-level collective bargaining agreements (Kollektivverträge), negotiated between trade unions and the Austrian Federal Economic Chamber (WKO), whose membership is mandatory for nearly every employer. In practice this means close to the entire workforce is covered by some wage floor — but the actual number depends entirely on the employee’s industry, role, and sometimes region, and can range from roughly €1,700 to well over €2,500 a month for comparable full-time roles in different sectors.

For an EOR hiring on your behalf, this means every offer has to be checked against the correct collective agreement for that role’s industry — not against a single national figure — which is one of the easier compliance steps to get wrong without local expertise.

Probation, Notice, and Severance Rules

Austrian employment contracts typically include a probationary period (Probezeit) of up to one month (three months for apprentices), during which either party can end the relationship immediately, without notice and without giving a reason.

After probation, white-collar employees (Angestellte) are generally entitled to employer-given notice of six weeks to five months depending on length of service, extending at two, five, 15, and 25 years of tenure; blue-collar employees typically follow shorter, collective-agreement-defined notice periods. Termination without proper notice or valid cause can expose an employer to a claim, so notice calculations should always be checked against both statute and the relevant collective agreement.

Severance works differently depending on when the employment relationship began. Contracts starting from 2003 onward fall under Abfertigung Neu: the employer pays 1.53% of gross salary every month into the employee’s Mitarbeitervorsorgekasse starting in month two, and the employee can withdraw the accumulated fund (or roll it into a new employer’s fund) after certain qualifying events, typically once three years of contributions have accrued. This replaces the older lump-sum model (Abfertigung Alt, still relevant only for the dwindling number of pre-2003 contracts), which required a direct payment of two to twelve months’ salary depending on tenure at termination.

Work Permits and Visas for Non-EU Hires

EU, EEA, and Swiss citizens can work in Austria without a permit. For everyone else, the primary route is the points-based Red-White-Red Card (Rot-Weiß-Rot – Karte), which scores candidates on qualifications, professional experience, language skills, and age across several categories, including Very Highly Qualified Workers, Skilled Workers in Shortage Occupations, and Other Key Workers. The “Other Key Workers” category requires a 2026 minimum gross monthly salary of roughly €3,465, while higher-paid “Other Key Workers” exempt from the points test need around €8,316 a month.

Austria also issues the EU Blue Card for highly qualified non-EU professionals with a university degree and a binding job offer, requiring a 2026 gross annual salary of approximately €55,678 (paid across the customary 14 payments common in Austria). Both routes require employer sponsorship and typically take several weeks to a few months to process, so visa timelines should be planned well ahead of a target start date — an area where an EOR’s existing registrations and local HR experience generally move faster than a newly incorporated entity handling its first sponsorship case.

Statutory Leave, Holidays, and Working Hours

The standard working week in Austria is 40 hours (up to 50 with overtime), though many collective agreements set a shorter norm, commonly 38.5 hours. Full-time employees are entitled to a minimum of 25 working days of paid annual leave, rising to 30 days after 25 years of service with the same employer. Austria also observes 13 public holidays nationally — more than most EU countries — including Epiphany, Corpus Christi, Assumption Day, and Austrian National Day, none of which count against the statutory leave allowance.

Parental protections are strict: pregnant employees and new mothers are protected from dismissal from the start of pregnancy until four months after giving birth (extending further during part-time return-to-work arrangements), and dismissal during that window generally requires a labor court’s approval.

Employment Contracts and Worker Classification

Austrian law expects a written employment record (Dienstzettel) to be issued as soon as someone starts work, setting out the essential terms of the relationship — role, pay, working hours, notice entitlements, and applicable collective agreement. Even without this document, the underlying employment contract remains legally binding, and the mandatory statutory terms still apply by default.

Austria also draws a firm line between employees, freelancers (freie Dienstnehmer), and genuinely independent contractors (Werkvertragsnehmer), and the distinction isn’t just paperwork: misclassifying someone who works under the employer’s direction, on fixed hours, using company equipment, as a “freelancer” to avoid payroll taxes and social security is one of the more commonly audited compliance risks in Austria. An EOR structures the relationship correctly from day one, which matters in a market where reclassification findings can trigger retroactive social security contributions and penalties.

Common Mistakes When Hiring in Austria

The most frequent missteps employers make when hiring in Austria without local support: assuming a single national minimum wage applies instead of checking the relevant collective agreement; underbudgeting payroll by quoting only the ~20% ASVG social security rate and forgetting Kommunalsteuer, DB/DZ, and the Abfertigung Neu contribution; treating the one-month probation period as negotiable upward without a specific legal basis; and starting Red-White-Red Card or EU Blue Card paperwork only after an offer has already been accepted, which can delay a start date by months. Partnering with an HR compliance specialist or EOR familiar with Austria’s collective-bargaining landscape avoids most of these in the first offer letter.

FAQ: Hiring in Austria

Do I need a local entity to hire employees in Austria?
No. An Employer of Record can legally employ staff on your behalf in Austria without you registering a GmbH or any other local entity, letting you hire within days rather than the four-to-eight weeks incorporation typically takes.

How much does it cost to employ someone in Austria?
Beyond gross salary, budget roughly 29–30% in mandatory employer contributions — social security (~20.4%), the DB/DZ family-fund surcharge (~3.7–3.9%), Kommunalsteuer (3%), the Abfertigung Neu severance contribution (1.53%), and a small housing-fund levy (~0.5%).

Is there a minimum wage in Austria?
Not a single statutory one. Pay floors are set by roughly 450 sector-specific collective bargaining agreements, so the applicable minimum depends on the employee’s industry and role rather than one national figure.

What’s the standard probation period in Austria?
Up to one month for most employees (three months for apprentices), during which either party can end the employment immediately without notice or cause.

Can I sponsor a non-EU employee to work in Austria?
Yes, through the points-based Red-White-Red Card or the EU Blue Card for highly qualified professionals meeting the 2026 salary thresholds, though both require employer sponsorship and several weeks to months of processing time.

Hiring in Austria doesn’t have to mean navigating collective agreements, social security registrations, and visa sponsorship on your own. Talk to WeHireGlobally about employing your next Austrian hire compliantly — often within days rather than months. For context on how Austria compares to its EU neighbors, see our guides to hiring in Germany, the Czech Republic, and Italy, or read WeHireGlobally’s LaborPedia overview of Austrian employment law for additional background.