Employee Benefits in Austria are mainly governed by the General Civil Code (ABGB), individual Acts, some European Union directives and Collective Bargaining Agreements (CBAs), the latter having comprehensive coverage of the Austrian workforce. Foreign companies must comply with every aspect of legislation as it applies to their employees once they have opened a subsidiary in the country, usually in the form of a private limited liability company, a GmbH. Once staff have been onboarded, employers must comply with Austria’s multi-layered legislation that provides safeguards and minimum guarantees for employees, such as paid vacations, working hours, termination, severance and notice periods, sick leave, and maternity allowances and benefits.

It emphasises that foreign companies’ responsibilities go beyond simply complying with Austrian tax and payroll regulations – although these still present a heavy workload. Employers must have a firm grasp of what is guaranteed for their employees to ensure a fruitful working relationship. Stepping out of line on specific compensation and benefit statutes runs the risk of fines, further sanctions and an unhappy workforce. This is where Bradford Jacobs points you in the right direction, drawing on over 20 years of experience as a Professional Employment Organisation (PEO) and Employer of Record (EOR). We deal with the complexities while your staff focus on work and are always under your daily operational control.

What are the Compensation Laws in Austria?

The General Civil Code (ABGB) lays down regulations governing employee benefits and entitlements in Austria. Additionally, individual Acts refer to specific areas of employment such as working hours, paid vacations, overtime and sickness benefit. Legally-binding Collective Bargaining Agreements (CBAs) cover the majority of the workforce. Austria’s membership in the European Union (EU) also affects some elements of legislation procedures, including the General Protection Data Regulation’s (GDPR) relevance to recruitment.

  • Maternity Leave and Benefit: Generally for eight weeks each before and after the birth. In the case of early delivery, the 16 weeks of total leave is adjusted accordingly to provide the full term. Premature, multiple and Caesarean section births entitle the mother to 12 weeks’ post-natal holiday. Full-time employees’ benefits are based on their three months’ salary before the due date and are paid at 100% of earnings.
  • Sick Leave and Benefit: Six weeks of sickness leave on full pay is allowed in the first year of employment under the Sick Pay Act (EFZG). This increases to eight weeks after one year, ten weeks after 15 years and 12 weeks after 25 years. A further four weeks are paid at 50% of the salary, beyond which benefit is from the Association of Austrian Social Insurance Institutions (HVB).
  • Minimum Wages: Minimum wage levels are not applied federally, but social partners and sector-level CBAs set the amount. The monthly limit agreed in 2017 has been in place since 2020 at €1,500 (US$1,495) per month, including bonuses and overtime.
  • Probation Periods: Trial periods can be a maximum of one month, according to the contract, written agreement or CBAs. Either party can terminate without reason during the probation period.
  • Working Hours: Eight hours a day (10 including overtime) and 40 a week (50 including overtime) are limits set by the Working Hours Act (AZG). The Working Time Rest Act (ARG) rules that six hours of non-stop work must include 30 minutes break, continuous or in separate periods, which is unpaid.
  • Overtime: Under AZG regulations, employees can refuse overtime if it takes them above 10 hours daily or 50 hours weekly. Overtime is reimbursed at a minimum of 50% above the usual hourly rate.
  • Notice Periods: Notice periods are set by the Employees Act (AngG) according to the length of service. Up to two years’ service – six weeks’ notice; two years to five years – two months; five years to 15 years – three months; 15 years to 25 years – four months; more than 25 years – five months. Employees must give at least one month’s notice regardless of the length of service.
  • Termination / Severance / Redundancies: Employment can generally be terminated without reason, but works councils must be advised in advance where they are in place. Labour authorities must be involved when five redundancies are planned if employing between 20 and 100, 5% redundancies if using more than 100 and up to 600, and 30 redundancies if using more than 600. Where employment began before 2003, employers contribute 1.53% of the employee’s gross monthly salary to an external company pension fund which provides severance.
  • Paid Vacations: The Holidays Act (UrlG) allows 30 days of paid annual leave for those working a typical six-day week, Monday to Saturday, increased to 36 days after 25 years of service. Those working five days a week receive 25 days of paid leave.

Guarantees and Restrictions on Employee Benefits in Austria

Guaranteed Benefits:

Maternity Leave and Benefit:  It is guaranteed for 16 weeks. Generally, it is eight weeks before and after the due date, but early birth is adjusted accordingly to include the full entitlement. Twelve weeks post-natal applies to premature, multiple or Caesarean section births. Full-time employees’ benefit is assessed on their three monthly payments before the due date and paid at 100% of earnings.

Working Hours and Breaks: The Working Hours Act (AZG) sets maximum daily hours at eight (10 including overtime) or 40 each week (50 including overtime). There must be at least 11 hours between each working day and a minimum of 36 hours of continuous rest in each calendar week, including Sundays. The Act requires a minimum 30 minutes break (unpaid) when working six hours continuously.

Paid Vacations:  Employees working the typical six-day week, Monday till Saturday, are guaranteed 30 days paid annual leave under the Holidays Act (UrlG), increased to 36 days after 25 years’ service. Five-day week workers receive 25 days of paid leave.


Unemployment Benefit: Claimants must have been covered by unemployment insurance for 52 weeks in the previous two years or 26 weeks in the last 12 months for under-25s. They must be available for work and registered with the local office of the Austrian Public Employment Service (Arbeitsmarktservice Österreich, AMS).

Social Security in Austria

Compulsory health coverage through insurance funds covers virtually everyone in paid employment, most self-employed, individuals on unemployment benefits, pensioners and dependents of these groups. Patients may have to pay for private treatment and orthodontic procedures, but their funds can partly reimburse them. Patients must also pay towards hospital stays.

The state health insurance fund, the Österreichische Gesundheitskasse, ÖGK, also covers pension and accident insurance. Individuals are automatically covered once they take up employment, are registered by their employer with the relevant social insurance office, and receive a social insurance number.

Employers contribute the equivalent of 21.23% of employees’ salaries from payroll, while employees contribute 18.12% to various categories assessed up to a maximum wage of €5,500 (US$5,490) per month.


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