Since the end of the World War II, Austria has achieved high economic growth facilitated by the growth of metallurgical, textiles, and machinery industries. Organic farming has also been on the rise in Austria with an overall share of 22% of its total economy. This makes Austria one of the leading countries for organic farming in Europe. Joining the EU in 1995 ensured that the country also benefited from the huge European market. There was a boom in tourism caused by favorable government policies. According to the World Bank, Austria’s GDP per capita was $386.4 billion making it one of the 14 richest countries in the world. On the other hand, the country has experienced challenges trying to assimilate migrants and strains on labor markets which are caused by the aging population.
The success of the country has been achieved by political stability which has created a positive investment climate. The judiciary is also considered independent, meaning it has the authority to protect individual properties and rights. Corruption in Austria is also relatively rare.
In Austria, the regulations for permanent employment are defined as a full-time permanent employment contract by which two parties (a prospective employee and an employer) engage in an agreement with no specific duration or termination time. Permanent employment contracts can be terminated at any time by giving notice by either party.
In Austria, there are no statutory requirements about the form of an employment contract, with a few exceptions (apprenticeship jobs and several positions within the public sector). An employment contract may be either oral, written, or explicit. If no written contract is used, employees and independent contractors receive a statement of terms and conditions of employment referred to as Dienstzettel at the start of employment. Employees must be given the option to receive the Dienstzettel in either paper or digital format, at the employee's choice.
It must include the names and addresses of both the employer and employee, the start date of employment, the duration of the contract if fixed-term, the notice period and termination date, the primary workplace and any potential reassignments, the employee's job title and responsibilities, the base salary and additional compensation, the payment schedule, the annual leave entitlement, the standard working hours, references to applicable collective agreements and company policies, and the details of the employee's provident fund or pension scheme.
In Austria, temporary work arrangements fall into 2 distinct legal categories that are governed by separate frameworks.
Marginal employment is defined as any work that provides monthly remuneration that does not exceed EUR 551.10. Effective January 1, 2026, this threshold has been frozen and will not be adjusted for inflation. Special payments such as holiday allowances or Christmas bonuses are not included in the calculation.
The Temporary Employment Act allows hiring temporary workers from third parties (temporary agencies) to perform work. For the duration of employment in the employee's company, the agency is considered an employer within the meaning of the employee protection regulations. The agency must inform the employee of all circumstances relevant to compliance with personal occupational safety, in particular working time protection and special personal protection. Employers are also considered to be the employer of the temporary workers within the meaning of the equal treatment regulations and prohibitions of discrimination that apply to comparable employees of the employer.
During probation, an employment contract may be terminated by either party at any time without special reasons and without observing deadlines and dates. The probationary period may not exceed 1 month with the exception of apprenticeships, which can have a probationary period that lasts up to 3 months. A probationary period can only be agreed at the beginning of an employment relationship.
In Austria, regular working hours, as stipulated in the Working Time Act, are 8 hours a day and 40 hours per week. There are a few exceptions where the normal working hours are reduced.
All employees who have performed at least 6 months of service are entitled to annual paid leave of 5 weeks (25 days for those working 5 days a week and 30 days for those working 6 days a week). Those who have more than 25 years of service with an employer have an entitlement to 6 weeks for annual leave. Employees are entitled to their usual wages during annual leave.
The holiday entitlement arises pro rata in the first 6 months of the first year of work. After 6 months of service, the holiday entitlement accrues in full in the first year of work. From the second year of work, the employee is entitled to the entire vacation at the beginning of the working year. Annual leave can be split into 2 parts to allow more flexibility but each part must have a duration of at least 6 working days. The entitlement to annual leave expires after 2 years of accrual.
Employees cannot take compensation in place of their annual leave except when dealing with employment termination prior to exercising their annual leave.
In the event of illness, employees are obliged to inform their employer immediately of their inability to work. If the employee is unable to work after starting work due to illness or accident, without being responsible for this intentionally or through gross negligence, they are entitled to continued payment of wages for 6 weeks. Depending on the length of the employment relationship, the entitlement increases to up to 12 weeks.
An employer may request that an employee provide written medical confirmation of the illness or injury. During the first 3 days of incapacity for work, employees are entitled to continued payment of wages from the employer. No social insurance sickness benefit is payable during this initial period. From the fourth day of incapacity for work, sick pay is granted as a statutory minimum benefit of 50% of the assessment basis for the calendar day. From the 43rd day of an illness associated with incapacity for work, the sickness benefit increases to 60% of the assessment basis for the calendar day. Sickness benefit is generally granted for a period of up to 26 weeks. The entitlement period increases to 52 weeks if the insured person was insured for 6 months within the last 12 months before the occurrence of the sickness.
Generally, maternity leave lasts 16 weeks: 8 weeks can be prior to birth and 8 weeks after. Although the postnatal period is set at 8 weeks, it may be extended to 12 weeks in the case of premature, multiple, or cesarean births. Other than the 8-week prenatal leave, a pregnant emplpyee may receive leave from work if she provides a certificate from a Labor Inspectorate doctor or another medical officer that her (or her child’s) life and health are endangered if she continues to work.
As soon as they become aware of their pregnancy, expectant mothers must notify the employer of this, stating the expected date of birth. In addition, they are obliged to draw the employer's attention to the beginning of the 8-week period within the fourth week before the beginning of the period.
Family time leave is a 1-month (28-31 days) leave and must be taken within 91 days of the birth of the child. The family time bonus is available to natural, adoptive, foster, permanent nursing, and same-sex fathers (including a woman partner of the mother). To be eligible, fathers must be employed, have valid health and pension insurance for at least 182 days prior to applying for the bonus. They must be living as a family unit at the same address. The benefit is paid at EUR 54.87 (Euros) per day, making a total of around EUR 1,700 per month.
The length of termination notice periods that an employer must abide by prior to terminating an employee is generally proportionate to the length of employment, regardless of the nature of the job, white-collar or blue-collar workers. Notice periods may be established within collective agreements.
The notice period for employees in case of termination by their employer increases with seniority:
6 weeks in the first 2 years of service
2 months after 2 years of service
3 months after 5 years of service
4 months after 15 years
5 months after 25 years of service
Employees can terminate their contracts by giving a month's notice. If the employment contract is for the lifetime of the employee or for more than 5 years, an employee may terminate with 6 months of notice after 5 years of service.
New severance pay was introduced for employees whose employment began after January 1, 2003. Employers must pay a severance allowance to employees when an employment contract is terminated. During the employment contract, the employer must pay 1.53% of each employee’s gross salary to a severance payment fund called BV-Kasse. Upon termination, the employee is able to decide to have these funds paid out as a severance (the employee must have worked for 3 years with this employer to have this option) or leave the pay in the fund. If the employee decides to leave it in the fund, then the employer will continue to contribute to the fund on a monthly basis, and, at termination, the employer will have no liability for a severance payment. The employee has six months from the end of the employment relationship to notify the BV-Kasse as to how the severance will be disbursed.
For employees whose employment began before January 1, 2003, the amount of the severance pay depends on the length of the employment relationship and the remuneration due for the last month of employment. Employees are entitled to 2 monthly wages after 3 years of service, 3 monthly wages after 5 years of service, 4 monthly wages after 10 years of service, 6 monthly wages after 15 years of service, 9 monthly wages after 20 years of service, and 1 annual salary after 25 years of service.
If the employee chooses to terminate the contract, is dismissed for reasonable cause, or resigns without just cause, then the capital remains in the fund and continues to be invested. The amount can then be drawn upon once the employee reaches the age of retirement.
Effective January 1, 2026, employees covered by Austria’s old severance system who transition to a partial pension will continue to have their severance calculated based on their pre-reduction working hours, meaning reduced hours under a Teilpension arrangement will not decrease their eventual severance entitlement, while employees under the new severance system remain unaffected.
When an employee leaves a company in Austria, all outstanding amounts owed to them, including their final salary, any prorated bonus payments, and compensation for unused vacation, must be paid at termination. Final pay is processed through the regular payroll system and must be clearly documented in the employee's payroll records and final payslip. Employers are required to withhold wage tax and the employee's share of social insurance contributions before issuing the final payment. Under Austria's current severance system, any severance benefits are paid by a severance fund rather than directly by the employer. Employers may only make additional deductions, such as for salary advances or overpayments, if there is a valid legal basis or the employee has agreed, and they must ensure the employee retains the legally protected minimum amount of pay.
