Austria Employment & Payroll Guide: Employment Laws, Payroll & Taxes
Key Law Terms Overview in Austria
Employment Act
Labor Law in Austria – Overview
In Austria, there isn’t a single unified “Labor Act.” Instead, employment and labor relations are governed by a framework of laws, regulations, and collective agreements. The most important of these include:
1. Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch – ABGB)
The ABGB contains general contract law, including fundamental rules on employment contracts.
It sets out the basic legal framework for employment relationships, rights, and obligations of employers and employees (e.g., contract formation, duties, termination).
2. Working Hours Act (Arbeitszeitgesetz – AZG)
Regulates working hours, rest periods, overtime, night work, breaks, and Sundays/public holidays.
Sets maximum weekly working time (generally 8 hours/day, 40 hours/week) and conditions for overtime pay or compensatory time off.
3. Paid Leave Act (Urlaubsrechtsgesetz)
Governs annual paid leave entitlements.
Employees generally accrue 5 weeks (25 days) of paid vacation per year (longer with seniority).
Includes rules on vacation pay and carry-over.
4. Termination Protection & Notice
Unlike some EU countries, Austria does not have a strict statutory termination protection regime for all employees — but there are specific rules:
Notice Periods
Section 20 of the Employment Contract Law (Angestelltengesetz – AngG) applies to white-collar employees (salaried staff) and sets statutory notice periods.
Notice periods depend on length of service, typically from 6 weeks to 5 months (longer for longer tenure), unless shorter periods are agreed in writing.
Unjustified Dismissal/Severance
For blue-collar workers, termination protection varies depending on collective agreements.
In many cases, if a dismissal is considered unfair, courts can award severance or compensation.
5. Employment Contract Law (Angestelltengesetz – AngG)
This is a central piece of Austrian labor law for salaried employees:
Applies to white-collar employees whose monthly salary exceeds a certain threshold.
Regulates:
Notice periods
Severance pay (Abfertigung alt for older employees)
Work post-termination obligations
Non-competition clauses
Term contract rules
It provides mandatory protections that cannot be overridden to the disadvantage of employees.
6. Severance Pay (Abfertigung)
There are two systems:
Older System (Abfertigung ALT)
Applies to employment contracts started before January 1, 2003 (or continued under legacy rules).
Employers must pay severance upon termination if certain conditions are met (length of service, termination type).
New System (Abfertigung NEU)
Applies to contracts from Jan 1, 2003 onward (or opted in voluntarily).
Employees accumulate 1.53% of monthly salary per month into a special employee provision fund managed by external funds (e.g., BAV).
Employees can also draw on their accumulated balance in defined circumstances (termination, unemployment, specific life events).
7. Minimum Wage
Austria does not have a statutory national minimum wage.
Minimum wages are generally set through sectoral collective bargaining agreements (Kollektivverträge) for most industries.
8. Collective Agreements (Kollektivverträge)
Austrian labor law heavily relies on collective agreements negotiated between unions and employer associations.
These agreements often regulate:
Wages and salary levels
Working time rules
Paid leave
Overtime and supplements
Termination conditions
Many employees are covered by collective agreements even if not union members.
9. Sick Leave and Health Insurance
Employees are entitled to continued payment of wages in case of sickness (Lohnfortzahlung), according to statutory rules and collective agreements.
Health insurance and social security contributions are mandatory for employees and employers.
10. Maternity / Parental Leave
Pregnant employees are entitled to:
8 weeks of maternity leave before birth
8 weeks after birth
Parental leave and childcare leave are also regulated, with the option of shared parental leave.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
Income Tax Act
Individual – Taxes on personal income
Last reviewed – 11 July 2025
All individuals resident in Austria are subject to Austrian income tax on their worldwide income, including income from trade or business, profession, employment, investments, and property. Non-residents are taxed on income from certain sources in Austria only. Non-residents are subject to income tax on Austrian-source income at normal rates (including a fictitious income increase of EUR 10,888).
Personal income tax rates
| Income (EUR) | Tax rate (%) |
| 13,308 and below | 0 |
| 13,308 to 21,617 | 20 |
| 21,617 to 35,836 | 30 |
| 35,836 to 69,166 | 40 |
| 69,166 to 103,072 | 48 |
| 103,072 to 1,000,000 | 50 |
| above 1,000,000 | 55 |
Payroll withholding tax (WHT) examples
Assuming Austrian social security applies, wage tax and social security contributions on current salary are withheld as follows:
| 2025 (EUR) | |||
| Annual taxable salary | Monthly salary (paid 14 times) | Pre-tax monthly social security withholding | Monthly wage tax withholding |
| 29,000 | 2,071.43 | 313.20 | 87.06 |
| 36,000 | 2,571.43 | 464.66 | 186.21 |
| 54,000 | 3,857.14 | 696.99 | 518.50 |
| 76,000 | 5,428.57 | 980.94 | 1,033.49 |
- Individuals for whom employment income subject to wage tax is the only source of income are not obligated to file income tax returns. However, such individuals may obtain a partial refund of taxes by filing an income tax return where they have incurred deductible business or special expenses or did not have a constant salary for 12 months.
- A sole earner credit can be applied as follows: If a married couple with a single income has one child and is entitled to the family allowance for more than six months, the monthly reduction amount is EUR 50.08, with two children it is EUR 67.75, and it increases for the third and each further child by EUR 22.33. For married couples without children, the sole earner credit is not applicable.
- Tax rates applicable to monthly salaries are based on the above-listed income tax rates.
- The 13th- and 14th-month salaries (‘special payments’) are subject to social security deductions (see Social security contributions in the Other taxes section for more information). The first EUR 620 is tax exempt; from the remaining amount, tax is withheld at a graduated rate between 6% and 55% (see Employment income in the Income determination section for more information).
Local income taxes
No local income taxes are payable in Austria.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
Pension Act
General Information
As with all payments under pension insurance, you must submit the relevant application to start drawing your old-age pension. Your pension will not be paid automatically. Pension applications must be submitted to the pension insurance institution.
Individuals born before 1 January 1955 are not subject to pension harmonisation (with the exception of those entitled to the flexible retirement scheme or retirement scheme for heavy labourers). In some cases, these individuals may benefit from more favourable provisions than those set out in the Allgemeinen Pensionsgesetzes (APG).
Flexible retirement schemes are not relevant for women born before 1955, as the standard retirement age for these women is still 60.
Affected Individuals
Individuals born before 1 January 1955
Requirements
To be eligible for an old-age pension, you must have:
Reached the standard retirement age
Completed the necessary qualifying period
Pension insurance benefits can only be paid out upon application. Pension applications must be submitted to the relevant authority.
Standard retirement age:
Women: 60
Men: 65
Qualifying period:
180 months (15 years) of being insured within the last 360 calendar months (30 years); or
180 months (15 years) of contributions under statutory or voluntary insurance, regardless of when these were accumulated; or
300 months (25 years) of being insured up until the pension effective date
Advice
The term “insurance periods” includes both periods in which contributions were paid (contribution periods) and credited insurance contribution periods. Credited periods are those in which no contributions were paid but are still counted as insurance periods (e.g., periods spent raising children).
Deadlines
Applications must be submitted by the end of the last month before retirement at the latest.
Competent Authority
The pension insurance institution is responsible for calculating and paying out the pension.
Only the institution where the most insurance months were accumulated in the last 15 years before the pension effective date is competent.
This institution applies the provisions relevant to it; periods with other institutions will be counted as if they were with the competent institution.
Procedure
Submitting an application is mandatory to initiate the pension determination procedure.
A separate application form is provided, but an informal written letter is also considered a valid application. The formal form can be submitted afterward.
Required Documents
The pension insurance institution will advise which documents are needed.
Costs and Fees
There are no charges payable for the application or pension determination.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice.
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Regulation Updates in Austria
Discover the latest employment and compliance updates in Austria — helping you stay ahead in a changing regulatory landscape.
Asylum and Migration Pact Adaptation Act (AMPAG)
What it is: The Asylum and Migration Pact Adaptation Act (AMPAG) has been adopted and transfers family reunification into the residence/quotas framework while implementing EU rules on combined residence-and-work authorisations, creating employer-facing changes to work permits.
What it changes: The policy integrates family reunification into the residence/quotas system and introduces EU-aligned combined residence-and-work authorisations, affecting how work permits are issued for employers to be aligned with these new rules.
Who is affected:
- Workers or employers explicitly mentioned or clearly implied by the policy summary.
What employers should do:
- Prepare for changes to work permits by aligning processes with the new combined residence-and-work authorisations.
- Review current staff permits and planning to accommodate the updated residence/quotas framework.
Notes: Effective month: 2026-05. Manual verification recommended.