Employment and executives

Freedom of contract exists in Austrian employment law, but it operates inside a thick mandatory frame. Nearly every private-sector employer belongs by law to the Economic Chamber, which means nearly every employment relationship is covered by a sectoral collective agreement — setting minimum salaries, the 13th and 14th salary, working-time detail and annual pay rises. A contract may improve on the collective agreement; it cannot fall below it. This is worth understanding early: Austria has no general statutory minimum wage precisely because collective agreements do that work.

Employees must receive a written statement of their essential terms, and since 2024 that statement is more detailed than it used to be. A trial period of at most one month may be agreed, during which either side can end the relationship without notice. Fixed-term contracts are possible but cannot be chained without objective justification. At executive level, all-in salaries that compensate expected overtime with one figure are standard practice — permissible, provided the total pay covers what the collective agreement would require for the hours actually worked.

Contracts may be drafted in English, and at senior level they usually are. White-collar employees fall under the Salaried Employees Act, which governs notice, sick pay and much else; the once-separate rules for blue-collar workers have largely been aligned with it. For work performed in Austria, the mandatory protections apply even if the parties choose a foreign governing law. How employment sits alongside directorships and shareholdings — most relocating executives combine several roles at once — is mapped on the business and employment hub.

Austrian annual salaries are customarily paid in 14 instalments: twelve monthly salaries plus a holiday payment in summer and a Christmas payment in winter. The two extra instalments — the 13th and 14th salary — are special payments, and within the so-called annual sixth (broadly, one sixth of the year's regular pay) they are taxed at flat rates far below the progressive scale. For an employee on an ordinary salary that means roughly one seventh of annual cash pay is taxed at about 6% instead of up to 55%. The 6% band is capped, however: it covers about EUR 25,000 of special payments a year, which two monthly salaries reach at roughly EUR 190,000 of annual gross pay. Above that the higher flat rates in the table below apply to the excess — on a package of, say, EUR 420,000 the 13th and 14th salaries bear closer to 20% overall, still well below the progressive income tax bands.

Payroll itself is the employer's problem, not the employee's. The employer must register each employee with the health insurance carrier before the first day of work, withholds wage tax and the employee's social security share every month, and remits both. On top of gross salary the employer bears its own social security share and payroll levies — in total roughly 29–30% of gross, of which the social insurance element stops at the annual cap described on the social security page. An employee with only Austrian employment income normally has no filing obligation at all.

A GmbH managing director occupies a special position. Directors can be engaged under a normal employment contract, but a free service contract is common at this level — it sits outside much of labour law, including the Working Time Act, and gives both sides more flexibility on termination and duties. A director who holds a significant stake in the company is treated as self-employed for social insurance and contributes to the SVS scheme rather than through payroll. Executives who direct the business autonomously and whose hours are not measured or fixed in advance are exempt from working-time limits even when they are employees, though holiday and notice protections still apply.

Post-contractual non-competes are enforceable only within narrow bounds: the employee's final monthly salary must exceed EUR 4,620 gross (2026, indexed annually), the restriction may last at most one year, it must be limited to the employer's line of business and it must not unfairly obstruct the employee's advancement. If the employer terminates, it can normally no longer rely on the clause — unless the employee gave culpable cause for the termination, or the employer declares when terminating that it will continue to pay the employee's last salary for the whole restriction period, which is how executive contracts usually keep a covenant alive. A contractual penalty for breach is capped by statute at six times the last net monthly salary, disregarding special payments, and the court may moderate it further; the employer can then claim only that penalty, not performance of the covenant or any further damages. During employment, by contrast, a statutory duty of loyalty already bars competing activity.

Families who employ household staff — housekeepers, drivers, nannies — take on genuine employer duties: registration before the first day of work, payroll withholding and minimum standards under the domestic-workers rules. The living in Austria hub covers the practicalities.