Transitioning from an EOR to direct hires in Austria presents unique challenges, from navigating strict labor laws to ensuring compliance with collective agreements.
Many companies struggle with complexities such as payroll, benefits, and cultural nuances during this shift, especially when relying too heavily on an EOR, which can only offer temporary relief rather than a sustainable solution.
For these reasons, EOR is not a good choice at all for any long-term operations, and companies using it are risking insufficient compliance, which leads to various fines and penalties.
This article provides a clear roadmap to smoothly transition away from EOR dependency and avoid costly mistakes. You’ll learn the essential steps to maintain legal compliance, retain top talent, and strengthen your long-term local employer presence.
With that in mind, let’s look at how to manage employee transfers, statutory obligations like 13th and 14th-month salaries, and integrate properly into Austrian workplace culture for long-term success.
Understanding the Essentials of Hiring in Austria with an EOR
Hiring in Austria presents unique challenges due to complex labor laws and strict compliance requirements. Without local expertise, businesses risk penalties and disputes, and many turn to an EOR as a quick fix.
However, while an EOR handles administrative tasks like payroll and social security, it remains a short-term workaround. It does not eliminate the deeper complexities of Austrian labor law; it simply shields you from them temporarily. Over-reliance on an EOR often delays the inevitable: building proper internal capacity or establishing a compliant local structure.
That said, there is a huge risk of compliance failures, as over-reliance on EOR, especially in the long run, creates more compliance risks, making it a terrible choice for companies.
Let’s dive into the details.
What Is an Employer of Record in Austria?
An Employer of Record (EOR) legally employs your staff in Austria on your behalf and manages payroll, taxes, and statutory benefits. While this may seem convenient, the trade-off is limited control, reduced employer visibility, and long-term cost inefficiency.
You retain operational oversight, but the EOR owns the employment relationship, which can weaken your employer brand and complicate long-term workforce planning.
Navigating Austrian Labor Law Complexities
Austrian labor laws require adherence to Collective Bargaining Agreements (CBAs), which dictate industry-specific wages and working conditions. CBAs cover 95% of employees, making them unavoidable for compliant hiring.
Mandatory 13th and 14th-month salaries and high social security contributions must be administered with precision. Although an EOR applies these rules, companies often discover that this expertise does not offset the long-term disadvantages:
- Layered service fees
- Lack of full contract control
- Inability to customize benefits competitively
EORs help avoid early errors, but they do not eliminate the need for proper internal HR and legal structures over time.
Core Responsibilities Handled by an Austrian EOR
An EOR typically handles:
- German-language compliant onboarding
- Monthly payroll and tax withholdings
- Mandatory 13th and 14th-month payments
- Health, pension, and accident insurance contributions
- Leave tracking and parental leave management
- Termination management under strict regulations
- GKK social security registrations
- Work permit processing for non-EU nationals
This provides peace of mind initially, but the model becomes costly and restrictive as your team grows and your commitment to Austria deepens.
Comparing EOR Solutions to Direct Hires in Austria
The Case for Starting with an EOR
EOR solutions provide speed and low upfront investment, making them a reasonable option for:
- Testing the Austrian market
- Hiring 1–5 employees quickly
- Avoiding immediate legal setup costs
- Quick onboarding: 2–10 business days
- Minimal upfront investment: No office space or legal registration
- Expert compliance: Manages complex contributions and filings
- Useful for temporary market exploration
However, beyond 10–15 employees, EOR fees typically increase sharply, often exceeding €500 per employee monthly. And because employment contracts list the EOR as employer, your brand visibility weakens, affecting recruitment and retention.
Most importantly: EOR is structurally unsuited for long-term operations or market presence in Austria.
When Setting Up a Legal Entity Makes Sense
Establishing a GmbH becomes the clear choice for companies seeking real, long-term success in Austria. Setup costs (€5,000–€10,000) quickly pay off by eliminating ongoing EOR fees and enabling:
- Full brand control
- Higher talent attraction
- Customized benefits
- Stronger employee loyalty
- Long-term operational efficiency
Employers can manage local obligations directly and build internal expertise, something an EOR model cannot offer or substitute.
EOR vs Direct Hire: A Side-by-Side Comparison
| Feature | Employer of Record (EOR) | Direct Hire (Local Entity) |
| Time to Onboard First Employee | 2–10 days | 4–12 months |
| Initial Setup Cost | Low | High |
| Compliance Risk | Outsourced, but limited transparency | Fully controlled, predictable |
| Brand Control | Weak (EOR name on contract) | Full |
| Long-term Scalability | Becomes very expensive | Highly cost-effective |
| Operational Control | Limited | Full, direct |
EOR fits early-stage hiring only, but for sustained growth, direct hiring consistently outperforms EOR financially, strategically, and culturally.
The Strategic Transition From EOR to Direct Hires in Austria
Identifying the Right Time to Transition
Most companies outgrow their EOR between 5–10 employees. At this point:
- Fees outweigh benefits
- Brand control becomes essential
- Internal HR needs increase
- Local compliance becomes predictable
Delaying the transition simply prolongs costs and dependency on a third party.
Key Steps for a Smooth Transition Process
- Strategic Planning and Legal Consultation
Work with Austrian experts to plan your structure and ensure your GmbH meets regulatory standards.
- Establish Your Austrian Legal Entity
Register your GmbH with Firmenbuch, open a bank account, and complete tax registrations. This takes 4–6 weeks.
- Negotiate the Employee Transfer
Terminate EOR contracts and reissue direct employment agreements without gaps in service or benefits.
- Communicate Transparently with Employees
Reassure employees that direct hiring enhances stability, career growth, and employer identity.
- Finalize the Handover
Transfer payroll history, records, and leave balances while observing Austrian data protection requirements.
Navigating Austrian Work Culture and Compliance for Long-Term Success
Austrian workplace culture is structured, formal, and predictable, making direct hiring far more effective for building trust and long-term relationships than working through an EOR intermediary.
Respect for hierarchy, punctuality, and well-defined roles is essential. The Betriebsrat (works council) plays a major role in larger companies, and maintaining direct relationships with them, not via an EOR, significantly strengthens organizational integrity.
Ensuring Ongoing HR Compliance
Compliance in Austria is not just legal, it is cultural. Maintaining direct employer accountability improves trust with employees, the Betriebsrat, and regulators.
An EOR may help during early market testing, but companies seeking long-term stability inevitably shift to direct hiring for:
- Greater control
- Lower costs
- Stronger brand identity
- Better employee relationships
Direct hiring is the only path that aligns with Austria’s structured labor environment and long-term growth expectations.
Frequently Asked Questions (FAQ)
What is an Employer of Record (EOR) in Austria?
An Employer of Record (EOR) in Austria is a third-party service that acts as the legal employer for your staff. This means the EOR handles all administrative and compliance responsibilities, such as payroll, taxes, social security contributions, and adherence to Austrian labor laws.
By using an EOR, your company can hire employees in Austria without establishing a local legal entity, which simplifies the process significantly. This approach allows you to focus on managing your team while the EOR ensures all legal requirements are met, reducing risks and saving time.
Which jobs are in high demand in Austria?
Currently, high-demand roles in Austria include IT specialists, software developers, engineers (particularly in mechanical and electrical fields), healthcare professionals like nurses and doctors, and skilled trades such as electricians and plumbers. The technology sector is growing rapidly, especially in Vienna, while industries like renewable energy and logistics also face significant talent shortages.
These sectors often prioritize candidates with specialized skills or certifications, making it easier for qualified professionals to secure employment. International companies and startups frequently seek global talent, further expanding opportunities for skilled workers in these fields.
Can American citizens work in Austria?
Yes, American citizens can work in Austria, but they must obtain a work permit and residence visa. This typically requires sponsorship from an Austrian employer who demonstrates that no suitable EU/EEA candidate is available for the role. The process involves submitting documentation to Austrian immigration authorities, including proof of qualifications and a valid job contract.
Working with an Employer of Record (EOR) can simplify this process, as they handle visa applications, compliance, and legal requirements on your behalf. This ensures smoother onboarding while minimizing administrative burdens for both the employer and the employee.
Is it challenging for foreigners to find employment in Austria?
The challenge depends on your industry and language skills. While high-demand sectors like IT, engineering, and healthcare may offer opportunities, German proficiency is often required for most roles outside international companies. Many Austrian businesses operate primarily in German, and local cultural norms emphasize formal communication and punctuality.
However, multinational corporations and tech-focused firms frequently use English as their working language, making it easier for non-German speakers. Building a professional network, tailoring your CV to Austrian standards, and learning basic German can significantly improve your chances of securing employment.
Is €3,000 a good salary in Austria?
Yes, €3,000 gross per month is considered a solid salary in Austria, especially when compared to the national average. While exact figures vary by region and industry, this amount typically provides a comfortable standard of living, even in higher-cost areas like Vienna. It exceeds the median gross monthly salary of approximately €2,500–€2,800 across most sectors.
However, factors such as experience, job role, and location influence how this salary is perceived. For example, salaries in finance or IT may be higher, while entry-level positions in rural areas might be lower. Overall, €3,000 offers financial stability and aligns well with Austria’s cost of living.
How does an Employer of Record (EOR) service work in Austria?
An EOR service in Austria handles all employer-related responsibilities on your behalf, including payroll processing, tax compliance, social security contributions, and adherence to local labor laws. The process typically takes 2–3 weeks to onboard an employee, during which the EOR prepares contracts, manages work permits if needed, and sets up payroll systems. This allows your company to hire talent quickly without establishing a local entity.
By leveraging an EOR, you avoid the complexities of setting up a legal entity, such as registration fees and bureaucratic delays. The EOR also ensures compliance with Austria’s strict labor regulations, including mandatory benefits like the 13th and 14th-month salaries, while you focus on managing your team’s day-to-day operations.
Is it possible to work in Austria with only English language skills?
Yes, but opportunities are mostly limited to international companies, tech sectors, or roles with a global focus. Many Austrian businesses require German proficiency for daily operations, but some multinational corporations operate primarily in English, particularly in Vienna’s tech and finance hubs. Roles in research, consulting, or academia may also accept English as the working language.
While English proficiency opens doors in specific industries, learning basic German is highly recommended to integrate better into the workplace and access a wider range of job opportunities. Even simple conversational skills can significantly improve your professional interactions and cultural adaptation.
What constitutes a decent salary in Austria?
A decent salary in Austria typically ranges from €2,500 to €3,500 gross per month, depending on the industry and location. In cities like Vienna, salaries tend to be higher due to the elevated cost of living, while smaller towns may have lower expectations. Specialized fields such as IT, engineering, or finance often offer salaries at the upper end of this range, reflecting the demand for skilled professionals.
It’s important to consider net income after taxes and social contributions, which can vary based on personal circumstances. For most individuals, a salary within this range provides a comfortable lifestyle, covering housing, healthcare, and leisure activities without significant financial strain.
Who is the largest employer in Austria?
The largest employer in Austria is the public sector, including government agencies and state-owned enterprises such as the Austrian Federal Railways (ÖBB). These organizations employ thousands of people across diverse roles, from administrative staff to technical specialists, making them the dominant force in the country’s job market. Public sector roles often offer stability and comprehensive benefits.
While private companies like OMV (oil and gas) and Siemens also have significant workforces, they are smaller in scale compared to the public sector. This highlights the importance of government institutions in driving employment and economic activity throughout Austria.
