How to Hire and Pay Remote Workers in Austria

Hiring remote workers in Austria gives you access to a lucrative talent pool at the heart of Europe. But for foreign employers, the hiring process is rarely straightforward. Austrian employment law is strict and highly regulated, leaving little room for mistakes.

Remote hiring also introduces less obvious risks, such as misclassification and permanent establishment. These can expose your business to unexpected tax and reporting obligations if setup isn’t handled correctly. Some compliance gaps can lead to significant penalties, legal action, and damage to your brand reputation.

Our guide shows you how to overcome all these obstacles to hire remote workers in Austria. We cover all the essential steps from setup and hiring through to onboarding, drawing on Deel’s experience supporting companies as they manage global, distributed teams.

Step 1. Decide how you will engage remote workers

The way you engage workers in Austria is the most important decision you’ll make in the hiring process. Worker classification determines which employment laws apply, how payroll and taxes are handled, and how much compliance risk your business takes on.

Full-time and part-time employment are the standard options for ongoing roles. Fixed-term contracts are also permitted, but they are tightly regulated. You must be able to justify the time limit objectively, follow strict renewal rules, and treat fixed-term workers the same as permanent employees in comparable roles.

Freelancing sits in a very different category. Austrian authorities base this classification on how the worker carries out tasks rather than the label you give the relationship. If an independent contractor is economically dependent on your company, integrated into your operations, or follows your direction, they reclassify your arrangement as employment.

Here’s a breakdown of the differences:

Note that remote work does not change these rules. Remote employees must receive the same pay, benefits, protections, and career opportunities as office-based workers, and location is not a valid justification for contractor classification.

Unsure how to classify a worker? Deel Contractor can verify their status based on a few details about the role and provide guidance on how to adapt the contract.

Step 2. Understand obligations to Austrian remote workers

Before moving forward with contracts or payroll, account for the legal obligations that remote work triggers in Austria.

Under Austria’s Telearbeitsgesetz *(*Teleworking Act), employers take on additional duties when work is performed outside a traditional workplace. In practical terms, this means you must plan for where work will take place, what tools the employee needs to perform their role, and which work-related costs you are expected to cover. These obligations apply automatically once you classify a role as remote.

You also need to ensure you treat on-site and off-site workers equally in every other respect. Off-site workers must receive the same pay, benefits, working time protections, and career opportunities as on-site employees. Location alone cannot justify different terms or reduced protections, and your responsibilities don’t shift to the employee simply because they work from home.

Step 3. Draft compliant contracts for remote workers

The next step is to put a compliant employment contract in place. In Austria, contracts are mandatory, so you must complete them and get the signature before someone starts working for your company.

Start by checking whether any Kollektivverträge or Collective Bargaining Agreements (CBAs) apply to the role. They’re commonplace in Austria and set minimum standards for pay, working conditions, and termination. Even with an employee’s consent, you can’t agree to terms that fall below the agreement’s minimum thresholds.

Once you have this information, ensure the contract covers the following terms:

• Working hours: The maximum in Austria is 40 hours per work week
• Overtime rules: Austrian employers must pay overtime at 150% of the regular hourly pay
• Salary: Austria doesn’t set a minimum wage — pay is usually based on CBAs
• Paid annual leave entitlements: Employees must receive a minimum of 25 days (equivalent to five weeks) per calendar year
• Sick leave provisions: Employees may take paid leave with a medical certificate from a doctor
• Termination rights and notice periods: This varies by role and industry, but it’s typically around one to three months

If you lack in-house expertise about Austrian employment law, consult with a professional before sending agreements to workers. Alternatively, use a service like Deel to generate compliant contracts that reflect employment laws and relevant CBAs.

Step 4. Assess permanent establishment risks before hiring

Determine whether hiring remote workers in Austria could create a permanent establishment risk. You need to check whether your business activities in the country could trigger corporate tax, registration, and reporting liabilities even if you don’t have a physical office.

In particular, focus on what the worker will do rather than their job title or their remote status. Permanent establishment risk increases when a role gives someone authority or visibility that makes them function like a local business presence.

The following can trigger permanent establishment:

• Authority to sign contracts or make binding decisions on behalf of the company
• Responsibility for managing local clients, sales, or business development
• Strategic or senior decision-making responsibilities
• Regularly representing the company in Austria, including at meetings or events
• Working from a dedicated home office that effectively functions as a business location
• Using an Austrian address for company correspondence or official materials

Partnering with an Employer of Record (EOR) can lower the risk of permanent establishment. Services like Deel employ the worker on your behalf, creating a legal distinction from your company and reducing these triggers.

Step 5. Consider whether to use an Employer of Record (EOR)

If you don’t have an Austrian entity, decide whether to incorporate or use an EOR service. Neither option is necessarily better than the other — the best approach depends on your unique business needs and goals.

The benefit of an EOR is that you can hire Austrian workers without investing in setting up an entity or registering as an employer. This can save you valuable time and resources. While you continue to manage the day-to-day work, the provider also takes responsibility for HR, payroll, and compliance.

Using an EOR is typically a good fit if you plan to:

• Enter Austria quickly
• Hire workers on a small scale
• Test the market before committing
• Work on a short-term assignment
• Reduce permanent establishment risk

Top providers like Deel offer EOR services in Austria and other countries through a single platform. This consolidates all your HR, payroll, and benefits administration in one place, making it easier to manage distributed, remote teams.

Step 6. Budget for employment costs in Austria

Budget for total employment costs, not just base salary. Mandatory bonuses, employer contributions, and remote work expenses can significantly change what a role costs over a year.

First, account for inevitable extra costs. Most roles fall under CBAs that require two extra salary installments, typically paid in the middle and at the end of the year.

On top of gross pay, employers must budget for tax and mandatory contributions. The employer’s share of social security is approximately 21% of gross salary, and the Kommunalsteuergesetz (communal employer tax) is 3% of the tax base. Altogether, this comes to around 24% of the gross salary.

Next, plan for remote work costs that apply to Austrian employers. That includes ongoing stipends or reimbursements and one-time setup costs for home office equipment. Consider using an IT asset management solution like Deel IT to streamline this operation and make expenses more predictable.

Here’s an example of a cost breakdown:

• Base monthly salary: €3,000
• Employer social security contributions (≈21%): €630
• Communal employer tax (3%): €90
• 13th and 14th month salaries (annual): €6,000
• Home office stipend (annual): €300
• Meal allowance (monthly): €75
• Equipment reimbursement (one-time): €800
• Total first-year cost: approximately €52,000

Step 7. Run compliant payroll and tax withholding

Ensure you have a reliable payroll process in place before you formally hire new workers. You’re required to not only pay salaries but also manage tax withholding, social contributions, and filings on time.

For each payroll run, calculate gross salary and apply all the necessary deductions. This includes withholding employee social security contributions and progressive income tax, adding employer-side contributions and employer taxes, and processing any bonuses, overtime, or reimbursements. Payslips must give a clear breakdown of all these calculations.

You must also follow fixed deadlines. Social security payments are due by the 15th of each following month, and salaries are based on the terms of the CBA.

Data protection adds another layer to compliance. The Austrian Data Protection Act, which reflects GDPR requirements, mandates strict controls over employee personal data. You must secure employees’ sensitive personal and financial information, limit access to authorized personnel only, and retain payroll records in case of an audit.

If you partner with an EOR with global payroll capabilities, the provider can handle many of these tasks. For example, Deel automatically calculates salaries and withholdings, transfers payments, and maintains secure records within our Cloud-based system.

Step 8. Onboard and manage remote Austrian workers effectively

Once payroll is running, the focus shifts to onboarding and day-to-day management. Remote workers need a lot of clarity and structure to integrate well into the new team.

As a minimum, make sure you:

• Provide the right tools and equipment, including secure collaboration software and appropriate work equipment, as required under the Teleworking Act
• Manage documents during pre-boarding, using an HR platform like Deel to collect forms and e-signatures
• Run a structured onboarding process, covering team structure, reporting lines, tools, performance expectations, and key administrative steps
• Set a communication schedule, with regular one-to-ones, team meetings, and clearly defined deliverables
• Define performance and feedback processes early, so expectations are clear from the outset
• Respect working-time boundaries and public holidays, avoiding out-of-hours communication where possible
• Decide whether to offer development support, such as training or learning budgets, to keep remote workers motivated

Scale your team globally with Deel

Hiring remote workers in Austria means navigating strict employment laws. A structured, step-by-step approach helps you stay compliant, control costs, and avoid issues that can derail expansion.

Deel EOR has everything you need to develop this approach. As your in-country partner, Deel can handle contracts, payroll, taxes, and social security, all while reducing compliance and permanent establishment risk.

Through our EOR service, Deel customers can access:

• Hiring through our wholly-owned Austrian entity
• Compliant employment contracts aligned with CBAs
• Local payroll, tax withholding, and social security management
• Benefits administration and expense reimbursements
• Built-in compliance and local regulatory expertise
• Immigration and work permit
• Continuous compliance monitoring

Planning your first remote hire in Austria? Speak with Deel’s team to see how we can support compliant hiring, payroll, and employment at every stage.