What is the Total Cost of Employment in Austria?

Written by EuroDev | 10-nov-2021 23:00:00

Austria is an attractive location for international companies looking to hire skilled talent in Europe. With a strong economy and a stable social market system, it offers both business reliability and a highly qualified talent market.

However, employers should be aware that Austria’s extensive social security system comes with mandatory contributions that significantly affect total employment costs. This article breaks down the key payroll elements, tax considerations, and what hiring in Austria typically costs from an employer’s perspective. In this blog, we will look into what it would cost for an employer to hire an employee in Austria.

What are the Main Costs of Hiring in Austria?

So if you’re an international company thinking about hiring in Austria, one of the first questions you’ll ask is: what does it actually cost to employ someone? Let’s break down the main cost components you should be aware of.

Social security contributions: Employers roughly pay up to 29.7% of the employee’s gross salary toward social security. An important compenent of this is the Pension contributions. The minimum employer contribution is 12.55%, although this can vary slightly if the employee opts into a private pension scheme.
Pension contributions: The minimum employer contribution is 12.55%, although this can vary slightly if the employee opts into a private pension scheme.
Holiday / 13th & 14th Salary: Often referred to as holiday and Christmas pay. These extra salaries are not required by law, but they are very common and usually mandated through collective bargaining agreements or included in employment contracts. Whether you need to pay them depends on the applicable agreement.
Sick Pay: Employers are required to continue paying salary during illness; typically 6 to 12 weeks at full pay, followed by around 4 weeks at half pay. After that, the public health insurance system takes over.

Bonus reading: Costs of Hiring Employees in Europe - explore average labour costs and contributions across multiple EU countries.

What goes into the Employer Social Contributions in Austria?

Payroll contributions by the employer amount to roughly 29.7% of gross salary. Let’s dive into the different components of the Employer’s Social contribution in Austria (also referred to as Employer Payroll Taxes).

Social Security Contributions

Contribution	Rate	Note
Health Insurance	3.78%	Covers medical care, hospitalization, maternity, and related benefits.
Pension (Retirement)	12,55%	Mandatory contribution to state pension system.
Unemployment Insurance	2,95%	Provides unemployment benefits to employees.
Accident Insurance	1,10%	Covers workplace accidents and occupational diseases.
Insolvency Guarantee Fund	1,53%	Mandatory contribution for employee severance pay; goes into employee pension/termination fund.
Muncipal Tax	3,00%	Only applicable with a permanent establishment*
Severance Fund	1,53%	Austrian law contribution to the mandatory employee severance fund
Total Employer Social Security Contribution	21,91%	Sum of mandatory social security contributions.

Table 1: Employer social security contribution ,according to recent data from BDO (2025).

Other employer contributions (e.g., family burden equalisation, municipal payroll tax, Chamber of Commerce) can push the total employer cost to ~22.51%.

How Are Employment Costs Calculated in Austria?

Austria, as many European countries, has a progressive income tax system as can be seen below.

Income Tax Brackets in Austria Based on Salary

Income in €	Tax Rate %
13,539 and below	0%
13,539 to 21,992	20%
21,992 to 36,458	30%
36,458 to 70,365	40%
70,365 to 104,859	48%
104,859 to 1,000,000	50%
above 1,000,000	55%

Table 2: Income Tax rate % in Austria per income bracket

Austrian customs usually include 13th and 14th salaries, with the annual salary paid in 14 equal payments. The 13th and 14th payments are paid out in June and November. Alternative arrangements can be made by agreement.

Calculation of Cost of employing an employee in Austria

Description of Cost Component	Amount
Gross Base Salary (Received by the employee)	€100.000
Employer social charges ~21.1% (Received by the state)	€21.100
13^th and 14^th bonus (Received by the employee)	€ 16.667
Total minimum Employer costs excluding benefits	€ 137.767
Gross payment to the employee	€ 116.667
Less: employee social contributions 17.15%	€ (20.769)
Less: income tax 50%	€ (50.165)
Total Employee net pay excluding benefits	€ 50.165

Table 3: Breakdown of total employee net pay for a € 100.000 salary excluding benefits

Conclusion

When employing in Europe, it comes down to which country and market is best for your goals. Because Austria has a strong economy and skilled talent, it is an interesting market for companies looking to expand into Europe. By better understanding Austria's structured social protections, employer contributions, and customary payments, employers can make confident decisions about their expansion.

Key Takeaways:

Employers in Austria contribute 21-22.5% of gross salary to social charges
13th and 14th salaries are standard in Austria
Income tax ranges from 0% to 55%, depending on the employee's salary

Thinking about expanding to Europe? Reach out to us for expert guidance on laws, regulations, and everything else that you need to know to get started, or learn more about hiring in Europe

Written by Sven Brands, Business Development Manager at EuroDev.

Disclaimer: While we strive to provide accurate and timely information, please note that HR policies and regulations can change frequently. It is recommended that you seek guidance from our HR consultants to ensure that the data presented here is current and accurate.

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