Work and income
The type of employment you choose has a direct impact on your rights and obligations of employment and, above all, on your income and whether it is regular or not.
Regardless of this, income losses may occur due to unemployment, pregnancy and maternity leave, illness, or retirement. In this case, you will need to claim welfare benefits and government support to help make ends meet. This page will inform you about the different types of employment in Austria. Additionally, you will learn more about welfare benefits and when you can claim them.
Types of employment
Under Austrian law, there are different types of employment that come with different rights and obligations for those employed. Your type of employment will also have an impact on your income:
Employees
Many people work as employees and have white-collar or blue-collar jobs. People in marginal employment and apprentices are also considered employees. In their employment contract, they undertake to perform specific services.
The following criteria determine whether someone is an employee. Note that the criteria need to be largely, but not fully, met.
- The services have to be performed by the employee themselves (i.e. they have an obligation to do the work themselves)
- The employer has the right to issue instructions and can therefore (within the scope of the employment contract) assign responsibilities and monitor their fulfillment.
- Employees are part of an organization
- Employees use their employer’s work equipment
- Employees are economically dependent
- An employment contract represents a continuing obligation (the employee performs their services and receives payments repeatedly over an extended period of time)
- The employer bears the risk of success (the employee has to do their work to the best of their ability. However, they do not have to achieve a certain result, for example to ensure that all goods produced can actually be sold)
White-collar workers tend to do mental work, for example in an office. Blue-collar workers tend to do physical work such as manufacturing or construction work.
Example
Thomas works in the HR department of a company and is responsible for recruiting and hiring new employees. He has to follow the instructions of his superior and is part of the company. The company provides him with everything he needs to do his job, such as a laptop and office supplies. Thomas has to conduct job interviews personally. However, he is not responsible for the performance of new employees. His responsibility is only to hire suitable employees.
Marginal employment is defined by one criterion: The employee’s pay does not exceed the so-called marginal earnings threshold. The threshold is adjusted annually, and you can find it here. They are subject to the same employment law provisions as full-time and part-time employees (vacation, severance pay etc.). However, people in marginal employment only have accident insurance. They can opt in for health and pension insurance. See here for more information (in German).
Example
Lena is a university student who has a part-time job at a gym. She is employed for 10 hours a week, and her pay is equal to the marginal earnings threshold. She has the same rights and obligations as her full-time colleagues, except for social security. Lena only has public accident insurance, which only covers accidents that happen at work and during her commute to/from work. She is not covered by health, pension and unemployment insurance, which means that her employer does not deduct any such contributions from the gross salary she earns at the gym. This means that unless Lena is co-insured with her parents or other people, she has to take out her own health insurance, and she does not receive any pension entitlements from her work at the gym.
Apprentices work under an apprenticeship contract. They receive an apprenticeship contract and are simultaneously trained and employed in a specific trade. The training takes place both in the workplace and at a vocational school. You can find a list of all apprenticeship trades in Austria on the website of the Federal Ministry of Labour and Economy. If you are looking for an apprenticeship, you can find one at the apprenticeship exchange (Lehrstellenbörse).
Example
Damian is doing an apprenticeship to become an electrical engineer. He works for his employer three times a week. Twice a week, he attends vocational school, where he receives professional training and general education.
In most cases, the above-mentioned features are laid down in the employment contract. An employment contract does not necessarily have to be drawn up in writing. They can also take the form of verbal or so-called implicit agreements. In general, however, it is recommended that you have a written employment contract that clearly sets out the rights and obligations of both parties. If there is no written employment contract, the employer has to issue a service note to the employee. In addition, staff councils and employers may conclude staff agreements. Their provisions apply to all employees of an organization (e.g. on working hours) on top of the individual employment contracts. It is also important to take into account collective wage agreements concluded between unions and employers. For example, wages and salaries as well as bonuses (e.g. 13th month’s salary and Christmas bonuses) are not regulated by law, but they are determined by collective wage agreements.
Tip
- By drawing up a written agreement, the employee and the employer can clearly define their rights and obligations. If no written employment contract has been made, you should insist on receiving a service note that the employer is legally required to issue.
Freelancers (Freie Dienstnehmerinnen und Dienstnehmer)
A freelance contract (freier Dienstvertrag) also represents a continuing obligation. However, there is no personal dependency. This means that freelancers can ask other people to do their job for them and that they are not bound by instructions or working hours. They are also not part of their client’s organization, but the essential resources are provided by their client. The client also bears the risk of success. In the event of illness, freelancers do not receive any pay from their client, and they are not entitled to paid annual leave. With respect to social security, however, their status is, in general, the same as that of employees. See here for more details.
Example
Luis is an IT expert and undertakes to maintain PCs and network from a company on a permanent basis. Sometimes, he can also do maintenance work from home. He does not necessarily have to do the work himself.
Contractors (Werkvertragsnehmerinnen und Werkvertragsnehmer)
Under a works contract (Werkvertrag), a contractor undertakes to do specified work in return for payment. Contractors are self-employed and have to deliver the specified work, i.e. they also bear the risk of success. Contractors do not have to do the work personally, i.e. they can pay other people to do it for them. In addition, contractors are not part of their client’s organization and have to use their own resources to deliver the work. The contract is not subject to employment law and contractors also have to make their own social security arrangements. For more information, see the Webseite of the Austrian Economic Chambers (in German).
Example
Hatice works as a software programmer. She creates a website for a company and does so without being bound to working hours or instructions. Hatice has to deliver a finished website to her client. She has to finish the website as agreed to be entitled to remuneration.
New self-employed workers (Neue Selbstständige)
New self-employed people also work on the basis of works contracts. For tax purposes, they generate self-employment income. However, they do not require a business licence iness license, which means that they are no tradespeople (Gewerbetreibende). For more information, see the Website of the Austrian Economic Chambers (WKO; in German)
Example
New self-employed people include lecturers, midwives, artists, experts, writers and nurses who provide their services under a works contract. They not only owe the effort, but have to actually deliver the specified work, for example, give a lecture or write an expert opinion.
| Employees | Freelancers | Contractors | New self-employed | ||
|---|---|---|---|---|---|
| What is owed? | Employees have to make an effort | Freelancers have to make an effort | Contractors have to deliver a result (specified work) | New self-employed have to deliver a result (specified work) | |
| Duration | Fixed-term or permanent contract | Fixed-term or permanent contract | Until completion of the work | Until completion of the work | |
| Instructions | Employer can issue instructions, employees have to work at a specific place and time | Client cannot issue instructions, freelancers can work when and where they want | Client cannot issue instructions, contractors can work when and where they want | Client cannot issue instructions, new self-employed can work when and where they want | |
| Integration into other organization | Employees are part of an organization | Freelancers are not part of the client’s organization | Contractors are not part of the client’s organization | New self-employed are not part of the client’s organization | |
| Employment law | Employment law (paid annual leave, continued payment in case of illness, etc.) and collective wage agreements apply | Employment law (paid annual leave, continued payment in case of illness, etc.) and collective wage agreements do not apply | Employment law (paid annual leave, continued payment in case of illness, etc.) and collective wage agreements do not apply | Employment law (paid annual leave, continued payment in case of illness, etc.) and collective wage agreements do not apply | |
| Taxes and social security contributions | Social security contributions and income tax are deducted by employer | Social security contributions are deducted by employer, income tax is paid by freelancer | Social security contributions and income tax are paid by the contractor | Social security contributions and income tax are paid by the new self-employed |
Working students
Working students are university students who work in a company or institution for around 10 to 20 hours a week. Normally, the student’s job is directly related to the degree they are studying. Students are employed as white-collar workers and receive an employment contract.
Beispiel
Alper studies education and serves as a part-time working student at a youth club. He looks after the children and helps them study.
Interns
Secondary-school and university students can gain some work experience and earn some money during their vacations. To be able to do an internship, a student has to be at least 15 years old and have completed compulsory schooling (i.e. 9th grade). Under certain conditions, however, people under the age of 15 can also do an internship if, for example, they have to complete a mandatory internship. For more information, see here (in German).
Beispiel
Letizia is 16 years old. She attends a Secondary College of Business Administration. In July, she works in the accounting department of a large company.
In most cases, the above-mentioned features are laid down in the employment contract. An employment contract does not necessarily have to be in written form. They can also take the form of verbal or so-called implicit agreements. In general, however, it is recommended that you have a written employment contract that clearly sets out the rights and obligations of both parties. If there is no written employment contract, the employer has to issue a service note to the employee. In addition, staff councils and employers can conclude staff agreements that can lay down rules on working hours etc. It is also important to take into account collective wage agreements agreed between unions and employers. Paid annual leave, bonuses (e.g. 13th month’s salary and Christmas bonuses) and pay raises are not regulated by law, but they are determined by collective wage agreements.
Working hours and income
Full-time vs. part-time work
The number of working hours agreed upon in the employment contract is a major factor determining an employee’s level of income. In Austria, the differences between full-time and part-time work are determined by employment law.
- The usual definition of full-time employment is a 40-hour work week, but other agreements can also be made. For example, some companies and the collective wage agreements of some industries define a normal work week as having 38.5 hours. Full-time employees are entitled to full welfare benefits, including health insurance, unemployment insurance and pension insurance. In addition, they are entitled to statutory paid annual leave.
- Part-time work is characterized by a number of working hours that is below that of a statutory or a company’s normal work week, with the pay being lower as well. Part-time employees are entitled to welfare benefits, but they may be pro-rated to their working hours.
Example
Anna and her employer agree that she reduces her work week to 20 hours. As a result, she only works three days a week, with her salary being reduced as well. She remains entitled to five weeks of annual leave. However, as she only works three days a week, this corresponds to 15 days of annual leave. Her sick pay will also be calculated on the basis of her new part-time gross salary. Anna’s pension insurance contributions will be reduced as well.
Overtime and extra hours
To increase your income, you can do overtime or work extra hours. Note that overtime and extra hours do not necessarily have to be paid, and that you can get compensatory leave instead.
- Doing overtime means to exceed the normal daily (eight hours) or weekly (40 hours) statutory working hours. However, the limits can also be set differently, for example when using flexible working hours (flextime). Unless otherwise agreed, employees doing overtime are remunerated at 1.5 times their regular rate of pay. Employees doing overtime at night, on weekends or on public holidays are normally paid at 2 times their regular rate of pay.
- When a part-time employee works more hours than set out by their employment contract, they do extra hours. They do not do overtime unless they exceed their normal working hours as defined by law. Employees working extra hours are paid at 1.25 times their regular rate of pay.
Flextime
Under flextime, employees can vary their working hours within a certain time of the day (flextime range). Unlike fixed working hours, flextime gives employees a certain degree of autonomy as to when they start and finish work. This can give employees a better work-life balance and allows them to work according to their individual circumstances and preferences. Employees can therefore flexibly decide how to spread their working hours over a day and/or week, or over a longer flextime cycle. Depending on the flextime agreement, employees can work a maximum of 10 or 12 hours a day and 50 or 60 hours a week. This means that they can accrue flextime credit and flextime debit. With flextime, employees do overtime only after they have exceeded their daily or weekly maximum limit, when they work outside their flextime range and when their flextime credit cannot be carried forward to the following flextime cycle.
Example
Romeo works as a controller. His flextime range runs from 7:00 (he cannot start work before) to 20:00 (he cannot work afterward). In principle, he has to work 40 hours a week, i.e. his normal working hours. Under his flextime agreement, he can work a maximum of 10 hours a day and 50 hours per week. Within his flextime range, Romeo can work whenever he wants. If Romeo works a total of 45 hours in a week, he gets 5 hours of flextime credit. In the following week, he could choose to work only 35 hours. However, any work in excess of 10 hours a day or 50 hours a week is considered overtime.
If an establishment has a staff council, flextime rules are set by a staff agreement. Otherwise, flextime agreements need to be concluded by the company and every single employee and be in written form.
Tip
- If an establishment has a staff council, flextime rules are set by a staff agreement. Otherwise, flextime agreements need to be concluded by the company and every single employee and be in written form.
Deductions from income
Social security
Social security is mandatory in Austria and includes the following:Die ist in Österreich eine Pflichtversicherung und beinhaltet folgende Leistungen:
- Health insurance
- Pension insurance
- Accident insurance
In a broader sense, it also includes unemployment insurance. However, unemployment insurance is coordinated by the Austrian Public Employment Service (AMS) and not by the social security institutions.
The amount of social security contributions you have to pay is determined by your income. Each month, about a fifth of your gross income is deducted and used to finance social security. Although this reduces your income, it allows you to make use of the above services free at the point of use. For example, you can visit doctors, get medications and stay at hospitals. If you are an employee or freelancer, your employer withholds your social security contributions from your pay. By contrast, if you are self-employed, it is your own responsibility to pay your contributions to the social security institutions.
Income tax (wage tax)
Income tax revenues make a significant contribution to funding public services. Employees pay their income tax in the form of wage tax, which is calculated from their gross income, withheld by their employer and paid to the tax office. Self-employed people pay income tax based on the income tax return that they have to file every year. Their income tax is calculated by the tax authorities and determined by means of an income tax assessment notice. Self-employed people have to make quarterly advance payments that cover their expected income tax bill for the year. Your income tax depends on your income and is calculated by means of various tax brackets.
Because of the statutory deductions from your income, your budget planning and financial decisions should always be based on your net pay (after deduction of social security contributions and tax). You can use a gross-to-net calculator on the website of the Chamber of Labour to calculate the net income of an employee.
The net pay of employees is calculated as follows and set out in their pay statement:
| Remuneration | Month | Units/hours | Rate | Amount |
|---|---|---|---|---|
| Basic pay | Nov. | 2,870.40 | ||
| Total gross salary | 2,870.40 | |||
| Deductions | Month | Days | Taxable income. | Amount |
| Health insurance and social security | 2,870.40 | 202.35 | ||
| Pension insurance | 2,870.40 | 294.21 | ||
| Chamber of Labour levy, contribution to housing subsidies | 2,870.40 | 28.70 | ||
| Income tax | 2,375.14 | 274.58 | ||
| Total deductions | 799.84 | |||
| Netto | 2,070.56 |
Your total gross salary is, in general, your gross pay. However, it can be complemented by bonuses (e.g. a 13th month’s salary and Christmas bonuses) and by additional pay for overtime and extra hours. The total gross salary serves as the basis for calculating social security contributions. These statutory social security contributions consist of health and other social security contributions (KV/SV) as well as pension insurance contributions (PV). In addition, other contributions may be deducted, such as a levy for the Austrian Chamber of Labour (KU) and the contribution to housing subsidies (WF). The gross salary less social security contributions is the basis for the calculation of employee wage tax, which also reduces the employee’s take-home pay. However, other items such as the commuter allowance, the additional commuter lump-sum allowance (Pendlereuro) and the Family Family Bonus can reduce your tax bill. See the website of the Chamber of Labour for more information on your monthly pay statement (in German).
Welfare benefits for low-income earners and those experiencing a drop in income
You might experience a temporary drop in income for several reasons. For example, you might lose your job and income for a certain period of time. Your income can also decrease when you get pregnant or study for a university degree. Single parents, people on low pay and recipients of a minimum pension can have low incomes for extended periods of time. Austria offers a range of welfare benefits to mitigate these problems.
Parental leave, maternity protection and childcare allowance (Kinderbetreuungsgeld)
Under maternity protection, women get eight weeks of maternity leave before and after the birth of a child. Afterward, parents can also take parental leave. It usually starts eight weeks after birth and ends at the latest on the day before the child’s second birthday. The exact duration is determined by an agreement with the employer. There is a legal entitlement to parental leave, and this cannot be changed by other (company) agreements. In addition, while on parental leave, parents cannot be laid off or terminated for cause. Parents can also take shared parental leave and split the leave into a maximum of three periods. Each of these periods has to have a minimum length of two months. If only one parent takes parental leave, it ends at the latest 22 months after their child was born.
If both parents take parental leave, it ends at the latest when the child turns two years old. See here for more information (in German).
Childcare allowance is intended to support the parent who takes care of their child and is therefore not in employment or only in marginal employment. It is important to note that the duration of parental leave is not necessarily the same as the duration of entitlement to childcare allowance. This is because there are two types of childcare allowance that parents can choose from. It can either be income-related or flat-rate.
Flat-rate childcare allowance
Flat-rate childcare allowance is paid regardless of prior income and even if no income was received before the birth of the child. Parents can choose how long they wish to receive this benefit, and this is the only factor determining how much they will get each month.
Income-related childcare allowance
Income-related childcare allowance is based on the income that the parent taking parental leave had before their child was born. This type of childcare allowance is equivalent to 80% of the prior income. However, a cap applies that limits the maximum daily childcare allowance. If parents choose the income-related option, the duration of parental leave is determined by law. If only one parent takes parental leave, they are entitled to childcare allowance until their child is one year old (until 365 days after birth). If the parents take shared parental leave, their entitlement lasts until the 426th day after the birth of their child (“12+2 model”).
The website of the Federal Chancellery features a calculator that allows you to determine the amount of childcare allowance you are entitled to. Also, see the website of the Austrian Public Employment Service (AMS) for more information on parental leave and parental leave options:
Benefits and allowances
Austria provides a whole range of benefits that provide crucial financial support. The most important ones are:
Family allowance (Familienbeihilfe)
This allowance is granted to families with children regardless of the parents’ income.
Housing benefit (Wohnbeihilfe)
This benefit helps people pay their rent or housing costs, especially in low-income households.
Study allowance (Studienbeihilfe) and scholarships
There are various programs in the education sector that aim to help people get access to education. These include scholarships and study allowance.
Top-up payment (Ausgleichszahlung)
If the income a pensioner derives from their gross pension is below the statutory minimum amount, they will receive a top-up payment to increase their total income. Consult the following website of the Austrian Ministry of Finance to see the statutory minimum amount (in German).
Care allowance (Pflegegeld)
People in need of care receive care allowance to cover the costs of necessary care services.
Minimum income benefit (Mindestsicherung)
This benefit provides financial support to people who are unable to support themselves due to unemployment, illness or other circumstances.
For more details and other benefits, see the websites of the Chamber of Labour and the Federal Ministry of Finance.
Unemployment benefit
This benefit provides an income for people who are looking for work. If a person is able and willing to work but currently unemployed, they are entitled to unemployment benefit under the following conditions: They have to register as unemployed with the Austrian Public Employment Service (AMS). They need to be willing to work at least 20 hours a week, or 16 hours if they have care duties. In addition, the person needs to have worked a certain period of time in a job covered by unemployment insurance and be considered employable. Usually, job seekers can get unemployment benefit for a maximum of 20 weeks. Afterward, they can request long-term unemployment assistance (Notstandshilfe).
Unemployment benefit consists of a basic amount that may be increased by a supplementary amount and family supplements. To calculate how much you can get, see the website of the Austrian Public Employment Service (AMS). Further information about unemployment benefit can be found here.
Pension
Austria has a three-pillar retirement system. First, there is a state pension that covers the cost of living in retirement. In addition, employers can offer an occupational pension to their employees (second pillar), and individuals can make their own retirement savings plans too (third pillar). You can use the Chamber of Labour’s pension calculator to determine the amount of pension you will receive.
A brief recap
How can income be earned?
You can earn income through employment, for example by working as an employee in a company. In addition, you may be able to claim various welfare benefits (allowances) to help you if you have a low income.
Which types of employment can I choose from in Austria?
Under Austrian law, you can be an employee, a freelancer or conclude works contracts. You can also work as a (new) self-employed person. Other options include marginal employment, internships and apprenticeship contracts.
How do working hours influence my income?
Whether you choose to work full-time or part-time will have an impact on your income. Pay is based on full-time employment; those who work fewer hours get a lower salary. You can increase your income by working overtime or extra hours.
What welfare benefits are you eligible for if you experience a drop in income or have a very low income?
In Austria, you can receive various benefits if you meet the requirements, for example family allowance, housing benefit, study allowance and scholarships, pension top-ups, care allowance and minimum income benefit. In addition, you can get unemployment benefit if you are unemployed and a pension when you have retired.
What deductions are made from gross income?
Your gross income will be reduced by deductions of social security contributions (unemployment, health, accident and pension insurance) and income tax.
