United States: A Guide To Hiring And Firing In Europe

Last Updated: July 4 2014
Article by Ann Bevitt and Caroline Stakim

AUSTRIA: HIRING

RECRUITMENT PRACTICE AND PROCESS

Most employers recruit externally by placing advertisements in newspapers or on the Internet. Professional recruitment agencies are used for more senior or more qualified employees.

Pre-employment references and background checks

During the application process, an employer is not allowed to ask questions that might infringe an applicant's privacy. Generally, requesting the applicant to undergo a medical examination is only permitted in relation to diseases that may be detrimental to other employees or that could restrict the applicant's ability to carry out the role. Drug and alcohol testing will, in general, infringe the applicant's privacy. It is common however, for employers to ask for criminal record checks and references from previous employers.

Selection of employees or workers

An employer may not discriminate in its recruitment practices, or in the terms and conditions it offers to a successful candidate, on the basis of sex, race, color, nationality, ethnic or national origin, disability, age, sexual orientation, religion or belief, or trade union activities or membership.

Itemized pay slips

Employers must give their employees itemized pay statements specifying gross and net salary, and the amount and purpose of any deductions (e.g., income tax and social insurance contributions).

Health and safety

Employers are obliged to safeguard the health and safety of their employees. In order to do so, they must carry out a risk assessment and take any measures necessary.

Written contract of employment

Generally, there is no requirement that a contract of employment be in writing. However, immediately following commencement of work, an employer is obliged to give the employee a written statement setting out the essential rights and obligations arising from the employment ("Dienstzettel"). The statement must include the names of the parties, start date, nature of employment, period of notice, proposed place of work, employee's salary scheme classification, job title, annual vacation entitlement, working hours, the applicable collective bargaining agreement and the fund administering the contributions for severance payments. Typically, a more senior employee is given a written employment contract, and the conditions are discussed prior to the acceptance of a job offer. Formal offer letters are seldom used.

Implied duties of the employer and the Employee

In general, the terms and conditions set out expressly in the contract of employment, collective bargaining agreement or shop agreement, along with statutory employment law protections, govern the employment relationship. There are no standard terms which are implied into every employment contract.

Company rules

There is no requirement in Austria to have company rules, and it is not common practice to have such rules in place.

Data protection

An employer has duties under the Data Protection Act in respect of the personal data and sensitive personal data of its employees. Personal data may be processed only for a specific, explicit and legitimate purpose, and the employee must be informed of every use of his or her data, e.g., processing payroll and recording working time. Disclosure of employee personal data to third parties is prohibited, unless the employer has a legitimate purpose, e.g., disclosing personal data to the employee's bank in order to pay salary. Employee consent is required in order to use or transmit personal data for any other reason.

The use of sensitive personal data, such as data relating to health or religion, is limited further. These may only be used for a purpose listed in the Data Protection Act unless the Data Protection Commission gives it prior approval.

STATUS

In Austria, an employer can enter into employment contracts, apprenticeship contracts, contracts for work and services, or service contracts.

Employees

An employment relationship gives the employer a greater ability both during and after the employment to protect company confidential information and intellectual property, and prevent the former employee from setting up in competition or poaching other staff. Historically, a distinction has been drawn between white-collar employees and blue-collar employees with both categories being subject to different statutory provisions and collective bargaining agreements.

Independent contractors and consultants

An independent contractor may be engaged under either a service contract ("freier Dienstvertrag") under which the worker undertakes to provide services for a certain period of time, or a contract for work and services ("Werkvertrag") under which the work to be provided is specified and guarantees a specific and successful result. Independent contractors are quite common in Austria. An independent contractor does not have to perform the work personally, is not integrated into the organization and uses his or her own resources. Further, an independent contractor is not bound by specific working hours or a specific place of work, and is not subject to any instructions from the engaging entity. Social insurance premiums are only payable in respect of service contracts, and not contracts for work and services, and it is the individual worker who is responsible for payment. For this reason, independent contractor arrangements are increasingly scrutinized by the tax and social insurance authorities. In recent years, changes to the law have narrowed the difference in treatment between independent contractors and employees in respect of entitlement to severance pay and cover under the social insurance system.

Agency workers

Agency workers are commonly used in Austria. The Agency Work Act ("Arbeitskräfteüberlassungsgesetz") contains extensive provisions to protect such workers, and entitles agency workers to equal pay with comparable employees and cover under the social insurance system.

PRACTICALITIES

Restrictions on overseas individuals working in Austria

Citizens of most countries within the European Union (EU) or the European Economic Area (EEA) do not need work permits. However, citizens of Croatia will need a work permit until June 30, 2020, if they have not already worked in Austria prior to Croatia joining the EU on July 1, 2013. All other non-EEA citizens who wish to work in Austria must obtain a residence and working permit.

An employer who employs workers without the necessary permits can be fined up to €50,000 for each illegal foreign worker engaged.

Tax and social security contributions

Salaries paid to employees are subject to income tax, to be withheld by the employer and directly forwarded to the tax office. Income tax is assessed on a progressive basis up to a maximum rate of 50 percent. The social security contribution payable is approximately 18 percent by the employee and 23 percent by the employer. In general, social insurance contributions are calculated on an assessment basis, which corresponds to all monetary or in-kind benefits received by the employee from the employer but are capped at a maximum salary. For 2014, this is €4,530 per month. If the salary is higher than the maximum, the additional part of the salary is not subject to contributions.

Taxation of individuals working in Austria

Every employee who stays 183 days or more in Austria is liable for Austrian income tax on his or her worldwide income.

To view the full report please click here.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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