28. November 2023 Christmas is just around the corner and the busy sales weeks are approaching, especially in the retail sector.
It is not uncommon for temporary workers from abroad to be employed in Austria to cope with the Christmas rush. In the following case study, a worker from Hungary is employed. The purpose of this example is to give you a practical understanding of the issues that need to be considered.
Case study
Mr Németh lives with his family in Hungary and is employed by a trading company in Parndorf for a fixed term of two months (the fixed term could also be limited in time, e.g. for the duration of the peak work period).
The employment relationship ends automatically at the end of the fixed term without the need for a special notice of termination.
With regard to the work permit, a distinction must be made between EU foreigners and third-country nationals. EU foreigners are not subject to any restrictions on the free movement of workers and have free access to the Austrian labour market. If a stay of more than three months is planned, a registration certificate must be applied for from the competent settlement authority within four months of entry.
Mr Németh can therefore work in Austria without a special permit.
Temporary employees are entitled to special payments (holiday pay and Christmas bonus) if the collective agreement provides. These are due pro rata to the duration of the employment relationship. Temporary employees are also entitled to annual leave on a pro rata basis. If this is not taken, it must always be compensated. Overtime, i.e. hours worked in excess of normal working hours, must be paid with a surcharge.
From a tax point of view, Mr Németh has a limited tax liability due to his daily return to Hungary, as he is not domiciled or ordinarily resident in Austria. Therefore, only the income earned in Austria is taxable.
Side note
In the case of employees from Germany, Italy and Liechtenstein, the situation may be different if the cross-border commuter rule is applied (in principle, daily return to the place of residence). In this case, the country of residence (home country of the employee) retains full taxing rights.
In terms of social security, temporary workers are subject to the legal provisions of the country of employment (in this case Austria), unless they are posted or simultaneously employed in the country of residence. The foreign employee is therefore subject to social security in Austria from the first day of work.
However, care must be taken if the employee intends to return to work in Hungary after termination of the Austrian employment relationship. Within the EU or EEA, an employee can only be subject to social security in one country. The country of residence depends on whether the employee carries out a substantial activity in the country of residence. The materiality criterion is met if at least 25% of the working time is spent in the country of residence and/or at least 25% of the remuneration is paid in the country of residence. This requirement must be checked in advance for the following 12 calendar months.
In this case (return to a Hungarian employer after termination of the Austrian employment relationship), Mr Németh would probably remain in the Hungarian social security system. This means that the Austrian employer would have to register for social security purposes in Hungary and pay the social security contributions for Mr Németh to Hungary.
The latter would also be the case, for example, if Mr Németh were permanently employed in Austria on Saturdays and by a Hungarian employer from Monday to Friday, as in this case he would carry out more than 25% of his work in his country of residence, Hungary.
Mr Németh would also have to apply to the competent social security institution in Hungary for an A1 form certifying that Hungary is responsible for social security. He would have to carry this form with him while working in Austria.
Conclusion
In principle, there should be no difference in treatment between the employment of EU citizens and the employment of Austrian citizens, with the exception of cases where social security responsibility lies abroad. In this case, employers would incur additional administrative costs due to the need to register abroad or, if necessary, set up a foreign payroll system to calculate social security contributions. Advantages could arise, for example, in the case of long-term employment, if social security contributions are lower in Hungary than in Austria.
We will be happy to advise you (info@artus.at).
PS: Please note, that we are no native speakers and that our blogposts were translated with the help of google translate.
