The following features indicate employment as an independent contractor:
- Obligation for an ongoing relationship
- No personal dependence or only to a limited extent
- No binding instructions or directives
- Free of restrictions on personal behaviour
- The work flow can be regulated independently and can be changed at any time
- Essential operating resources are provided by the employer
- Remuneration is made according to the period of time spent on work, rather than based on performance or delivery of a work product
- Performing services mostly in person
It is irrelevant whether a contract is called a "service contract" ["Dienstvertrag"] or an "independent service contract" ["freier Dienstvertrag"]. A decisive factor is how the contractual relationship turns out to be and how the contracting parties handle the contents of their contract.
Since every activity or project arising from an employer-employee relationship can also be the subject of an independent service contract, the question of whether a true economic relationship is best described as a service contractGerman text or as an independent service contract can only be judged in individual cases and according to the true economic content of that relationship.
Independent contractors have reduced protection under labour law. The regulations of the Austrian General Civil Code [Allgemeines Bürgerliches Gesetzbuch (ABGB)] concerning termination of employment are applied analogously to employer-employee relationships in the case of independent contractors. In the absence of a written contract, employers are obliged to hand out a service note [Dienstzettel] to any independent contractor fully insured under the General Social Insurance Law [Allgemeines Sozialversicherungsgesetz (ASVG)].
In the absence of a specific agreement between an employer and an independent contractor, the regulations of the Salaried Employees Act [Angestelltengesetz], the vacation law, the Working Hours Act [Arbeitszeitgesetz] (in particular concerning added payment for overtime hours), the Act on Rest Periods [Arbeitsruhegesetz] and the Continued Remuneration Act [Entgeltfortzahlungsgesetz] do not apply.
Therefore, independent contractors are entitled neither to collective bargaining agreement wages nor (unless otherwise agreed between the employer and the independent contractor) to special payments [Sonderzahlungen] or paid holidaysGerman text.
As independent contractors are members of the Austrian Chambers of Labour [Arbeiterkammern], they have the opportunity to use all services provided by the Chambers of Labour including legal advice and legal representation.
Independent contractors are also involved in the system of pension funds for staff and the self-employed [betriebliche Mitarbeiter- und Selbstständigenvorsorge]. Further information on this topic can be found in the chapter "Abfertigung NEU".
Independent contractors whose monthly income is below the marginal earnings threshold [geringfügig Beschäftigte] must be enrolled in the accident insurance institution [Unfallversicherung] by their employer before employment has commenced (registration of employeesGerman text).
For the year 2019, the marginal earnings threshold is 446.81 Euro (for the year 2018, the limit was 438.05 Euro).
Independent contractors whose monthly income exceeds the marginal earnings threshold are required to sign up as "independent contractors" with the competent health insurer [Krankenversicherungsträger]. They are thus covered by accidentGerman text, healthGerman text and retirement pension insuranceGerman text.
There are special regulations concerning the insurance obligation for people who are in multiple marginal employment relationships pursuant to the Service Cheque Act [Dienstleistungsscheckgesetz (DLSG)].
Independent contractors whose monthly income from independent employment exceeds the marginal earnings threshold are also required to sign up for unemployment insurance and income support in case of bankruptcy which means that they are entitled to unemployment benefits [Arbeitslosengeld] and compensation in case of bankruptcy [Insolvenz-Entgelt] under the same conditions as regular employeesGerman text. Further, they may be entitled to sick pay [Krankengeld] and income-dependent maternity allowance [Wochengeld].
Applications for compensation in case of bankruptcy must be submitted to the competent branch office of the IEF-Service GmbH according to the jurisdiction of the bankruptcy court.
People who are in several marginal employment relationships are entitled to sick payGerman text and maternity allowanceGerman text if their total income exceeds the marginal earnings threshold of 438.05 Euro (for the year 2018). They are not required to sign up for unemployment insurance and are not entitled to claim unemployment insurance benefits.
The insurance obligation ends when the employment relationship (or the independent contractor's claim for remuneration) ends.
As independent contractors are treated like self-employed peopleGerman text for tax purposes, they are subject to income tax [Einkommensteuer], but not to earnings tax [Lohnsteuer]. They are liable for the payment of the income taxGerman text. The income tax liability is settled by the contractor's annual taxable income. If his or her income exceeds the sum of 11.000 Euro, he or she must pay tax for them.
If independent contractors also have other incomeGerman text which is liable to earnings tax (from employment or from retirement pensionGerman text) in addition to their income as independent contractors, the limit for their annual income which is exempt from taxation is 12.000 Euro.
Independent contractors are regarded as entrepreneurs within the meaning of the Umsatzsteuergesetz 1994 and are therefore subject to sales tax. Small-scale entrepreneurs who are exempt from tax without credit are practically not or only slightly affected by that, unless they exercise the standard taxation option [Regelbesteuerung].
Employers are obliged to pay the following duties and taxesGerman text for independent contractors:
- Municipal tax [Kommunalsteuer]
- Employer's contribution [Dienstgeberbeitrag]
- Employer's contribution surcharge
Employers do not have to pay the following duties and taxesGerman text for independent contractors:
- Employer's levy [Dienstgeberabgabe]
- Steuerliche Veranlagung von Einkünften und Umsatzsteuer aufgrund eines freien Dienstvertrages (BMF)
- Brochure "Soziale Absicherung für freie Dienstnehmerinnen/freie Dienstnehmer" (BMASK)
- Regional Health Insurance Funds [Gebietskrankenkassen]
- IEF-Service GmbH
- Allgemeines Bürgerliches Gesetzbuch (ABGB)
- Allgemeines Sozialversicherungsgesetz (ASVG)
- Dienstleistungsscheckgesetz (DLSG)
Federal Ministry of Labour, Social Affairs, Health and Consumer Protection