Posting Employees to Austria: Minimum Pay Compliance Under LSD-BG
When posting employees to Austria, the minimum wage is governed by local collective bargaining agreements, and non-compliance can cost a company tens of thousands of euros. Many companies mistakenly believe that a Czech agreement (DPP or DPČ) allows them to pay a lower wage, but Austria’s Act to Combat Wage and Social Dumping (LSD-BG) is uncompromising. We explain how to avoid sanctions that could be devastating for a business.
Table of contents
Quick summary
- Austria’s minimum pay is mandatory regardless of the type of Czech contract. Whether you send an employee under an employment contract, a DPP, or a DPČ, in Austria they must receive pay corresponding to the relevant Austrian collective agreement (Kollektivvertrag) for the given sector and activity.
- The type of contract in the Czech Republic does not relieve you of obligations in Austria. A DPP or DPČ concluded in the Czech Republic does not mean that more lenient conditions apply to you. Attorneys from ARROWS, a Prague-based law firm, handle situations where companies try to save costs in this way, which Austrian authorities (Finanzpolizei) often assess as circumvention of the law.
- Hidden risks go beyond base pay. Mandatory remuneration in Austria is not made up only of the basic hourly rate. You must also pay the employee the 13th and 14th salary (pro rata), overtime premiums, per diems, installation allowances, and ensure the correct pay group is determined.
- Documentation and notifications are critical. Without a valid A1 form, without timely posting notification (ZKO 3), and without complete payroll documentation in German directly at the workplace, you expose yourself to the risk of penalties. In practice, it pays to have the contractual setup for the posting aligned in advance as well (e.g., addenda to the employment contract, arrangements on pay and reimbursements), which the contracts and negotiations team can help with. In practice, it pays to set up posting processes and employment documentation in advance, which typically falls within the employment law agenda of employment law.
How Austria’s mandatory minimum pay works
In Austria, there is no single statutory minimum wage for all employees as companies in the Czech Republic are used to. Instead, minimum pay is set out in so-called collective agreements, which are binding for the entire relevant sector.
As soon as your employee enters Austrian territory and performs work there, the mandatory pay components under the Austrian collective agreement for the given industry apply to them for the duration of the posting. This means they must receive at least what is stated in that agreement. Rates vary by sector and qualification; in 2026 they often range from approximately EUR 1,800 to EUR 2,500 gross per month.
If you believe you can pay a lower rate because you have the employee on a DPP rather than a standard employment contract, you are mistaken. Austrian authorities, especially the Financial Police, assess the factual circumstances of the work performed. If the person works under your supervision, they are considered an employee in an employment relationship (Dienstverhältnis) with all entitlements.
Content of the collective agreement
A collective agreement in Austria is a binding legal document that covers the vast majority of employees in the private sector. Each collective agreement defines not only the base pay depending on the employee’s classification, but often also:
- overtime premiums (typically 50% to 100% on top of the base rate),
- special payments (Sonderzahlungen), most commonly the 13th and 14th salary,
- premiums for night work, weekend work, and work on public holidays,
- per diems and reimbursement of travel expenses,
- working hours.
Ensuring minimum pay does not mean merely topping up the hourly rate. You must ensure that the employee receives all of these components correctly calculated. If you pay only the basic amount and omit premiums, you are committing wage dumping (Unterentlohnung).
The difference between an employment contract, DPP and DPČ in the Czech Republic
It is essential to understand how Austrian law views different forms of employment in the Czech Republic. This is where Czech companies most often make mistakes.
Employment relationship and posting
If you have an employee under a standard employment contract in the Czech Republic and you post them to Austria, the situation is legally the most straightforward. There is a demonstrable employment relationship. In cross-border postings, it is often key to align Czech and Austrian regulation (including conflict-of-law rules and communication with foreign authorities), which is supported by international law. Your obligation is to ensure that for the period of work in Austria they receive pay corresponding to the Austrian collective agreement.
DPP and the risk of misunderstanding
An agreement to perform work (DPP) is a specific instrument in the Czech Republic, but in Austria the concept of an “agreement” in the Czech sense does not exist. As soon as a person performs dependent work, from the perspective of Austrian law (ASVG and LSD-BG) they are in an employment relationship.
This means that even a temporary worker on a DPP is subject in Austria to the pay scales under the collective agreement. The Austrian authority will require you to top up pay to the level of the Austrian tariff for every hour worked, including the relevant premiums.
DPČ and time records
Similarly to a DPP, a DPČ is also considered a standard employment relationship in Austria for the purposes of pay entitlements. Limiting the scope of work in the Czech Republic does not change this; for hours worked in Austria, the Austrian hourly rate applies.
Attorneys from ARROWS, a Prague-based law firm, handle cases where companies posted employees under a DPČ but did not keep accurate working time records in line with Austrian rules. During an inspection, the Financial Police then often assess pay based on full-time employment if the contrary cannot be proven, and impose a penalty for failure to keep payroll documentation.
Related questions on remuneration in Austria
1. When do Austrian minimum pay rates start to apply to employees on a DPP/DPČ?
From the very first moment they begin performing work on Austrian territory. There is no grace period or exception for short-term work as regards pay entitlements.
2. Can I pay an employee on a DPP in the Czech Republic a lower wage and make up the rest with per diems?
Be careful: per diems (Reiseaufwandsentschädigungen) are expense reimbursements, not wages. They cannot be used to plug a gap in base pay, and mixing up these components is a common reason for fines.
3. What is the difference between a DPP and a DPČ in Austria?
From the perspective of entitlement to minimum pay under the LSD-BG, practically none. In both cases, it is dependent work that must be remunerated according to Austrian tariffs.
Mandatory A1 form and social insurance
Many companies mistakenly believe that it is enough for the employee to be insured in the Czech Republic and to rely on the insurance card. However, in the case of a posting, the situation is strictly formal and requires official confirmation.
To second an employee to Austria, the employee must remain covered by the Czech social security system, which is evidenced by the A1 form. In the Czech Republic, this document is issued by the Czech Social Security Administration (ČSSZ), or the competent District Social Security Administration (OSSZ).
The A1 form is a legal document certifying to the Austrian authorities that social insurance contributions for the employee are paid in the Czech Republic. In practice, this means:
- Before the secondment, you must submit an application for the issuance of A1 to the locally competent OSSZ.
- You must have the form available at the workplace in Austria in case of an inspection.
- Without the A1 form, there is a risk that the Austrian authorities will require the employee to be registered with the Austrian social insurance system (ÖGK).
ZKO 3 secondment notification
In addition to social insurance, Austria imposes an obligation to notify the authorities of posted workers for the purpose of combating illegal employment. Filing the notification is an absolutely essential administrative step.
Under Section 19 of the LSD-BG Act, any foreign company posting employees to Austria must file a notification before work begins. The notification is submitted exclusively electronically via the ZKO 3 form on the website of the Austrian Ministry of Finance.
You must provide the identification details of the employer and the employee, the place of work, the duration of the posting, and the amount of wages. Failure to submit the ZKO 3 notification, or submitting it with incorrect information, is an administrative offence subject to significant fines.
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Risks and sanctions |
How ARROWS helps (office@arws.cz) |
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Missing A1 form: Risk of double taxation and double payment of social insurance contributions; need to register in the Austrian ÖGK system. |
Documentation management: ARROWS, a Prague-based law firm, will advise on the process of obtaining A1 and ensure a legal assessment. |
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Failure to notify an employee (ZKO 3) or late notification: Fine under LSD-BG (up to EUR 20,000 in serious cases); entry in the register of offences. |
Notification obligations: We will advise you how to complete the ZKO 3 form correctly and on time to avoid formal errors. |
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Incorrect classification (DPP/DPČ vs. employment contract): Risk of reassessment of wages and contributions in Austria. |
Legal analysis: We will review your contracts and set up the posting structure so that it reflects the reality. |
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Missing payroll documentation at the workplace: Fine for failure to cooperate and failure to present documents (Lohnunterlagen). |
Documentation preparation: We will help you compile a list of documents that the responsible manager in Austria must have available. |
Determining the correct collective agreement
In Austria, there are hundreds of collective agreements, and correctly determining which one applies to your employees is absolutely crucial. Agreements are divided by sectors such as construction, metalworking, or transport, and sometimes also regionally.
Placement in the wrong pay group is considered wage dumping if it results in lower pay. If you post a bricklayer, a different agreement applies than for an electrician or a steel structure installer.
You must identify the correct collective agreement (KV), determine the correct pay group, and find the current rates for 2026. It is also necessary to verify entitlements to supplements and per diems under the relevant agreement.
The attorneys at ARROWS, a Prague-based law firm, have experience in locating and interpreting Austrian collective agreements, which is key to setting a compliant wage.
Practical example
If you send a qualified installer but pay them the rate for an unskilled worker, an inspection by the Financial Police will identify the discrepancy. The authority will then calculate the difference for the entire posting period and impose an obligation to pay the wage shortfall to the employee plus pay a fine to the state.
German-language documentation at the workplace
Under Sections 21 and 22 of the LSD-BG Act, you must have payroll and employment documentation available in German at the place of work in Austria. The documents must be accessible at the time of inspection.
Mandatory documents include:
- employment contract (or confirmation of employment),
- pay slips (Lohnzettel) and proof of wage payment,
- working time records (Arbeitszeitaufzeichnungen),
- the A1 form and a copy of the ZKO 3 notification.
The absence of these documents during an inspection is penalised by separate fines. These sanctions can reach thousands of euros depending on the number of employees and repeated offences.
Long-term postings and changes to the rules
Standard postings are governed by the Posted Workers Directive. If the posting exceeds 12 months, in addition to pay, other working conditions under Austrian law will apply to the employee. This period can be extended to 18 months if you submit a reasoned notification.
After this period, almost the entire Austrian employment law regime applies to the employment relationship. The exceptions remain the rules on the commencement and termination of employment and occupational pension insurance.
Please note that if the posting exceeds 24 months, the social security regime also changes. In such a case, the employee should generally move to the Austrian system unless an exemption is granted.
Entitlement to the 13th and 14th salary
In Austria, the 13th and 14th salary are a standard feature enshrined in most collective agreements. From the perspective of a posted employee, this means they are entitled to a pro-rata portion of these payments for the time worked in Austria. A simplified calculation example shows that if an employee works in Austria for one month, they are entitled to the base wage plus one twelfth of the 13th and 14th salary.
If a Czech company fails to pay these components, it commits wage dumping. Other common mistakes include non-payment of overtime, per diems, and accommodation allowances where an entitlement arises under the collective agreement, or incorrect working time records.
Sanctions for non-compliance
The Austrian LSD-BG Act has undergone amendments that have mitigated the draconian cumulative fines, but the sanctions remain significant. The authorities enforce fines very effectively, including cross-border enforcement in the Czech Republic.
Indicative fine levels:
- Wage dumping: The fine depends on the amount of the underpayment and may range from thousands to tens of thousands of euros.
- Missing documentation: Fines for failure to present payroll documents or failure to notify the posting are also in the thousands of euros.
- Ban on activity: In extreme cases of repeated serious breaches, a company may be prohibited from carrying out activities in Austria.
Workers under DPP/DPČ and sham self-employment
A major risk is posting so-called false self-employed persons (OSVČ), i.e., sole traders who in fact work as employees. In Austria, this is referred to as Scheinselbstständigkeit.
If an inspection finds that a person presented as self-employed is in fact integrated into your company, the relationship will be reclassified as employment. The consequences include retroactive reassessment of taxes, contributions, and wages under the collective agreement, plus substantial fines.
In the construction sector, the activities of self-employed individuals are often additionally restricted, and certain types of work require trade licences that a Czech unregulated trade does not cover.
Conclusion and recommendations
Posting an employee to Austria requires thorough preparation and knowledge of the local regulations. Relying on the assumption that Czech procedures are sufficient is a strategy that can end up costing tens of thousands of euros.
Key steps for a safe posting:
- verify the Austrian wage and the applicable collective agreement,
- arrange the A1 and ZKO 3 forms in time,
- prepare workplace documents in German,
- do not underestimate the 13th and 14th salary and daily allowances.
If you are planning to post employees to Austria or want to verify that your processes are set up correctly, contact office@arws.cz. The attorneys of ARROWS, a Prague-based law firm, can assist you with a contract audit, calculation of entitlements, and representation in the event of an inspection.
FAQ
1. If I have an employee on a DPP in the Czech Republic and I send them to Austria for 3 months, do I have to top up their pay to the Austrian wage?
Yes. As soon as the employee works in Austria, the Austrian collective agreement applies to them. If their remuneration under the DPP is lower than the Austrian rate (including pro-rata parts of special payments), you must pay the difference.
2. How long does it take to obtain the A1 form?
The standard processing time for an A1 application with the Czech Social Security Administration (ČSSZ) is 30 days; in practice it may be faster (approx. 2 weeks), but during peak periods it can take longer. We recommend applying well in advance of the trip.
3. What happens if I forget to submit the ZKO 3 notification?
This is an administrative offence under the LSD-BG. You face a fine which, for a first offence, may amount to a few thousand euros, and increases in case of repetition. The notification must be submitted before work begins.
4. Who pays sickness benefits during a posting?
If the employee has a valid A1 form, they remain subject to Czech regulations. Sickness benefits are therefore paid by the Czech system (the employer for the first 14 days, then ČSSZ) under Czech rules. Medical treatment in Austria is provided on the basis of the EHIC.
5. Can we use Czech self-employed contractors (OSVČ) in Austria?
Yes, but only if it is genuine self-employment (delivery of a work, own responsibility). If the contractor works under your direction in the same way as an employee, this constitutes disguised employment with a high risk of sanctions.
Notice: The information contained in this article is of a general informational nature only and is intended for basic guidance based on the legal status as of 2026. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client security we maintain professional liability insurance with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation.
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