Hiring the first employee — A field report

I have been self-employed with my advertising agency for 7 years now. Especially in my early days, I struggled from project to project, but that was not dramatic. I don’t have very big expenses and I am only responsible for myself. However, I am a safety person, and working on projects can be fun, but always brings a certain uncertainty because they are difficult to calculate. Therefore, my goal has always been to work with clients on a long-term basis (logically). Fortunately, things have changed in the last few years and I am now responsible for several hotels and restaurants in the area of social media.

All of them have the same requirements: Being present on Facebook, Instagram, and LinkedIn. Hardly any hotel can provide internal resources for this and even less has the necessary know-how, especially in the area of content creation. Therefore, my clients outsource the entire organic social media support to me. What started with one hotel now works very well with over 10 hotels. This has meant a lot of work for me in the last few months and I have repeatedly reached the point that many self-employed people will know very well: A little too much work for one person, a bit too little work to afford the first employee.

But if you want to grow you have to free up resources. I have therefore decided to take the risk. I will be hiring my first full-time employee in the next few weeks and I can’t wait. On the way there I have already gained some experience and I would like to share this with you.

Question to ask yourself at the beginning (and honestly).

Once you have decided to take the step, the euphoria is great, but before you hire a person, you should ask yourself some questions. Because an employee is one thing above all: a big responsibility. Enclosed you will find a list of points with which you must deal with BEFORE:

• Can I afford it? And in such a way that there is still money left over for yourself.
• Which subsidies are possible for me? You can find a summary of my findings here.
• What must the employee be able to do? (soft and hard skills) In my experience, soft skills are often much more important than hard skills.

This list is not complete, but these are the points I have dealt with the most.

What does such an employee actually cost?

Before you even advertise a position, you have to find out how the future employee is to be classified and under which collective agreement he is to be categorized. The salary of the employee depends on:

• Profession
• Use group
• Year of employment

Every entrepreneur in Austria is compulsorily supplied with the WKO. In this case, however, the WKO can actually be helpful and therefore I can only recommend you to contact an advisor of the WKO for the correct classification of the employee.

Know your taxes!

Anyone who receives a wage or salary has to pay wage tax. The employer — i.e. YOU — has to take care of this. It must be taken into account in the settlement, collected when the salary is paid out, and paid to the tax office together with the income tax. The tax rate ranges between 25% and 55%, depending on the amount of income. The first 11,000 euros are tax-free. Detailed information on income tax can be found here: https://www.arbeiterkammer.at/beratung/steuerundeinkommen/lohnundgehalt/Lohnsteuer.html

Not to be neglected are the contributions to health insurance. These are to be paid on the 15th of the following month. The contributions are divided into:

• Employee share and
• employer’s share,

whereby the employer has a higher share of the contribution.

• Employee share: 18.12
• employer’s share: 21.48

The percentage for special payments is an additional 17.12% (employee share).

You can find more information online on the WKO website: https://www.wko.at/service/steuern/Lohnverrechnung-Abrechnung-Dienstnehmer.html.

Subsidies

When you hire your first employee, you may be eligible for a subsidy as an entrepreneur. EPUs, for example, are subsidized here for one year with a whopping 25% of the gross salary for non-wage costs. More information at: https://www.wko.at/service/netzwerke/Folder-LNK-Foerderung-2016.pdf

The employment bonus of the Austria Wirtschaftsservice (AWS) supports companies that hire an additional employee by refunding up to 50% of the employer’s contributions for three years: http://www.beschaeftigungsbonus.at.

Another subsidy also comes from AWS. The Austria Wirtschaftsservice wants to help innovative startups create jobs for the first time. Micro and small enterprises are supported. Here you can find more information: https://www.aws.at/foerderungen/aws-lohnnebenkostenfoerderung/

If you decide to hire an employee who is registered with the AMS, you can receive funding from the AMS for hiring and qualification. Funding is provided in the form of subsidies for non-wage labor costs, training costs or qualification measures. For EPUs, the AMS may even provide a subsidy on the gross monthly salary. Further AMS subsidies for companies can be found here: https://www.wko.at/service/arbeitsrecht-sozialrecht/AMS-Foerderungen_fuer_Arbeitgeber.html

So test, therefore, who joins forever

An employee is a kind of partnership. In private life, too, it is best to take a closer look at your ideal partner before entering into a long-term relationship. Even if you don’t always follow this advice privately, professionally you should really take it to heart. If the employer and employee are not a good match, then this can have serious consequences. I’m talking about the loss of reputation on the one hand, because your employees will be performing for you and your company in the future, to loss of revenue if work is not done.

The probationary period is intended to provide information about whether the selected applicant can cope with the challenges set and whether the working conditions deliver what they promise. During this period, both the employer and the employee may terminate the employment relationship without giving reasons (and without observing deadlines). The maximum permissible probationary period may not exceed one month.

Hiring your first employee is initially time-consuming and nerve-racking. It is a big change in the life of an entrepreneur. However, those who want to grow should dare to take this step, because at the end of the day not only the company will grow, but also the entrepreneur at this task.