In brief
Working on the beach or in the mountains instead of in the office — "workation" is becoming increasingly appealing to many employees. For employers, it presents an interesting opportunity to retain employees. At the same time, however, this model carries legal risks. Employers should therefore establish clear guidelines to avoid these risks, so that nothing stands in the way of the next "workation".
"Workation" is not a vacation!
The term "workation" generally refers to working from a (usually foreign) vacation destination, often in conjunction with vacation activities before or after the "workation". However, this term is not legally defined in Austria. It is important to make a distinction: Legally speaking, there is simply no such thing as a true "blending" of vacation and work. Vacation is intended exclusively for rest and relaxation, and any work performed interrupts it. A "workation" is therefore more accurately a special form of mobile work or telecommuting. The principles of working time law also remain in effect: working time is working time—regardless of location. Employees therefore cannot freely interrupt their work at will with leisure activities.
No entitlement—a (clear) agreement is required
There is no legal right to a "workation". Nor can it be unilaterally mandated — it is always a matter of mutual agreement between the employer and the employee. As "workations" are not regulated by law, it is strongly recommended that a written agreement is put in place. This provides clarity on the terms and conditions and reduces risks. In practice, the following aspects should therefore be clearly regulated:
- Location and duration,
- Working hours and availability,
- Scope of work,
- Costs and work equipment,
- Data protection and confidentiality, and
- Governing law and jurisdiction.
International "workation"
What labor law applies to "workations" abroad?
In practice, Austrian labor law generally remains applicable to temporary work abroad (unlike in the case of longer-term or repeated work abroad). However, this does not mean that foreign legal provisions are completely irrelevant. Rather, mandatory provisions of the country where the work is performed (i.e., the vacation destination)—such as those regarding employee protection or working hours—may also apply. Against this background, it is advisable to agree on a clear choice of law in favor of Austrian law while also reviewing any applicable local regulations on a case-by-case basis, particularly work restrictions on local holidays and maximum working hour limits.
Tax and social security law considerations for "workations" abroad
In many cases, short-term "workation" arrangements do not result in a change in social security coverage or tax classification. However, deviations may arise during longer or repeated stays abroad, which is why an individual assessment remains essential. Any potential tax implications for the employer's company (particularly the risk of creating a permanent establishment) should also always be taken into account before approving an employee's "workation".
Special considerations for "workations" in non-EU countries
Particular caution is advised when taking a "workation" outside the EU. A common misconception is that a residence permit alone automatically entitles the holder to take up employment. Tourist visas generally do not permit paid employment. Violations of residence or employment laws can result in severe penalties for employers. It is therefore essential to verify in advance the requirements under residence and employment laws for "workations" in other non-EU countries.
Conclusion
A clearly defined legal framework—particularly through explicit agreements and a proactive assessment of cross-border issues—is crucial for "workations" in order to provide employees with the desired flexibility while minimizing legal risks for the employer. Our clear recommendation, therefore, is that a standardized workation policy framework combined with case-by-case review offers the best balance between flexibility and risk minimization.
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