How to hire and pay employees in Australia
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Before hiring
Before hiring in Australia, there are a few important things you’ll need to know. First, you would typically need to establish a legal business entity there—and if you plan to operate in Australia long-term, you’d also have to create a subsidiary and incorporate with the Australian Securities and Investments Commission (ASIC).
In order to set up a payroll for your new employees in Australia, you’d want to make sure you’re registered for PAYG and GST (Good and Services tax) and may even decide to open an Australian bank account to help conduct your business there.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Australia below.
At a glance
CURRENCY
AUD
OFFICIAL LANGUAGE
ENGLISH
PAYROLL FREQUENCY
WEEKLY, BI-MONTHLY, MONTHLY
EMPLOYER TAXES
9.5%
13th / 14th SALARY
N/A
Good to know
- Employees in Australia have a superannuation fund—an employment-funded pension that they can access after retiring from work. Employers are mandated to contribute to the fund for their employees at the rate of 11.5%. Additional employee contributions are allowed, but not compulsory. Agreed salaries typically exclude the superannuation contributions.
- Employees in Australia who are dismissed in the first six months of employment (or 12 months of employment in small businesses) cannot make a claim of “unfair dismissal” to the Fair Work Commission.
- If a non-compete agreement is included in an employee’s original offer of employment, it can be seen as part of the exchange for the employer’s promise to employ the individual. If it is introduced afterwards, it can be compensated by a bonus or salary increase.
Labor laws in
Australia
Working hours and overtime
Employees in Australia typically work 38 hours a week, unless additional hours are "reasonable.” These must be pre-negotiated by employers and employees. Employees do not have the option to opt out of these provisions.
Minimum wage
Employment contracts
Employment contracts should be written in English.
Employers in Australia are not obligated to offer a reason for terminating employees:
- Who have been working for less than six months (for an organization larger than 15 employees)
- Who have been working for less than a year (for an organization that have fewer than 15 employees)
IP protection and non-compete agreements
The enforcement of non-compete clauses can depend on whether consideration for such an agreement was given to an employee.
If the agreement was part of the employee’s original offer of employment, it can be seen as part of the exchange for the employer’s promise to employ the individual. If it was introduced afterwards, it can be linked to a bonus or salary increase.
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Benefits and leave in
Australia
Vacation time
Full-time employees in Australia are entitled to four weeks of paid leave per year. Up to eight weeks of accrued but unused annual leave can be rolled over to the next year. Any accrued but unused leave must be paid out on termination.
Sick leave
Employees are entitled to 10 days of paid sick leave per year. This is funded entirely by their employer. Sick leave that is not used may accrue from year to year but is not required to be paid out on termination.
Maternity and paternity leave
Parental leave
Employees who have worked continuously with an employer are entitled to 12 months unpaid maternity leave. Some employers provide paid maternity leave.
In addition, employees can apply to the Federal Government paid parental leave scheme, which provides payment for 18 weeks of paid leave at the minimum wage (915.90 AUD per week).
Employees are entitled to five days' unpaid paternity leave at the time of the birth or adoption of a child. They can also apply to the Federal Government scheme for additional paid leave of two weeks.
Holidays
View a list of recognized public holidays in Australia here.
Employer tax
In Australia, there is a compulsory superannuation guarantee contribution that is capped at 21,002.06 AUD per year. In addition, employers who exceed a threshold amount of wage bill also pay a payroll tax, which differs by state. For instance, in New South Wales, this is paid at the rate of 5.45%. Social contributions for employers total 10%.
Individual tax
Employees in Australia are required to pay a medicare levy of 2%.
The income tax structure in Australia is as follows:
- 0-Income up to $18,200: Exempt
- 18,201 – $45,000: 19 cents for each $1 over $18,200
- $45,001 – $120,000: $5,092 + 32.5 cents for each $1 over $45,000
- $120,001 – $180,000: $29,467 plus 37 cents for each $1 over $120,000
- $180,001 and over: $51,667 plus 45 cents for each $1 over $180,000
Termination in
Australia
Employers in Australia can offer termination pay in lieu of a notice of termination. This is paid at the employee's full pay rate as if they had worked the minimum notice period.
Employees made redundant are entitled to redundancy pay, which is paid at their base—not full—salary level. This excludes incentive-based payment and bonuses, or overtime and penalty rates.
In Australia, the notice period is determined by an employee’s length of employment:
- Less than one year: One week
- One to three years: Two weeks
- Three to five years: Three weeks
- Five years: Four weeks
If the employee is over 45 and has been employed for at least two years, they are entitled to an additional week of notice.
Employees should check their award or employment contract for the notice period set out for resignations.
Start hiring employees in
Australia
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
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