Employing in Australia: fourteen answers for overseas firms planning a first hire

1

How can a foreign firm employ an Australian?

A foreign business has two routes: register an Australian proprietary company (Pty Ltd) and run its own payroll, or have an employer of record employ the person. Either way the employer issues the Fair Work Information Statement, withholds PAYG, reports every pay through Single Touch Payroll Phase 2, pays 12% super into the employee’s fund and registers for state payroll tax and workers’ compensation where required. If a modern award covers the role, it sets the minimum pay and conditions.

2

What does a Sydney employee on AUD 110,000 cost the employer?

In our 2026-27 example, a Sydney employee on AUD 110,000 costs the employer AUD 130,284 a year. The extra covers 12% super (AUD 13,200), NSW payroll tax at 5.45% on salary plus super (AUD 6,714.40) and an illustrative 0.30% workers’ compensation premium (AUD 369.60).

The payroll tax line assumes the employer’s group already exceeds the NSW AUD 1.2 million threshold; a smaller employer below it would pay nil. The employee keeps AUD 84,280 after income tax and the 2% Medicare levy.

3

How long before a new Australian hire can be paid?

With an employer of record, the timetable is mostly the contract and onboarding, because we already run Australian payroll. Your own Pty Ltd takes longer. Registering with ASIC online takes about 15 minutes and confirmation usually arrives within 2 business days, but an ABN, TFN, PAYG withholding registration, state payroll tax, a workers’ compensation policy and an STP-enabled payroll must follow before the first pay run.

4

Do you need an Australian company to put someone on payroll?

No, if you use an employer of record: we take the employer role in law, sign the contract and run Australian payroll, while you direct the daily work. Your own Pty Ltd would need a director ID for every director, a physical registered office in Australia, an annual review fee and a yearly solvency resolution. In Queensland, Victoria, South Australia and the ACT, supplying and paying a worker for a client may fall under state labour hire licensing, so ask any provider how it deals with this.

5

Employee or contractor under Australian law?

The Closing Loopholes changes to the Fair Work Act give weight to how the working relationship operates in practice, alongside what the written contract says. Someone who works set hours, under your direction and only for you, looks like an employee. Getting it wrong can mean back-pay of award and NES entitlements, a super guarantee charge and penalties for sham contracting. Super may also be owed to some contractors paid mainly for their labour, so check before signing a contractor agreement.

6

What should an Australian employment contract cover?

A sound contract names the employer (for our hires, EOR Australia), the job title and any modern award classification, the salary with super stated on top, ordinary hours of up to 38 a week plus reasonable additional hours, leave, notice, confidentiality and ownership of work. A fixed-term contract cannot run beyond 2 years including renewals, subject to exceptions. On day one the employee must also receive the Fair Work Information Statement from the employer.

7

Which taxes come out of Australian pay?

Employees pay income tax and the 2% Medicare levy through PAYG withholding each payday. For 2026-27, residents pay nothing up to AUD 18,200, then 15%, 30% from AUD 45,001, 37% from AUD 135,001 and 45% above AUD 190,000. The employer withholds using the ATO’s Schedule 1 formulas and reports each pay through STP Phase 2. Australia has no employee social security contribution; on-costs such as super at 12%, state payroll tax and workers’ compensation fall on the employer instead.

8

What is the lowest legal pay rate in 2026-27?

From 1 July 2026 Australia’s national minimum wage stands at AUD 26.44 per hour, or AUD 1,004.90 for a 38-hour week, a 6% rise (DEWR). Most roles fall under a modern award, whose minimum rates rose 4.75% on the same date and which can add penalty rates, overtime and allowances. Casual employees receive a 25% loading, so confirm the award classification before you set pay.

9

What leave does the NES give Australian staff?

Under the National Employment Standards, full-time staff get 4 weeks’ paid annual leave a year, 10 days’ paid personal/carer’s leave, 10 days’ paid family and domestic violence leave and 2 days’ compassionate leave per occasion. Parents can take 12 months’ unpaid parental leave, and the government pays up to 26 weeks of Parental Leave Pay from 1 July 2026. Long service leave comes from state law; in NSW it is 8.67 weeks after 10 years.

10

Who gets paid sick leave?

Permanent staff do. Full-time employees get 10 days’ paid personal/carer’s leave each year, covering their own illness or injury and caring for a family or household member; part-timers get it pro rata. Casual employees have no paid sick leave but can take 2 days’ unpaid carer’s leave per occasion. Separately, every employee, casuals included, has 10 days’ paid family and domestic violence leave a year. An award or contract can offer more.

11

Where do super and workers’ comp payments go?

Super goes to the employee’s superannuation fund, not to the government. The employer pays 12% of qualifying earnings for 2026-27, up to a maximum contribution base of AUD 270,830 a year, and Payday Super gives it 7 business days from each payday to land in the fund. Late payment attracts the new super guarantee charge. Workers’ compensation is a state insurance policy; in NSW it sits with icare and is priced on wages and industry. Payroll tax goes to the state revenue office, such as Revenue NSW.

12

What notice applies when a job ends?

Minimum NES notice grows with tenure: 1 week in year one, then 2, 3 and 4 weeks at the 1, 3 and 5-year marks, and a further week for an employee aged over 45 with 2 years’ service. Payment in lieu is allowed. Redundancy pay begins at 4 weeks after 1 year and peaks at 16 weeks; employers with fewer than 15 staff are exempt. Staff under an award, or earning below AUD 190,100, can claim unfair dismissal once past the minimum employment period.

13

Can Australian staff work from home?

Yes, where the contract allows it. After 12 months’ service an employee can formally request flexible working, including working from home. Employees also have a right to disconnect: they may refuse to monitor or answer contact outside working hours unless refusing is unreasonable, and small business employers have been covered since 26 August 2025. Where staff live matters too, because each state sets its own public holidays, long service leave, payroll tax and workers’ compensation scheme.

14

Which tasks does EOR Australia take off your desk?

EOR Australia acts as legal employer. It issues the contract and Fair Work Information Statement, runs payroll with PAYG withholding, reports each pay through STP, pays super under Payday Super, deals with payroll tax and workers’ compensation, and keeps leave records and handles any exit under the NES. You keep the choice of candidate, day-to-day direction of the work and the salary decision. EOR Australia bills from USD 560 a month for each employee.