Making a first hire in Australia, one decision at a time

The first decision is which organisation signs the contract: an Australian company of your own, or an employer of record. Engaging the person as a contractor is a third option only when they genuinely run their own business.

Setting up your own proprietary company involves ASIC registration and director IDs, an Australian street address for the registered office, and a series of ATO, state and insurance registrations before anyone is paid. It is the right answer for a permanent team and for businesses that need an Australian entity for customers or premises. Our comparison, EOR or Australian Pty Ltd, weighs the two.

With Employer of Record Australia, the candidate you select is employed by us as employer of record, and we take care of the contract, payroll, PAYG withholding, super and Single Touch Payroll reports, while your manager directs the work. That route suits a first hire where you want to start without forming a company.

A contractor arrangement needs care. Since August 2024 the Fair Work Act decides employee status by how the relationship operates in practice rather than by the labels in the written contract. Someone who works set hours for one business, under its direction, using its tools, is likely to be an employee whatever the agreement says. Our guide to sham contracting and contractor status explains the risk.

Before drafting a job advert, find out which state or territory the person will work from and whether a modern award covers the role. Both shape the cost, the contract and several legal duties.

State matters because Australia’s federal system leaves several employment costs to the states. Payroll tax, injury insurance, long service leave entitlements and holiday calendars differ from one state to the next. NSW, for example, grants 8.67 weeks of long service leave after ten years, while Victoria grants long service leave after seven years. Labour hire licensing also depends on location: Queensland, Victoria, South Australia and the ACT run schemes, and Queensland’s regulator explains its definition on its questions and answers page.

The award question matters because modern awards, made by the Fair Work Commission, set minimum pay by classification and often add penalty rates, overtime and allowances. Many professional roles are covered by an award even when the salary is well above its minimum. A role outside any award still has the protection of the National Employment Standards and the national minimum wage.

Remote hires need the same analysis. A person working from home in Brisbane is working in Queensland for payroll tax, public holiday and licensing purposes, even if your nearest customer is in Sydney. If the candidate might move state during the employment, raise it early, since a move can change several of these rules at once.

Write both answers down before you advertise, because they will appear in the contract and the cost estimate.

Set a salary that meets the award minimum for the classification, then budget the employer costs on top: 12% superannuation, workers’ compensation insurance and, where it applies, state payroll tax. In Australia, advertised salaries exclude super, so the candidate will read your figure as base pay.

The floors changed on 1 July 2026. Adults may not be paid less than AUD 26.44 an hour, AUD 1,004.90 for a 38-hour week, after a 6% rise in the national minimum wage, and modern award minimum rates rose 4.75%. The ATO confirms the super guarantee rate of 12% for 2026-27 and later years, and no further contributions are required in a year after qualifying earnings hit AUD 270,830.

For budgeting, our worked example uses a Sydney-based, full-time role paid AUD 110,000, with super on top. It assumes the employer’s grouped wages are above the NSW payroll tax threshold, so the 5.45% rate applies from the first dollar, and it uses an illustrative workers’ compensation rate of 0.30%. Super comes to AUD 13,200, payroll tax to AUD 6,714.40 and workers’ compensation to AUD 369.60, for a total annual employer cost of AUD 130,284. The employee’s side of the same example, with tax and take-home pay, appears in our Sydney cost post.

Where an employer of record employs the person, the service fee sits on top. Ours is from USD 560 monthly per person, equal to about AUD 797 when converted on 24 September 2026, whatever the salary.

Check the candidate’s work rights before the offer becomes unconditional. Australian citizens and permanent residents need no visa; everyone else needs a visa that allows the work.

For sponsored hires, most employers look first at the Skills in Demand visa (subclass 482). It superseded the older TSS visa from 7 December 2024, runs for a maximum of four years and offers streams for Specialist Skills, Core Skills and Labour Agreements; applicants need a year or more of relevant experience. Pay has to clear a Home Affairs income threshold as well as the going market rate, and because the published figure can change, confirm it on the department’s website when you lodge the nomination.

Sponsorship carries its own set of obligations for the sponsoring business, which the department explains on its sponsor pages. Placing a visa holder with a business other than the sponsor raises its own issues, so take migration advice before combining a visa hire with any third-party employment arrangement.

Temporary visas can carry conditions on who the holder may work for and in what occupation. Read the grant conditions with the candidate before the offer is final, including any limits on hours or employer, and diarise the expiry date so a renewal or a new application starts well ahead of it.

Build the visa timeline into your start date. A hire who already holds work rights can start as soon as the contract and payroll steps are complete.

The offer and contract must at least meet the National Employment Standards and the applicable award, and should state the employment type, hours, salary plus super, place of work and notice. The employer also has to give the new starter the Fair Work Information Statement.

The NES minimums cannot be contracted away: annual leave of four weeks, personal/carer’s leave of 10 paid days, 10 paid days for family and domestic violence, compassionate leave, unpaid parental leave, notice and redundancy pay. Ordinary full-time hours top out at 38 a week, plus additional hours only where reasonable. After a year with the employer, staff may ask for flexible working.

Fixed-term contracts have a limit. Since December 2023 a fixed-term arrangement generally cannot exceed two years including renewals, with exceptions. For a first hire whose future depends on how the market responds, a permanent contract with clear notice terms is often simpler than a fixed term that may need extending.

Include clauses on confidentiality and intellectual property that fit your business, and make sure the offer letter and the contract say the same thing about title, pay and start date.

On the first payday the employer calculates gross pay, withholds PAYG tax, pays net wages, files an STP Phase 2 report with the ATO and starts the clock on the super contribution. Each of those needs information from the employee before the payroll cut-off.

The new starter completes a tax file number declaration and a superannuation choice form, or provides details of an existing fund. Under Payday Super, which began on 1 July 2026, each payday opens a 7 business day window for the super to arrive, stretched to 20 business days for the very first contribution.

For 2026-27, a resident’s first AUD 18,200 is tax-free; income to AUD 45,000 is taxed at 15%, to AUD 135,000 at 30%, to AUD 190,000 at 37%, and anything higher at 45%, with the 2% Medicare levy added. Withholding each pay follows Schedule 1, and any difference is settled when the employee lodges a return. Our onboarding guide, the Australian EOR onboarding sequence, sets out the documents in order.

In the first months, focus on clear expectations, accurate leave and hours records, and early feedback. Access to unfair dismissal depends on income, award coverage and length of service, and a dismissal decision is judged partly on the process behind it, so written goals and dated review notes from the first weeks are worth the effort. Agree with the employer of record at the outset what a review period will look like and how concerns will be raised.

Out-of-hours contact needs thought when your head office is in another time zone. Australian employees have a right to disconnect, which lets them ignore work messages and calls outside their hours unless doing so would be unreasonable. Agree which calls are part of the role and put that in writing.

Leave and hours records deserve early attention. Because annual leave builds up with each week worked, the payroll needs accurate leave balances from the first pay run, and any leave taken should be approved and recorded the same way each time. If the role is covered by an award, keep a record of the hours worked so you can show the salary covers any overtime or penalty rates.

Plan for growth at this stage as well. A second or third hire in another state brings a new set of state rules, and a team that is growing fast may be the signal to compare the EOR route with a company of your own again.

Two dates recur each year. On 1 July, minimum wages, award rates and many thresholds change, so pay should be checked against the new figures. The financial year ends on 30 June, and the employer must make its STP finalisation declaration by 14 July.

The page on employing in Australia gathers the rules on leave, tax and termination in one place.