What an employer of record for Australian hires takes on, and what you keep

The legal employer is the employer of record. It issues the contract in its own name, appears as employer on the payslip and in the tax office’s records, and is the party the employee would bring a claim against. Your company is the client that asked for the hire and pays for the service.

At Employer of Record Australia, every hire is employed by us as employer of record. We do not run an Australian subsidiary of our own, and nothing in this model makes your business an Australian employer on paper. What changes for your hire is the name at the top of the contract; the job, the manager and the reporting line stay yours.

It helps to be precise about the legal status of the arrangement. No Australian statute or regulator defines an “employer of record” as a category. The employer of record is simply an employer under the Fair Work Act 2009, and because its employee’s work benefits a separate business, several states treat the set-up as labour hire. That point is covered in the state section below and it affects you as the business receiving the work.

The contract itself is the employer of record’s document, drafted for the state and award that apply, but it should reflect what you agreed with the candidate: title, salary, hours, start date, place of work and any probation expectations. Review a draft before it goes out, because the employee will treat the offer letter and the contract as a single promise, and gaps between them are hard to repair after signature.

For the employee, the practical effect is ordinary Australian employment: a written contract, wages paid through a registered payroll, tax withheld, superannuation paid into their fund and the full set of minimum entitlements under national law.

Your company keeps control of the work itself. You select the candidate, agree the salary you want to offer, set objectives, run one-to-ones and decide what the role should achieve. The employer of record does not supervise tasks or sit in your team meetings.

Because the employer of record signs the contract and is accountable for it, some of your decisions pass through it before they take effect. A pay rise, a change of hours, a move to another state or a decision to end employment all need to reach the employer of record first, since each one changes a legal obligation it holds. In practice these are approvals and paperwork steps rather than second opinions on your management.

• Choosing the person, the job title and the start date
• Setting goals, reviewing performance and giving feedback
• Deciding on salary increases, bonuses and equipment
• Owning the customer relationships and the output of the role
• Telling the employer of record early about any change to hours, location or the future of the job

Some matters sit in both camps. Workplace health and safety duties in Australia are shared between the business that employs a worker and the business where the work is done, so a home office set-up or a site visit is something you and the employer of record should both think about. Intellectual property and confidentiality clauses are drafted into the employer of record’s contract, and your company should confirm the wording protects the work your hire produces for you.

What you hand over is the machinery of employment: the contract drafting, the award check, payroll calculation, PAYG withholding, super payments, Single Touch Payroll reports and the employee records the employer must keep.

Each cycle the employer of record invoices your company for the salary, the employer on-costs and the service fee, then pays the employee and the authorities from those funds. Salary in Australia is quoted before superannuation, so the 12% super guarantee is added on top of the agreed pay, until qualifying earnings for 2026-27 pass AUD 270,830, the annual maximum contribution base.

Since 1 July 2026 super is due with every pay run. Under the ATO’s Payday Super rules, each contribution is due at the fund by the seventh business day following the day wages go out, with a longer 20 business day window for a new starter’s first contribution. The old quarterly timetable applies only to earnings paid up to 30 June 2026. The employer of record also files a Single Touch Payroll Phase 2 report for every pay run no later than payday; since July 2026 those reports list qualifying earnings and the super owed too.

To give a sense of scale, our worked example for a Sydney employee on an AUD 110,000 base puts the annual employer cost at AUD 130,284. That figure includes AUD 13,200 of super, NSW payroll tax at 5.45% and an illustrative workers’ compensation premium of 0.30%, and it assumes the employer’s grouped wages already exceed the NSW payroll tax threshold. The full assumptions sit in the Sydney employee cost breakdown.

The EOR service fee is separate: from USD 560 per employee per month, which converted to about AUD 797 using European Central Bank rates published on 24 September 2026. A senior engineer and a junior coordinator attract the same fee, so the percentage cost of the service falls as pay rises.

Two layers of national rules set the floor: the National Employment Standards (NES) in the Fair Work Act, and for many roles a modern award made by the Fair Work Commission for that industry or occupation. The employer of record has to apply both, whatever your company’s home-country policies say.

The NES entitle a full-time employee to 20 days’ paid annual leave a year on a five-day week, 10 days of paid personal/carer’s leave, 10 paid days of family and domestic violence leave and, after a year of service, a year of unpaid parental leave. Maximum ordinary hours are 38 a week plus reasonable additional hours. Government Parental Leave Pay runs to 26 weeks for eligible parents from 1 July 2026 and is funded by the government rather than by the employer.

Pay has its own floor. The national minimum wage became AUD 26.44 per hour on 1 July 2026, which is AUD 1,004.90 across a full 38-hour week, and modern award minimum rates rose by 4.75% on the same date. An award can also add classifications, penalty rates, overtime and allowances, which is why the employer of record checks award coverage before a salary is confirmed.

Termination has its own statutory table. Notice under the NES runs from one week for up to a year of service to four weeks beyond five years, and an employee older than 45 who has served two years or longer gets one additional week, and redundancy pay scales from four weeks after one year to a peak of 16 weeks at nine to ten years.

Dismissal protection depends on income. Anyone paid below AUD 190,100 a year from 1 July 2026 has access to the unfair dismissal system once past the qualifying period, and award or agreement coverage extends that protection to higher earners as well.

Australia splits employment costs and duties between the Commonwealth and the states, so the state where your hire works matters from day one. State and territory law governs payroll tax, workers’ compensation cover, long service leave and the public holiday calendar.

Payroll tax is the clearest example. New South Wales charges 5.45% for 2026-27 once an employer’s taxable wages pass AUD 1.2 million in a year, with super included in wages. Other states set different rates and thresholds. Long service leave also differs: NSW grants 8.67 weeks after ten years, while Victoria grants it after seven years of service.

Labour hire licensing is the state rule that bears most directly on the employer of record model. Queensland, Victoria, South Australia and the ACT each run a licensing scheme. Queensland’s regulator treats a business as a labour hire provider when it places workers with another business and pays them, and it penalises both unlicensed providers and businesses that use them; the maximum for a corporation from 1 July 2026 is AUD 518,100. Victoria likewise requires hosts to use only licensed providers. If your hire will work in one of these places, ask about the licensing position before the contract is signed. Our guide to labour hire licensing by state goes through each scheme.

The Fair Work Act also contains Same Job Same Pay orders, under which the Fair Work Commission can require the labour hire employer to match, at minimum, the host’s enterprise agreement pay for the supplied worker. A host that is a small business employer cannot be the subject of these orders, and they matter only where the host has its own enterprise agreement for comparable roles.

The employer of record route is built for a business testing the market with a small number of hires before it forms an Australian company. It becomes less attractive as headcount and permanence grow, or when the business needs an Australian contracting party for its own customers, leases or tenders.

Forming a proprietary company makes your group the employer directly, and it brings its own work: ASIC registration, a director ID for each director, an address in Australia for the registered office, and the tax, insurance and super set-up that precedes a first pay run. We compare the two routes in EOR or Australian Pty Ltd.

An EOR is also the wrong tool for someone who genuinely runs their own business and invoices several clients. Since August 2024 the Fair Work Act judges employee status on how a working relationship operates in practice, so a person who works like staff should usually be employed, by an employer of record or by you.

If the model does fit, the next step is picking a provider carefully. The questions that separate providers in Australia, from award knowledge to Payday Super readiness, are listed in questions before signing an Australian EOR.