Questions before signing an Australian EOR, and the answers worth waiting for

Find out which Australian company will sign the employment contract, and ask in which states it holds a labour hire licence. Many providers sell under one brand and place staff through a different legal entity, and the licence question depends on that entity.

Queensland, Victoria, South Australia and the ACT all license labour hire. Queensland’s regulator describes labour hire as placing someone to work for another party while paying them yourself, which is a close description of how an EOR arrangement operates, and its questions and answers page sets out the tests and exemptions. The point for you as a buyer is that the obligation does not stop with the provider. In Queensland, using an unlicensed provider is itself an offence, with a maximum penalty for a corporation of AUD 518,100 from 1 July 2026, and Victoria requires hosts to use only licensed providers.

A good answer names the entity, lists the states where it holds a licence, and explains how it would handle a hire in a state where it does not. A weak answer says the EOR model is outside labour hire rules. No Australian statute or regulator has said that, and a provider that claims it is asking you to carry an untested risk.

At Employer of Record Australia, we employ your hires as employer of record, and we will set out the licensing position for the state in question before you commit. Our guide to licensing rules state by state has the detail on each scheme.

Ask the provider to show you, for your actual role, which modern award it thinks applies, which classification level, and the minimum rate that results. An answer in those terms shows real Australian payroll practice; a promise that the salary “exceeds the minimum wage” does not.

Modern awards are made by the Fair Work Commission for industries and occupations. They set minimum pay by classification, and many add penalty rates for weekends and evenings, overtime, allowances and rules on rostering. The AUD 26.44 hourly national minimum from 1 July 2026 is a floor for award-free adults, not a guide for award-covered roles, and award minimums themselves rose by 4.75% on the same date.

Two follow-ups are revealing. First, how does the provider handle roles that are paid well above the award but still covered by it, where overtime and penalty rates may still be owed unless the contract is drafted to deal with them? Second, who in the provider’s chain watches the Annual Wage Review each year and applies the new rates when they take effect each 1 July? The name of a team or a process is a better answer than “our system does it”.

It also helps to ask how the provider records hours for award-covered staff who work flexibly from home. Awards often tie penalty rates and overtime to when work is done, so a provider that keeps no time records for these employees cannot show that the salary covers what the award requires. A sensible answer will describe a simple timesheet or an annualised salary clause checked against the award, with a periodic reconciliation.

Classification mistakes surface late, often when an employee compares notes with a friend or leaves and asks for back pay. Underpayment is a Fair Work Act contravention regardless of which company in the chain made the error.

Ask how the provider meets the ATO’s limit of 7 business days between each payday and receipt of super by the fund, in force since 1 July 2026. A provider that still describes super as a quarterly payment has not updated its Australian payroll.

Good answers mention the details that make Payday Super work in practice. Up to 20 business days are allowed for a new hire’s opening contribution, and likewise for a fund the employer has never paid before. Contributions are calculated on qualifying earnings, which include ordinary time earnings and all commissions. STP Phase 2 reports have also started to include the qualifying earnings figure and the super owed, so the ATO can compare what was owed with what arrived. The Small Business Superannuation Clearing House closed completely on 1 July 2026, so the provider needs its own payment channel.

The cost of getting this wrong is higher than it was. The ATO’s new super guarantee charge adds to the unpaid amount a notional interest component, an uplift for administration of as much as 60%, and a loading for ignored fund choices (25% of the contributions, capped at AUD 1,200 per notice period). Ask whether the provider’s contract makes it responsible for charges caused by its own late payments, or passes them back to you.

Finally, ask how funding works. If super must leave within days of payday, the provider will usually want your payment for super before or at the same time as wages. That affects your cash planning and should be in the service agreement.

Ask whether the provider has considered Same Job Same Pay for your set-up and what it would do if an application were made. The Fair Work Act allows the Fair Work Commission to make a regulated labour hire arrangement order obliging the labour hire employer to pay the supplied worker no less than the rate in the host’s enterprise agreement, called the protected rate of pay.

The rules narrow the practical reach of these orders. They can only be sought by the workers, employees of the host, a union or the host itself, and the Fair Work Commission’s guidance explains that no order is available if the host counts as a small business employer, or where the arrangement is wholly or mainly for the provision of a service. They also only bite if an enterprise agreement of the host’s covers the kind of work being done.

Timing matters as well. The Commission’s guidance explains that an order can include an exemption period, usually three months, and that training arrangements are excluded, so short or early-stage placements are treated differently from long-running ones. A provider that knows the regime will raise these points without being asked.

For most overseas companies making a first Australian hire, the host has no Australian enterprise agreement and the question may never arise. It becomes live if your company already employs people in Australia under an agreement and then adds workers through a provider alongside them. In that situation, ask the provider to explain in writing how it would respond, and do not accept a claim that its model sits outside Part 2-7A of the Act.

Ask for a line-by-line estimate for your real hire: salary, super, payroll tax, workers’ compensation, the service fee and any one-off charges. A single percentage or a “from” price cannot be compared across providers because the on-costs vary by state and by the provider’s own payroll.

Payroll tax deserves a specific question. It is a state tax charged on the employer’s total wages above a threshold; the NSW rate for 2026-27 is 5.45%, applied once yearly wages exceed AUD 1.2 million, with super counted as wages. A provider whose grouped payroll is already above the threshold will pass payroll tax through from the first dollar of your employee’s pay. In our Sydney worked example on an AUD 110,000 base, that adds AUD 6,714.40 a year and takes the total employer cost to AUD 130,284 before the service fee.

• Is the service fee fixed, or tied to salary so that it climbs with each pay rise?
• Which currency is the invoice in, and whose exchange rate applies?
• Are there fees for onboarding, contract changes, terminations or year-end STP finalisation?
• Is there a deposit, and how many months does it cover?
• What notice is needed to end the service or move the employee elsewhere?

Leave costs are another place where estimates diverge. Annual leave and long service leave accrue on the same salary rather than adding cash cost each month, but a balance can fall due when employment ends. In NSW, for instance, long service leave is payable pro rata after five years of service in limited termination cases, and each state sets its own rules. Ask whether the estimate treats these as provisions, and who funds any balance owed at exit.

The EOR Australia fee is from USD 560 per person per month, roughly AUD 797 on the ECB’s published rates for 24 September 2026, identical at every salary level, and most clients also pay a set-up fee once, which we state in the quote. Employer costs are passed through at cost, as set out on the pricing page.

Ask how an exit works from your first message to the final pay, and who deals with the Fair Work Commission if the employee lodges a claim. The employer of record is the legal employer, so claims are made against it, but its response depends on the facts you supply as the business directing the work.

A clear provider will describe its process: how much notice it needs to prepare a termination, how it checks NES notice and redundancy entitlements, and how it documents the reasons. It will also explain the income test that decides access to unfair dismissal, with the high income threshold at AUD 190,100 from 1 July 2026, and how awards and agreements affect coverage below and above that figure.

Deadlines are short in this area, so ask how quickly the provider tells you when a claim arrives and who drafts the response. A slow handover between the employer of record and your company is where many small disputes become expensive ones.

Ask too about the cost split for a claim. Some agreements pass legal costs and settlements to the client in every case; others share them where the provider’s own process caused the problem. Whatever the answer, you want it in writing before the first hire. Our explainer on who does what under an Australian EOR sets out the division of roles, and the onboarding sequence guide shows where each document is produced.