Employer of Record in Australia

Australia serves as a base for English-speaking companies that want to establish a presence in the Asia-Pacific (APAC) region. Businesses will hire professionals across the sales, marketing, customer service, project management and engineering fields because there is a highly skilled talent pool.

The country's proximity to lucrative Asian markets such as Indonesia, Malaysia, Singapore and the Philippines provides foreign companies with access to these markets while establishing a presence in Australia.

Australia is not a low-cost hiring market. The talent pool is highly educated, skilled and experienced. Therefore, companies hire more senior and specialist roles in Australia than they do in the rest of APAC. It is not uncommon for a company to hire a senior executive in Australia, and smaller teams for customer support and marketing in the Philippines or Malaysia.

Foreign employers should not assume that Australia has a similar employment landscape to the U.S or Europe. The country has a detailed and regulated labor structure characterized by Modern Awards, the National Employment Standards (NES), superannuation obligations and strict immigration policies.

Entering into the market can be very lucrative, but it’s not always easy and partnering with an Employer of Record (EOR) in Australia can benefit foreign companies. An EOR, like Rivermate can act as the local employer and ensure compliance with local employment laws, providing the vehicle for business expansion.

How an Employer of Record (EOR) Works in Australia

The reasons for using an EOR are varied. Labor market testing, establishing a business presence in a region, or moving customer support teams offshore. However, it is the simple process that companies favor.

• You Find the Talent: You recruit and select the best candidate for your team.
• The EOR Hires Them: The EOR legally hires the employee in Australia under their local business entity.
• Onboarding: The EOR manages employment contracts, benefits registrations and social security contributions. The full onboarding process takes between one and three weeks, but it can be quicker for standard hires.
• HR and Payroll Management: The EOR continues to manage HR administrative tasks. They process salary payments, manage taxes, and provide mandatory employee benefits.
• You Manage Your Employee: You manage your employee’s daily tasks and responsibilities. The EOR takes care of the HR and legal aspects of employment.

Why use an Employer of Record in Australia

Without an Employer of Record, you will need to establish a legal entity, which is costly, find a local expert to run your hiring and HR process, and make a significant financial investment in doing this. An EOR reduces these operational burdens and provides the following benefits.

Here are some key benefits:

• Faster Market Entry: You can hire employees in days, not months. This gives you a competitive edge.
• Compliance with Local Laws: EORs are experts in Australian labor law. They ensure your hiring practices comply with local labor regulations. This includes complex areas like superannuation and workers' compensation.
• Cost-Effective: Setting up a legal entity in Australia is expensive. An EOR provides a more affordable alternative for hiring employees.
• Access to Better Benefits: EORs can often provide more competitive benefits packages for your employees. This helps you attract and retain top talent.

Hiring in Australia is effective if you're looking for client-facing and regional business support roles. The country acts as a valuable hub for companies serving clients across the APAC region, because workers operate in similar time zones and possess strong English skills.

In Australia, Modern Awards, which establish minimum employment standards for sectors, play a significant role. For this reason, hiring requires careful planning and attention to:

• Minimum pay rates.
• Overtime payments.
• Allowances.
• Leave conditions.

Employers are legally required to provide superannuation contributions (retirement savings) as part of payroll obligations. In addition, workers are entitled to a number of mandatory benefits.

Australia’s employment costs are much higher than those in emerging Asian markets. Therefore, its primary focus is not on large remote teams but on placing senior and executive roles.

Employment contracts & must-have clauses

Australian candidates expect full transparency in employment contracts and prefer flexible working hours, remote arrangements, and variable pay options to traditional employment terms.

Your employment contract should include several key clauses to protect both you and your employee:

• Position and Duties Clearly state the job title, responsibilities, and performance expectations.
• Type of Employment Specify if the role is full-time, part-time, or casual.
• Remuneration Detail the salary, any bonuses, and superannuation contributions.
• Hours of Work Outline the expected working hours and any overtime arrangements.
• Leave Entitlements Include details on annual leave, personal leave, and any other leave entitlements as per the National Employment Standards (NES).
• Confidentiality and Intellectual Property Protect your business's sensitive information and clarify ownership of any work created.
• Termination Explain the notice period required for both parties to end the employment relationship.

Probation periods

A probation period is a trial phase at the start of employment, usually lasting between three to six months. It allows you and your new employee to decide if the role is a good fit. During this time, you can assess their performance and cultural fit within your company.

Employees on probation have the same rights and entitlements as permanent employees, including:

• Minimum wage
• Leave accrual
• A safe working environment.

If things don't work out, you can terminate the employment during the probation period. However, you must still provide the required notice period.

Working hours & overtime

In Australia, the standard full-time working week is 38 hours. You can ask employees to work reasonable additional hours, but they have the right to refuse if the request is unreasonable.

Overtime pay is typically calculated at a higher rate. The exact rate depends on the industry award or enterprise agreement. Common overtime rates are:

• 150% of the normal hourly rate for the first two hours.
• 200% of the normal hourly rate after the first two hours.

Employees are also entitled to rest breaks during the workday and a minimum break between shifts.

Public & regional holidays

Australia has national public holidays that apply to everyone. Each state and territory also has its own public holidays.

National Public Holidays

• New Year's Day
• Australia Day
• Good Friday
• Easter Monday
• Anzac Day
• Christmas Day
• Boxing Day.

Here is a list of some of the additional public holidays for each state and territory:

State/Territory	Additional Public Holidays
Australian Capital Territory	Canberra Day, Reconciliation Day, Labour Day
New South Wales	King's Birthday, Labour Day
Northern Territory	May Day, King's Birthday
Queensland	Labour Day
South Australia	Adelaide Cup Day, King's Birthday, Labour Day
Tasmania	Devonport Cup, Royal Hobart Regatta
Victoria	Labour Day, AFL Grand Final Friday, Melbourne Cup Day
Western Australia	Labour Day, Western Australia Day, King's Birthday

Hiring contractors in Australia

Hiring independent contractors can be a flexible and cost-effective way to access specialized skills for specific projects. Contractors are responsible for their own taxes and superannuation, and you don't provide them with leave entitlements.

It's crucial to have a clear contract that outlines the scope of work, payment terms, and intellectual property ownership. If the contract doesn't state otherwise, the contractor will own the intellectual property of the work they create.

A major risk when hiring contractors is misclassification. This happens when a worker is treated like an employee but is classified as a contractor. Misclassification can lead to significant penalties, including back payment of wages and taxes.

An Employer of Record (EOR) can help you mitigate this risk. An EOR takes on the legal responsibility for your workers, ensuring they are classified correctly and that you comply with all local labor laws. This gives you peace of mind and allows you to focus on growing your business.

In Australia, compensation packages consist of base pay, mandatory awards, superannuation, incentive-based pay and fringe benefits. When a company offers fringe benefits, it may pay certain employee expenses directly, such as car leases or technology.

The country has a strictly mandated payroll system called Single Touch Payroll (STP). Employers are required to use the system to transmit real-time payroll and superannuation data to the Australian Taxation Office (ATO).

Payroll cycles & wage structure

You have flexibility in how often you pay your team. Common payroll cycles in Australia include:

• Monthly: Paying employees once a month.
• Bi-weekly: Paying employees every two weeks on a set day.

An employee's pay is more than just their base salary. The wage structure can include several components:

• Salary: A fixed regular amount.
• Hourly wage: Pay based on the number of hours worked.
• Allowances: Extra payments for specific needs like travel or uniforms.
• Bonuses: Additional pay for reaching specific goals.

Overtime & minimums

Australia has a national minimum wage that is reviewed each year. As of July 2023, the national minimum wage is $23.23 per hour. However, many jobs fall under specific industry "awards" that set higher minimum pay rates.

A standard work week is 38 hours. If an employee works more than these hours, you generally need to pay them overtime. Overtime rates are typically:

• 150% of the employee's normal rate for the first three hours.
• 200% for any work after that.

Employees may also get higher pay, known as penalty rates, for working on weekends, public holidays, or late at night.

Employer taxes and contributions

As an employer, you are responsible for several contributions and taxes on behalf of your employees.

Contribution/Tax	Description
Superannuation	A mandatory retirement savings contribution.
Payroll Tax	A state-based tax on the total wages you pay each month.
Workers' Compensation Insurance	Insurance that covers employees if they get sick or injured at work.

Employee taxes and deductions

The main deduction from an employee's pay is income tax.

Deduction	Description
Pay As You Go (PAYG) Withholding	This is the income tax you collect from an employee's pay and send to the Australian Taxation Office (ATO).
Employee Superannuation Contributions	Employees can choose to make additional contributions to their superannuation fund from their pre-tax or post-tax salary.

In Australia, providing employee benefits and leave is essential for a successful business. It goes beyond legal requirements and is crucial for attracting and retaining top talent in a competitive job market.

Australian candidates view the type of benefits as a representation of the company culture. Benefits that align with work-life balance, flexible work arrangements and wellness are favored amongst top candidates.

Statutory leave

Australia's National Employment Standards (NES) set the minimum leave entitlements for employees. These are legal requirements.

• Annual Leave Full-time employees get four weeks of paid annual leave per year. Some shift workers are entitled to five weeks. This leave starts accruing from the first day of work.
• Personal/Carer's Leave This is 10 days of paid leave per year for when an employee is sick or needs to care for an immediate family member. Unused leave can be carried over to the next year.
• Parental Leave Eligible employees can take up to 12 months of unpaid parental leave. They can also request an additional 12 months. The government may provide paid parental leave.
• Long Service Leave After a long period of continuous service with the same employer, employees are entitled to an extended period of leave. The length of service required varies by state and territory, typically between 7 and 15 years.
• Community Service Leave This is unpaid leave for activities like jury duty or voluntary emergency management activities.

Public holidays & regional holidays

Australia has national public holidays, and each state and territory has its own additional holidays.

Date	Holiday	Location
January 1	New Year's Day	National
January 26	Australia Day	National
March 2	Labour Day	WA
March 9	Canberra Day	ACT
March 9	Adelaide Cup Day	SA
March 9	Labour Day	VIC
April 3	Good Friday	National
April 4	Day after Good Friday	National (except TAS & WA)
April 5	Easter Sunday	National (except TAS & WA)
April 6	Easter Monday	National
April 25	Anzac Day	National
May 4	May Day	NT
May 4	Labour Day	QLD
June 1	Reconciliation Day	ACT
June 1	Western Australia Day	WA
June 8	King's Birthday	All (except QLD & WA)
August 3	Picnic Day	NT
September 25	Friday before AFL Grand Final	VIC
September 28	King's Birthday	WA
October 5	Labour Day	ACT, NSW, SA
November 3	Melbourne Cup	VIC
December 25	Christmas Day	National
December 26	Boxing Day / Proclamation Day (SA)	National

Typical supplemental benefits

To attract and retain talent, many employers offer benefits beyond the legal minimums.

Statutory Benefits	Non-Statutory (Supplemental) Benefits
Minimum Wage	Supplemental Health Insurance
Superannuation (Retirement Fund)	Superannuation Top-Ups (contributions above the minimum)
Annual Leave	Company Cars & Allowances
Personal/Carer's Leave	Performance Bonuses
Parental Leave	Flexible Work Options
Long Service Leave	Additional Paid Parental Leave
Workers' Compensation Insurance	Wellness Programs & Gym Memberships

How an EOR can help with setting up benefits

Setting up employee benefits in Australia can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR acts as the legal employer for your Australian team. They handle all the administrative tasks, including payroll, taxes, and benefits. This means you can be sure you are compliant with all national and state-level laws without needing to be an expert in Australian employment regulations.

An EOR can:

• Ensure you provide all mandatory benefits.
• Administer both statutory and supplemental benefits.
• Manage payroll and superannuation contributions.
• Keep you updated on any changes to employment laws.

Using an EOR allows you to offer competitive benefits and attract top talent in Australia, all while saving you time and reducing risk.

Terminations in Australia are heavily regulated under the Fair Work Act 2009. This act enforces notice periods, final payouts and protections against unfair dismissal. Mandatory notice periods are required during which the employee can keep working or receive a payment in lieu of notice.

During the offboarding process, the reasons for the termination are defined. If it is due to economic downturn or technological shifts, the employee is made redundant, not terminated. This affects severance payments.

Notice Periods

In Australia, you must give employees written notice before their employment ends. You can't just tell them it's their last day. The legal minimum notice period is set by the National Employment Standards (NES).

The amount of notice depends on how long the employee has worked for you continuously.

Period of Service	Minimum Notice Period
1 year or less	1 week
More than 1 year to 3 years	2 weeks
More than 3 years to 5 years	3 weeks
More than 5 years	4 weeks

Employees over 45 years old who have worked for you for at least two years get an extra week of notice.

You can let the employee work through their notice period. Or, you can pay them in lieu of notice. This means you pay them what they would have earned during that time, and their employment ends immediately.

These rules do not apply if you are terminating an employee for serious misconduct. In that case, you don't have to provide notice.

Severance Pay

In Australia, severance pay is called redundancy pay. It applies when you make a role redundant, meaning the job no longer needs to be done by anyone. This is not for employees terminated for performance or conduct reasons.

To be eligible for redundancy pay, an employee must have been with your company for at least 12 months. Casual employees are not eligible.

The amount of redundancy pay is based on the employee's length of service. This payment is separate from their final pay, which includes wages and unused leave.

Here are the minimum redundancy payments required by law:

Period of Service	Redundancy Pay
At least 1 year but less than 2 years	4 weeks
At least 2 years but less than 3 years	6 weeks
At least 3 years but less than 4 years	7 weeks
At least 4 years but less than 5 years	8 weeks
At least 5 years but less than 6 years	10 weeks
At least 6 years but less than 7 years	11 weeks
At least 7 years but less than 8 years	13 weeks
At least 8 years but less than 9 years	14 weeks
At least 9 years but less than 10 years	16 weeks
At least 10 years	12 weeks

This payment is calculated using the employee's base rate of pay and does not include bonuses, allowances, or overtime. A portion of the redundancy payment is tax-free.

How Rivermate Handles Compliant Exits

Navigating Australian employment law can be tricky. The rules for termination, notice, and final payments are specific. Mistakes can lead to legal claims.

We handle the entire offboarding process for you.

• We ensure compliance. We manage all termination requirements according to the Fair Work Act and the National Employment Standards. You don't have to become an expert in Australian labor law.
• We calculate final pay. We accurately calculate all final entitlements. This includes notice in lieu, redundancy pay, and unused leave.
• We manage the paperwork. We prepare all the necessary documentation for a clean exit. This reduces your risk and ensures a smooth process for your departing employee.

Using Rivermate means you can manage employee exits with confidence. We take care of the complex details so you can focus on your business.

The Australian government offers a range of visa options for foreign workers. The two most common options are the employer-sponsored visa and points-tested skilled visas. For short-term appointments, there is also a working holiday visa.

Visa processing in Australia can take some time, depending on the type of visa. Employers should expect turnaround times of between four and twelve months before approval is given. For temporary and critical skills shortages, visas are fast-tracked and approved within one month.

An Employer of Record (EOR) can sponsor skilled workers for certain visas, but it's not a simple process. Sponsorship is a significant commitment with strict legal obligations.

Here are the main visas an EOR can potentially sponsor:

• Temporary Skill Shortage (TSS) visa (subclass 482) This is the most common sponsored work visa. It allows employers to bring in skilled workers to fill labor shortages.
• Employer Nomination Scheme (ENS) visa (subclass 186) This visa provides a path to permanent residency for skilled workers.
• Skilled Employer Sponsored Regional (Provisional) visa (subclass 494) This visa is for skilled workers who are willing to work in regional Australia.

What this means for you:

Securing a sponsored visa through an EOR depends on several factors. Your occupation must be on the relevant skilled occupation list. You also need to have the required skills and experience for the role. Not every job or candidate will be eligible for sponsorship. The EOR must be an approved sponsor with a solid track record.

Business travel compliance

If you are visiting Australia for short-term business activities, you need the right visa. It is important to understand the rules to avoid any issues.

Here are the common options for short-term business travel:

• Visitor visa (subclass 600) Business Visitor stream This visa is for business-related visits of up to three months. Permitted activities include attending conferences, negotiations, and meetings. You cannot work on this visa.
• Temporary Work (Short Stay Specialist) visa (subclass 400) This visa is for short-term, highly specialized, non-ongoing work. It is typically granted for up to three months but can be extended in some cases.

Staying compliant:

Always be clear about the purpose of your visit. Performing work outside the scope of your visa can lead to serious consequences, including visa cancellation and future travel bans. Ensure you have the correct visa before you travel.