Hiring Employees in Australia: A Complete Guide for International Companies

Australia is one of the most attractive markets in the Asia Pacific for international companies building a team, and one of the most heavily regulated. A skilled workforce, stable economy, English-speaking business culture, and time-zone overlap with Asia make it a natural base for regional expansion.

What surprises most companies entering Australia is the layering. Employment is governed federally through the Fair Work Act, but tax obligations, workers' compensation, and long service leave are administered separately by each of the six states and two territories. On top of that, three of the biggest changes to Australian workplace law in a generation have landed between August 2024 and July 2026: a new statutory test for who counts as a contractor, criminal penalties for wage underpayment, and the shift to paying superannuation on every payday rather than quarterly.

This guide covers the detail that matters when you are hiring in Australia, whether you intend to set up your own entity or employ through an Employer of Record.

Australian employment law overview

Employment in Australia is regulated by the Fair Work Act 2009, which applies to most private sector employers and employees through the national workplace relations system. It is administered by two bodies: the Fair Work Ombudsman, which enforces compliance, and the Fair Work Commission, the national workplace tribunal that sets minimum wages and approves enterprise agreements.

Three instruments set the floor for pay and conditions, in ascending order of specificity. The National Employment Standards (NES) are the universal baseline. Modern awards sit on top of the NES and set minimum pay and conditions for particular industries and occupations; around one in five Australian employees is award-reliant. Enterprise agreements are negotiated at the workplace level and must leave employees better off overall than the relevant award. A contract can improve on these instruments but can never offer less than the legal minimum, and an employee's agreement to a lower standard does not make it lawful.

Employment contracts

Australian employment contracts do not have to follow a prescribed government form, but they must reflect the NES and any applicable award or enterprise agreement. Employees are engaged as full-time, part-time, casual, or fixed-term.

Fixed-term contracts are now constrained. Since December 2023, a fixed-term contract generally cannot run for more than two years, including renewals, and the same role cannot be filled by consecutive fixed-term contracts indefinitely. Several exceptions apply, including for genuine specialised tasks and certain high-income roles.

Every new employee must be given the Fair Work Information Statement on or before their first day. Casual employees must also receive the Casual Employment Information Statement.

Working hours, leave and the National Employment Standards

Working hours

Full-time hours are capped at 38 ordinary hours per week, plus reasonable additional hours. What counts as reasonable depends on factors including the employee's role, pay, personal circumstances, and the notice given.

Annual leave

Full-time and part-time employees accrue four weeks of paid annual leave per year, accruing progressively from the first day of employment, including during any probation period. Some shift workers are entitled to five weeks. Leave loading of 17.5% applies where an award or agreement provides for it.

Personal, carer's and other leave

Employees are entitled to 10 days of paid personal and carer's leave per year, accruing progressively, plus two days of unpaid carer's leave per occasion where paid leave is exhausted. All employees, including casuals, are entitled to 10 days of paid family and domestic violence leave per year. Compassionate leave is two days per occasion, and community service leave covers jury duty and voluntary emergency activities.

Parental leave

Eligible employees with at least 12 months of continuous service are entitled to up to 12 months of unpaid parental leave, with the right to request a further 12 months. Separately, the Australian Government Paid Parental Leave scheme provides government-funded payments. From 1 July 2026 that scheme provides up to 26 weeks, increased from 24 weeks, and now includes superannuation on the government-funded payments.

Long service leave

Long service leave is a distinctly Australian entitlement and is set by each state and territory rather than federally. The qualifying period and the amount of leave differ by jurisdiction. As an indication, an employee in Queensland is entitled to roughly 8.67 weeks of paid leave after 10 years of continuous service. Employers with staff across multiple states must apply each jurisdiction's rules separately.

Public holidays

Employees are entitled to paid days off on public holidays they would ordinarily work. Public holidays are a mix of national and state or territory dates, so the calendar an employer must observe depends on where each employee is based.

Pay, minimum wage and modern awards

The National Minimum Wage is reviewed every year by the Fair Work Commission and adjusted on 1 July. Following the 2026 Annual Wage Review, from the first full pay period on or after 1 July 2026 the National Minimum Wage is $26.44 per hour, or $1,004.90 per week based on a 38-hour week, and modern award minimum rates increased by 4.75%.

Most employees are not actually paid the National Minimum Wage itself; they are paid under a modern award, which sets higher minimums by classification along with penalty rates, overtime, and allowances. Identifying the correct award and classification for each role is the single most common source of underpayment, because the award rate, not the National Minimum Wage, is usually the real legal floor.

Casual employees receive a casual loading, generally 25%, on top of the base rate to compensate for not accruing paid leave.

Superannuation and Payday Super

Superannuation, Australia's compulsory retirement savings system, is one of the largest employer-side costs and one of the most closely monitored. The Superannuation Guarantee rate reached 12% of an employee's earnings on 1 July 2025 and is stable through 2026-27. Since January 2024, superannuation has been part of the National Employment Standards, which means unpaid super can be pursued through the Fair Work Ombudsman as well as the Australian Taxation Office.

Employers generally must offer employees a choice of fund. Where an employee does not nominate one, the employer must request the employee's existing "stapled" fund from the ATO rather than defaulting them into a new account.

The most significant change to Australian payroll in a generation takes effect on 1 July 2026: Payday Super. From that date, superannuation must be paid at the same time as wages, and the contribution must reach the employee's fund within seven business days of payday. This replaces the long-standing quarterly system, under which employers had up to 28 days after the end of each quarter to pay.

The detail that catches employers out is threefold. The contribution base changes from Ordinary Time Earnings to a broader measure of qualifying earnings under the new regime. The Superannuation Guarantee Charge that applies to late payment has been redesigned, is assessed directly by the ATO, carries interest that compounds daily, and is not tax deductible. And the Small Business Superannuation Clearing House, which many employers relied on to remit contributions, closed to new users in October 2025 and closes to all users on 30 June 2026, so a SuperStream-compliant alternative must be in place before the first payday in July. The ATO has issued a transitional compliance guideline, PCG 2026/1, setting out a risk-based approach for the first year.

The practical effect is that super stops being a quarterly true-up and becomes a real-time obligation tied to every pay run, with the ATO receiving near-real-time visibility through Single Touch Payroll. Single Touch Payroll itself is the mandatory system through which employers report salaries, PAYG withholding, and super information to the ATO each time they pay staff.

Payroll tax and state-based obligations

Payroll tax is the obligation international employers most often overlook, because it behaves nothing like a national tax. It is levied by each state and territory separately, each with its own rate, threshold, and rules, and it is payable in the jurisdiction where the work is performed. A company with staff in Sydney, Melbourne, and Brisbane is dealing with three revenue offices, three thresholds, and three returns.

The approximate standard rates and annual thresholds for the 2025-26 financial year are:

State / Territory	Standard rate	Annual threshold
New South Wales	5.45%	$1.2 million
Victoria	4.85% (1.2125% regional)	$1.0 million
Queensland	4.75% (4.95% over $6.5m)	$1.3 million
Western Australia	5.5% (tapered $1m–$7.5m)	$1.0 million
South Australia	4.95%	$1.5 million
Tasmania	4.0% ($1.25m–$2m), 6.1% above $2m	$1.25 million
Australian Capital Territory	6.85%	$2.0 million
Northern Territory	5.5%	$2.5 million

Several jurisdictions add surcharges for large employers, such as Victoria's mental health and wellbeing surcharge and COVID-19 debt surcharge on national wages above $10 million, and Queensland's mental health levy.

Two features regularly surprise foreign-owned businesses. The threshold applies to total Australian wages, not just wages in one state, and is apportioned, so wages under a single state's threshold can still attract tax once the national total is counted. And grouping provisions aggregate the wages of related entities under common ownership or control into a single threshold, which can pull a subsidiary or branch into liability it would not face on its own.

Workers' compensation insurance is similarly state-based. Each state and territory runs its own scheme with its own premium rules, and an employer must hold cover in every jurisdiction where it employs staff.

Casual employment and the right to disconnect

The definition of a casual employee changed on 26 August 2024. A casual is now defined by the absence of a firm advance commitment to continuing and indefinite work, assessed on the real substance and practical reality of the arrangement rather than the contract label alone.

The pathway from casual to permanent employment also changed. The old model, under which employers had to offer conversion, was replaced by an "employee choice pathway" in which the employee initiates the change. It applied to most employers from 26 February 2025 and to small businesses from 26 August 2025.

Separately, the right to disconnect gives employees the right to refuse unreasonable work-related contact outside working hours. It applied to larger businesses from 26 August 2024 and to small businesses from 26 August 2025.

Independent contractors and employees

Worker classification is where international companies face the most exposure, and the rules tightened significantly in 2024. A new test in the Fair Work Act, effective 26 August 2024, determines whether a worker is an employee or a genuine contractor by looking at the real substance, practical reality, and true nature of the relationship, including how the contract is performed in practice, not just its written terms. This restored a multi-factor approach after High Court decisions had placed primary weight on the written contract.

The complication that trips up even well-advised businesses is that the test now differs depending on the law in question. For Fair Work purposes, the whole-of-relationship test applies. For tax and PAYG withholding purposes, the written contract remains the primary determinant where it is comprehensive and genuine. A worker can therefore be treated differently under different parts of the system, which makes a documented, accurate arrangement essential.

The consequences of getting it wrong have also sharpened. The defence to a sham contracting claim moved from a "recklessness" test to a stricter "reasonableness" test, meaning an employer must now show it reasonably believed the worker was a genuine contractor. High-income contractors above $183,100 can opt out of the whole-of-relationship test by written notice. For superannuation specifically, a contractor engaged wholly or principally for their labour is treated as an employee, so misclassification carries a super liability that, under Payday Super, now surfaces every pay cycle rather than at a quarterly reconciliation.

Termination, notice and redundancy

Notice of termination under the NES scales with length of service, up to five weeks for long-serving older employees, and redundancy pay scales up to 16 weeks. Awards and contracts can provide more.

Most employees with at least six months of service, or 12 months in a small business, can bring an unfair dismissal claim. Dismissals must be for a valid reason and follow a fair process. Employees earning above the high income threshold and not covered by an award or agreement are excluded from unfair dismissal, though they retain other protections such as the general protections regime. The high income threshold is indexed each year on 1 July. Small businesses with fewer than 15 employees can rely on the Small Business Fair Dismissal Code, which provides a degree of protection where the code is followed.

Visas and the right to work

Employers must verify that every worker has the right to work in Australia, typically through the free Visa Entitlement Verification Online (VEVO) system. Australian citizens and permanent residents have unrestricted work rights, as do many temporary visa holders.

For sponsoring overseas talent, the main pathway is the subclass 482 Skills in Demand visa, which replaced the Temporary Skill Shortage visa in late 2024. It has three streams: Core Skills, which draws on the Core Skills Occupation List; Specialist Skills, for high earners with no occupation list; and Labour Agreement. The visa runs for up to four years and provides a pathway to permanent residence through the subclass 186 Employer Nomination Scheme. From 1 July 2026 the Core Skills Income Threshold rises to $79,499 and the Specialist Skills Income Threshold to $146,717, indexed annually.

Sponsorship is an employer obligation, not just a worker one. The sponsoring entity must be an approved Standard Business Sponsor, conduct labour market testing where required, pay the Skilling Australians Fund levy, and meet ongoing sponsorship obligations. This matters when employing through a third party, because the entity that holds the employment relationship is the entity that must hold sponsor status, and not every engagement model can sponsor every role.

Compliance changes to watch in 2026

Several changes land in or around 2026 and should be on every employer's radar. Payday Super begins on 1 July 2026, replacing quarterly superannuation with payment on each payday. The National Minimum Wage and award rates rose from the first full pay period on or after 1 July 2026. The government Paid Parental Leave scheme expands to 26 weeks from 1 July 2026 and continues to carry superannuation. Employer-sponsored visa income thresholds increase on 1 July 2026. The right to disconnect, the new casual definition and employee choice pathway, the contractor whole-of-relationship test, and criminal wage-theft penalties are all already in force, having commenced between August 2024 and August 2025.

Hiring in Australia without a local entity

Companies that want to employ in Australia without incorporating typically use an Employer of Record. The EOR holds the Australian entity, employs the staff on its books, and manages payroll, superannuation, PAYG withholding, Single Touch Payroll reporting, leave, and compliance with the Fair Work system.

When evaluating an EOR for Australia, the considerations that matter most are whether the provider holds its own Australian entity rather than relying on a third party, how it handles superannuation under the new Payday Super timing, whether it registers and manages payroll tax correctly across the states where staff are located, and how it approaches worker classification given the tightened contractor rules. The depth of the in-country setup matters more than the software layer, because superannuation timing, multi-state payroll tax, and classification are precisely the areas where a thin arrangement leaves the client carrying the risk.

About Aspirock

Aspirock's Australian entity, Aspirock Australia Pty Ltd, provides Employer of Record services and contractor payroll services in Australia, employing staff directly on its own Australian entity. Services cover Fair Work-compliant employment contracts, superannuation administration under Payday Super, PAYG withholding and Single Touch Payroll reporting, multi-state payroll tax registration, leave and entitlement management, and worker classification support. Australia sits alongside Aspirock's wider operations across the GCC, Europe, the Americas, and Turkey, with deployments in 70+ countries.

Frequently asked questions

Do I need a local entity to hire employees in Australia?

No. An Employer of Record that holds its own Australian entity can employ staff on your behalf, managing contracts, payroll, superannuation, tax reporting, and Fair Work compliance. This lets a company hire in Australia without the cost and lead time of incorporating and registering its own entity.

How much does it cost to employ someone in Australia?

Beyond gross salary, the main employer-side costs are the 12% Superannuation Guarantee, state payroll tax where the wage bill exceeds the relevant threshold, workers' compensation premiums, and any leave loading. Payroll tax rates and thresholds vary by state, from 4.75% to 6.85%, and there is no employer social security charge beyond superannuation. Total employer on-costs commonly add in the region of 15% or more on top of salary, depending on the state and the role.

What is Payday Super and when does it start?

Payday Super is a reform that takes effect on 1 July 2026. From that date, employers must pay superannuation at the same time as wages, with contributions reaching the employee's fund within seven business days of each payday, replacing the previous quarterly system. The Superannuation Guarantee rate itself stays at 12%; what changes is the timing, the late-payment penalty regime, and the cash-flow profile for employers.

What is the minimum wage in Australia in 2026?

From the first full pay period on or after 1 July 2026, the National Minimum Wage is $26.44 per hour, or $1,004.90 per week for a 38-hour week. Most employees are covered by a modern award that sets a higher minimum for their role, so the applicable award rate, rather than the National Minimum Wage, is usually the real floor.

Can I engage contractors instead of employees in Australia?

Yes, but the arrangement must be genuine. Since August 2024, a worker's status under the Fair Work Act is determined by the real substance and practical reality of the relationship, not the contract label, and the defence to sham contracting has been tightened. A contractor engaged wholly or principally for their labour is also treated as an employee for superannuation. Misclassification can trigger backdated entitlements, super liabilities, and penalties.

Do employees in Australia need a visa, and can an EOR sponsor one?

Australian citizens, permanent residents, and many temporary visa holders already hold work rights, which must be verified before employment. Overseas talent generally requires sponsorship, most commonly under the subclass 482 Skills in Demand visa. Because the entity holding the employment relationship must be an approved Standard Business Sponsor, visa sponsorship through an EOR depends on the provider's sponsorship status and the specific role, and is not available for every engagement.

How long does it take to hire an employee in Australia through an EOR?

For a candidate who already holds Australian work rights, onboarding through an established EOR is typically a matter of days once the contract is agreed, covering the employment agreement, payroll and superannuation setup, and right-to-work verification. Timelines extend where visa sponsorship is required, as that adds the sponsorship, nomination, and visa stages.