Employer of Record (EOR) in Australia

Employment Laws and Regulations in Australia

Employment Contracts

An employer of record (EOR) in Australia lets you hire full-time employees without setting up a local entity. EOR services in Australia typically cost $300 to $600 USD per employee per month, covering payroll, superannuation, tax withholding, and full compliance with the Fair Work Act 2009 and National Employment Standards (NES). Every employment contract must reference the applicable Modern Award and meet all statutory minimums — the EOR handles this for you, so you can onboard employees in as few as 5 business days.

Your EOR drafts contracts that comply with the NES and the relevant Modern Award for each employee’s industry. The Fair Work Commission publishes and regularly updates these awards across occupations like retail, hospitality, construction, and professional services. Your EOR applies the correct award to each contract.

Working Hours and Overtime

The standard full-time week in Australia is 38 hours under the Fair Work Act. There’s no legislated maximum, but hours must be “reasonable” based on the role, the employee’s circumstances, and industry norms. Overtime isn’t automatically paid; compensation is negotiated or defined in Modern Awards, usually at 150% of base rate for extra hours and 200% for public holidays or specific weekends. An employer of record ensures overtime calculations comply with award requirements.

Australia’s working time rules come from the Fair Work Act 2009 and industry-specific Modern Awards administered by the Fair Work Commission. The statutory standard is 38 hours per week, and any additional hours must be “reasonable” under section 62 of the Fair Work Act. Overtime, penalty rates and public holiday loadings are set in the applicable Modern Award or enterprise agreement; most awards follow the standard pattern shown below.

Overtime and Premium Pay Rates in Australia

Australia’s labour code caps the standard working week and sets the premium rates employers must pay for hours worked beyond it (Fair Work Ombudsman – Hours of work). The table below lays out the statutory overtime multipliers for each shift type so you know what to budget for weekday, weekend, night, and public-holiday work.

Minimum Wage

Australia’s minimum wage is set annually by the Fair Work Commission. As of approximately A$24.95 per hour (effective 1 July 2025). This is the statutory floor for all full-time, part-time, and casual employees.

Many Modern Awards set higher rates depending on the role. Skilled trades and professional positions, for example, often exceed the minimum. When using an employer of record in Australia, payroll automatically reflects the correct wage and applicable award rate for each employee.

Probation Period

Australia’s Fair Work Act doesn’t mandate probation periods, though including a 3 to 6 month term is standard practice.

Dismissal during probation is easier if the fit isn’t right, but you still must follow procedural fairness and provide warnings. Once probation ends (or if you didn’t specify one), dismissal requires genuine reason and proper notice, except within the first 6 months (12 months for small businesses under 15 employees).

In practice, probation is a trial period, but employment protections still apply. Your EOR documents the terms clearly and advises on dismissal procedures if things don’t work out. For details, see our probation rules guide.

Leave Entitlements

Annual Leave

Permanent employees accrue four weeks (20 days) of annual leave per year at roughly 1.54 hours per week. Continuous shift workers get an extra week: five weeks total.

Unused leave can roll over, though you can cap carryover at a reasonable level and require employees to take leave with reasonable notice. Leave is paid at the ordinary rate of pay. An employer of record tracks accruals and ensures leave balances comply with Fair Work regulations.

Sick Leave

Employees get 10 days per year of paid personal or carer’s leave from a single pool. This covers their own illness or injury, or caring for family or household members.

Unlike annual leave, sick leave is a fixed yearly entitlement with no accrual. Employees can use it for medical appointments and must notify you as soon as possible.

Maternity Leave

Primary caregiver leave extends 12 months after 12 months of employment. From from 1 July 2026, paid parental leave expands to 26 weeks at the national minimum wage (A$948.10 per week). This government-funded payment supplements employer-provided superannuation and other benefits during the leave period.

Paternity Leave

The second parent gets at least four weeks of unpaid parental leave as part of a shared 12-month entitlement (from 1 July 2026). The government pays up to four weeks at the minimum wage if both parents draw from the same employment. You can offer more generous terms in enterprise agreements.

Other Statutory Leave

Long service leave builds at roughly 8.67 weeks per 10 years under state legislation (eligibility varies by state). Compassionate leave (2 days per occasion for serious illness or death) is paid for permanent employees.

Community service leave covers jury duty (paid for permanent employees) and emergency activities like firefighting. Employees also have protections for family and domestic violence leave, now standard in workplace policies and awards. Your employer of record stays updated on these evolving entitlements.

Statutory Employee Benefits

Superannuation is Australia’s mandatory retirement system and the most significant employee benefit in Australia. You must contribute 12% of ordinary time earnings (capped at A$62,500 per quarter) to each employee’s registered fund.

It’s separate from salary and non-negotiable. Employees can’t opt out; the contribution comes from your budget, not their pay. Your EOR handles registration and contributions automatically.

Workers’ compensation is a state-based scheme covering work-related injuries and illnesses. You must carry a policy; premiums typically range from 1% to 3% of payroll depending on industry risk and state.

It protects employees injured at work and gives you limited liability protection. Your EOR handles registration and premium payments.

The Medicare Levy (2% of taxable income) funds Australia’s public healthcare system and is withheld from employee pay. A surcharge (up to 1.5%) may apply to high-income earners without private health insurance, incentivizing private coverage.

Recent Regulatory Updates (2026)

Starting 1 July 2026, employers must pay superannuation on each payday or within 5 business days. No more quarterly or end-of-year payments. Your EOR handles this automatically, ensuring compliance.

Paid parental leave expanded from 18 to 26 weeks effective 1 July 2026 at the national minimum wage. It applies to all employees and is government-funded, though you can supplement it or offer additional benefits.

Wage theft became a criminal offense in January 2025 (not just a civil matter). This tightens Australia’s enforcement of wage and payment obligations and emphasizes why accurate payroll is critical.

Non-compete reforms arrive in 2027, restricting post-employment non-competes to narrow circumstances (senior management, legal professional privilege). This limits your ability to prevent employees from working for competitors afterward.

Work Permits and Visas in Australia

Work Permit Requirements

Who Needs a Work Permit

Non-Australian and non-New Zealand citizens need a work visa to legally work in Australia. If you hire someone from elsewhere, verify they have a valid visa before they start. Working without one exposes you both to penalties.

Eligibility and Required Documents

Common work visas include the Skilled Independent Visa (subclass 482, Temporary Skill Shortage), Employer Nomination Scheme (subclass 186, permanent sponsorship), and Regional Sponsored Migration Scheme (subclass 494). Eligibility hinges on occupation, qualifications, work experience, and English proficiency.

Applicants need a formal job offer, relevant qualifications or work experience, plus health and character clearance. Typical documents include a passport, professional skills assessment, employment offer letter, and proof of qualifications.

Processing Time and Validity

Processing times vary: Temporary Skill Shortage visas (482) usually take 8-12 weeks, while permanent visas like the Employer Nomination Scheme (186) can take 6-12 months or longer depending on complexity. Temporary visas last 2-4 years; permanent ones grant indefinite work rights.

Renewal Process

Temporary visas must be renewed before expiry, similar to the initial application and often requiring a fresh skills assessment and sponsorship letter. Permanent visa holders don’t need renewal, but must maintain residency if they spend extended time overseas.

Foreign workers can be employed in Australia through employer-sponsored pathways administered by the Department of Home Affairs. The main sponsorship channels are the Skills in Demand visa (subclass 482), the Employer Nomination Scheme (subclass 186) and the Skilled Employer Sponsored Regional visa (subclass 494), with the Short Stay Specialist visa (subclass 400) covering brief specialised assignments. Each pathway has distinct duration, eligibility and permanent-residency implications.

Work Visa Types for Foreign Workers in Australia

Foreign nationals typically need a work permit or employment-authorised visa to take up a job in Australia (Home Affairs – Skills in Demand visa (subclass 482)). The table below summarises the most common visa categories employers use when relocating international hires, along with typical eligibility requirements and permit durations.

How an EOR Handles Work Permits

Your EOR doesn’t directly sponsor visas. That’s the legal employer’s responsibility. Since the EOR is your legal employer in Australia, it can serve as the sponsoring employer on visa applications. As the legal employer of record in Australia, the EOR can act as the sponsoring employer on visa applications.

Your EOR provides the job offer letter, employment contract, and supporting documents the Department of Home Affairs needs. This streamlines sponsorship through the EOR rather than forcing you to set up a local company. See our work visa requirements guide for details.

Payroll, Taxes, and Social Security in Australia

Australia’s employer of record handles all payroll and tax obligations on your behalf. Understanding the cost structure is essential for budgeting, so here is how employer contributions, employee deductions, and income tax work in practice. When you partner with an employer of record in Australia, these calculations are handled automatically, freeing you to focus on building your team.

Employer Contributions

Employers hiring in Australia owe mandatory contributions on top of gross salary, funding social security, health, pensions, and other statutory schemes (ATO Super Guarantee). The table below lists the employer-side contribution rates so you can calculate the true all-in cost of each hire.

Superannuation Guarantee (12%) is your largest employer contribution. The ATO sets a maximum contribution base of A$62,500 per quarter for 2025-2026. Once earnings exceed this cap, no further super is required that quarter.

Payroll tax is state-based. New South Wales charges 5.45% on annual payroll above A$1.2 million. Workers’ comp varies by state and industry, from 0.5% for low-risk office work to 5%+ for high-risk construction or mining.

Employee Contributions

Alongside income tax, employees in Australia pay statutory payroll deductions that fund social security, health cover, and other state schemes (ATO Tax Rates). The table below summarises the employee-side contribution rates payroll must withhold from gross pay each month.

Employees pay progressive income tax withheld at source (PAYG, or Pay As You Go), calculated by the ATO based on their income and tax file number. Most also pay the Medicare Levy (2%), Australia’s universal health contribution.

High-income earners without private health insurance pay an extra Medicare Levy Surcharge (0–1.5% depending on income), incentivizing private coverage. Employer superannuation contributions aren’t deducted from employee pay; they’re funded separately by you.

Income Tax Brackets

Personal income tax in Australia is levied on a progressive basis, with the rate rising as taxable income crosses statutory thresholds (ATO). The table below sets out the current income-tax brackets that apply to resident employees so you can model net-of-tax compensation before making an offer.

Australia’s income tax system is progressive, with rates ranging from 16% at the lowest bracket to 45% at the top. The tax-free threshold is A$18,200, meaning individuals earning below this amount pay no income tax. Note that Medicare Levy (2%) is applied on top of income tax and is effective on all taxable income; this means even low-income earners pay the levy once they exceed the tax-free threshold.

Payroll Cycle

Australia’s standard payroll cycle is monthly, though weekly and fortnightly cycles are also common in hospitality and retail. Payments are made via bank transfer (BPAY or direct deposit) to the employee’s nominated bank account.

The employer must comply with Single Touch Payroll (STP), a digital reporting system where payroll data is reported to the ATO automatically with each pay run. STP has been mandatory since July 2019 and streamlines tax compliance by providing real-time payroll data to tax authorities.

13th Month Salary and Bonus Pay

Australia does not have a statutory 13th month salary or mandatory annual bonus. Australian employment is based on 12 monthly payments, with no additional mandated payments beyond superannuation.

Bonuses, performance payments, and discretionary annual payments are entirely optional and must be documented in the employment contract or enterprise agreement. An EOR will process any bonuses as directed but does not automatically include a 13th month in your cost calculations.

Cost of Hiring Through an EOR in Australia

EOR Service Fees

EOR service fees in Australia typically range from $300 to $600 USD per employee per month. This fee covers payroll processing, tax withholding, superannuation administration, employment contract drafting, and Fair Work Act compliance.

Using an employer of record means you avoid setup costs and administrative overhead, paying only the service fee plus statutory contributions.

Some EOR providers charge a flat rate; others scale fees based on the complexity of the role or industry classification. The fee does not include statutory employer contributions (superannuation, payroll tax, workers’ compensation), which are additional costs on top of the service fee.

Total Employment Cost Breakdown

Monthly Cost Example

The all-in cost of employing someone in Australia goes well beyond gross salary. The table below walks through a realistic cost build-up for a typical hire, layering mandatory employer social contributions, statutory benefits, and payroll taxes on top of base pay so finance teams can budget accurately before an offer goes out.

For a single employee earning $3,200 USD per month in New South Wales, the total cost is roughly $4,206 USD per month (131.4% of gross salary). The biggest recurring costs beyond salary are superannuation (12%), EOR service fee (12.5%), and state payroll tax in NSW (5.45% if payroll exceeds A$1.2 million).

Exchange rates fluctuate; the figure above uses the April 2026 exchange rate. Actual costs vary by state (payroll tax rates differ) and by role (different Modern Awards set higher minimums). For benchmarking, review the average salary in Australia guide.

Using an EOR eliminates the upfront cost of forming a local company (typically $1,920–$9,600 USD) and its ongoing maintenance. For teams of 1 to 10 employees, the EOR service fee is substantially cheaper than hiring a local payroll manager or outsourcing firm.

Ready to hire in Australia? Contact RemotePeople to discuss your hiring needs. We handle employment contracts, payroll, tax withholding, and full Australia compliance. No local entity needed.

Benefits of Using an EOR in Australia

The primary benefit of using an employer of record in Australia is speed — one of the reasons companies choose EOR solutions in Australia over entity setup. Hiring through an EOR takes 5 to 10 business days from job offer to first payment. In contrast, setting up a local company in Australia requires 3 to 6 months of registration with ASIC (Australian Securities and Investments Commission), ACN (Australian Company Number) issuance, ABN application, and payroll system setup. For companies seeking to quickly test the Australian market or grow a small team, an employer of record compresses hiring timelines dramatically.

Your EOR handles compliance. The Fair Work Act, modern awards, superannuation, and state payroll taxes are intricate. By transferring responsibility to the EOR, you reduce exposure to penalties and litigation.

If an employee is misclassified, underpaid, or denied statutory leave, the EOR bears initial liability. By using an established employer of record in Australia, you leverage their expertise and compliance infrastructure.

Cost efficiency improves for small teams. Instead of hiring a local HR manager ($60,000–$100,000 USD annually) or outsourcing payroll to a firm, an employer of record charges a per-employee fee, typically $300–$600 per month.

For 1 to 10 employees, an EOR is far cheaper than local alternatives. It also handles all administrative tasks (leave accrual, tax updates, payroll certification), freeing your team to focus on business strategy.

An EOR also manages currency and FX risk. If you operate in the US but hire in Australia, the EOR handles conversion and protects you from currency swings. Many EORs offer payment in your base currency and handle conversion internally.

Termination and Offboarding in Australia

Notice Periods

Notice periods in Australia are prescribed by the National Employment Standards, depending on the employee’s tenure. For employees with less than 1 year of service, the employer must provide one week notice. Employees with 1 to 3 years of service receive 2 weeks, and those with 3 to 5 years receive 3 weeks. Using an employer of record ensures termination notices meet legal requirements. Your employer of record also manages the full termination process, from redundancy calculations to final pay and statutory reconciliation.

Employees with over 5 years of service get four weeks’ notice. If they’re over 45 and have served at least 2 years, add another week for a maximum of five weeks.

Employees must also provide notice when resigning; the notice period mirrors the employer’s obligation. Employees can be terminated immediately for serious misconduct (willful disobedience, theft, violence, repeated performance failures after warnings).

Minimum notice of termination in Australia is set by section 117 of the Fair Work Act 2009 as part of the National Employment Standards. The statutory schedule rises with continuous service, and employees aged 45 or over with at least two years of service receive an extra week on top of the base entitlement. Employers may pay in lieu of notice; casual staff, fixed-term employees whose contracts expire naturally and workers dismissed for serious misconduct are outside the minimum notice regime.

Statutory Notice Periods in Australia by Position Level

Under Australia labour law, employers must give written notice before terminating an indefinite employment contract, and the minimum period scales by either tenure or position level (Fair Work Ombudsman – Dismissal and notice). The table below sets out the statutory notice periods employers owe in each termination scenario, including how probation affects the minimum notice required.

Severance Pay

Redundancy pay in Australia is set by section 119 of the Fair Work Act 2009 under the National Employment Standards. The schedule rises with continuous service and peaks at 16 weeks’ pay for employees with 9 to 10 years of service, then drops to 12 weeks for those with 10 or more years of service in recognition of long service leave entitlements. Redundancy pay is calculated on the employee’s base rate of pay for their ordinary hours and is triggered only by a genuine redundancy; small business employers with fewer than 15 employees are generally exempt.

Severance Pay Schedule in Australia by Years of Service

Australia’s labour code entitles eligible employees to severance pay when an indefinite contract ends without cause, typically rising with years of service (Fair Work Ombudsman – Redundancy pay). The table below lays out the statutory severance schedule so finance teams can budget end-of-service liabilities before a termination date is set.

Grounds for Termination

Valid grounds for termination include genuine redundancy (position no longer exists), serious misconduct (theft, violence, willful breach of a material obligation), poor performance (after documented warnings and fair opportunity to improve), and other valid reasons (repeated absence, repeated breaches of conduct standards).

Termination must follow procedural fairness: the employee must be informed of the alleged misconduct or performance issue, given an opportunity to respond, and provided with a clear warning and opportunity to remedy. Termination without this process is often deemed “unfair dismissal” and can result in re-employment orders or financial compensation.

Your EOR manages the entire termination: notice periods, severance calculations, final pay processing, and document retention. It handles all final payments (accrued leave, superannuation, tax reconciliation).

EOR vs. Other Hiring Models in Australia

EOR vs. Setting Up a Local Entity

Local Entity Comparison Table

Choosing between an Employer of Record and setting up your own legal entity in Australia comes down to timeline, upfront cost, ongoing administrative burden, and how quickly you can scale up or wind down. The table below lays out both paths side by side across setup time, cost, compliance risk, and flexibility so you can match the right model to the size and duration of your Australia hiring plan.

An EOR is ideal for companies testing a market or building a small team (1 to 15 employees) without long-term local presence. You sidestep the upfront legal and accounting costs of forming an Australian company, the complexity of ASIC registration and ABN applications, and the burden of managing local compliance.

The decision between an employer of record, a subsidiary, and contractors depends on your hiring volume, timeline, and growth plans.

If you scale to 15+ employees or plan a multi-year commitment, the annual cost of maintaining a local entity ($30,000–$80,000) may eventually become cheaper than an EOR in Australia, which scales with employee count.

You need a local entity if you plan to bid for government contracts (federal, state, or local) requiring an Australian company with an ACN and registered office. Government procurement often excludes foreign entities and EORs. A local company also offers equity ownership and asset protection if you plan to sell the Australian business later; an EOR is service-based with no ownership stake.

The choice hinges on timeline and team size. For rapid market entry with a lean team, an EOR is superior. For long-term large teams or government revenue, a local entity is necessary.

Some companies use a hybrid approach: start with an EOR for 1 to 3 employees, then transition to a local company once the team exceeds 10 people and the business case justifies the investment.

EOR vs. Hiring Independent Contractors

Contractor Comparison Table

Classifying a Australia-based worker as an independent contractor rather than an employee can expose you to back-taxes, unpaid social contributions, and reclassification penalties if the working relationship looks like employment in practice. The table below contrasts EOR employment with contractor engagement across legal relationship, tax and benefits treatment, IP ownership, and misclassification risk so you can pick the right model role by role.

Independent contractors offer flexibility and lower per-hour costs, as you do not pay superannuation, workers’ compensation, or statutory leave. However, Australia’s Fair Work Act contains a sham contracting provision; if the relationship appears to be an employment arrangement (the worker is dependent on your business, works on your premises, follows your direction), the Fair Work Commission can reclassify the contractor as an employee retroactively. This exposes you to back-payment of superannuation, leave accrual, and statutory entitlements.

Contractors are appropriate for genuinely independent work: consultants advising on strategy, external specialists on short-term projects, freelancers providing specialized services to multiple clients. Contractors are inappropriate for ongoing operational roles where the worker is integrated into your team, works exclusively for you, or has minimal control over how they deliver their work.

If you intend to use independent contractors, consult the hire contractors in Australia guide and ensure the arrangement genuinely reflects the contractor’s independent status.

For ongoing, full-time roles integrated into your team, an EOR is the safer, more compliant choice. It clarifies employment status, ensures all obligations are met, and protects you from reclassification risk. RemotePeople also offers a contractor management solution for properly structured contractor relationships.

EOR vs. PEO

EORs and PEOs both simplify international hiring, but only an EOR becomes the legal employer of record in Australia — a critical distinction when you don’t have a local entity of your own. The table below maps the practical differences across legal employer status, entity requirement, liability allocation, and scope of coverage.

A PEO (Professional Employer Organization) is a co-employer model where both your company and the PEO share employment responsibilities. Unlike an EOR, a PEO does not replace your employment relationship; instead, both entities are technically employers.

In Australia, PEO services do exist but are less common than in the United States. Importantly, Australian PEOs typically require you to already have a registered local company (ABN); they do not eliminate the need for a local entity as an EOR does.

EOR and PEO models differ significantly in liability and compliance. An EOR assumes primary liability for employment law, payroll accuracy, tax withholding, and benefits. A PEO shares liability; you typically keep responsibility for hiring, performance management, and termination (though the PEO co-signs).

Shared liability can muddy things if wage theft, discrimination, or unfair dismissal claims come up. An EOR, as the sole legal employer, has clear liability for all statutory obligations.

PEOs are better suited to companies that already have a local Australian presence, a registered company, and an HR team that wants to outsource specific functions (payroll, benefits administration) while retaining control over HR strategy. For companies with no Australian footprint seeking rapid market entry, an EOR is the clearer, simpler choice.

Australia’s regulatory environment doesn’t formalize PEO arrangements as clearly as employment law, creating compliance risk if challenged as sham employment. An EOR, as the sole statutory employer, sidesteps that ambiguity.

Public Holidays in Australia

Australia observes a defined set of official public holidays on which most private-sector employers must give staff a paid day off (Fair Work Ombudsman). The table below lists the statutory holidays employers need to build into payroll calendars and leave planning for the year, along with the date rule for each.

Australia observes nine national public holidays in 2026. Most states honor the same dates; however, some variations exist. Western Australia and Queensland observe Queen’s Birthday in different months (WA: September, QLD: October).

Some states also have additional local or state-specific holidays (e.g., Melbourne Cup Day in Victoria). When an employee works on a public holiday, they are typically entitled to penalty rates (150%–250% of ordinary pay) or paid time off in lieu, depending on the Modern Award and enterprise agreement.

Your EOR ensures public holiday pay is calculated right per the applicable award, tracks state-specific variations, and applies the correct schedule for each employee’s location. It’s critical for payroll accuracy and compliance.

How to Get Started with an EOR in Australia

Getting started with employer of record services in Australia is straightforward and takes only a few steps. Below is the typical onboarding process for hiring through an EOR:

Partnering with an employer of record in Australia streamlines the entire process, from candidate sign-up to first paycheck.

• First, gather candidate information and employment details. Provide the candidate’s full name, date of birth, Tax File Number (if they have one), location, role title, start date, and salary. If the candidate is a foreign national, confirm their work visa status and visa subclass.
• Second, define the employment terms. Confirm whether the role is permanent full-time, part-time, or fixed-term, and identify the relevant Modern Award that applies to the role (the EOR will assist here if needed).
• Third, the EOR drafts and issues the employment contract. The contract will be compliant with the Fair Work Act, include all relevant National Employment Standards, and reference the applicable modern award rates and conditions.
• Fourth, the candidate signs the contract and confirms acceptance. You and the EOR receive a signed copy for your records.
• Fifth, the EOR registers the employee with the ATO, sets up superannuation, and initiates payroll. The first pay run begins the following pay period, and the employee receives all statutory deductions and employer contributions correctly processed.

Throughout this process, the EOR handles compliance, documentation, and regulatory filings. You focus on onboarding the candidate to your team, setting expectations, and managing their work.

Ready to hire your first employee in Australia? Contact RemotePeople to discuss your hiring needs and timeline. Our EOR experts will guide you through the process and answer any questions about Australian employment law, costs, or benefits. We can have your first employee on payroll in as little as one week.

Where companies hiring in Australia expand next

Teams hiring in Australia typically expand across Asia-Pacific, leveraging existing regional trade ties and overlapping business hours. Companies often start with operations in New Zealand, drawing on closely aligned employment frameworks. Singapore typically follows as the Asia-Pacific regional hub, while hiring in Hong Kong adds access to financial services talent. An EOR partner in Japan often rounds out the regional footprint with deep engineering and manufacturing expertise.