Hire Staff in Australia without Establishing a Local Entity.
New Horizons’ Professional Employer Organization (PEO) service allows businesses to outsource the hiring and administrative functions to us while they maintain direction and control over the day-to-day functions of their employee. The employee is hired through our PEO, which is compliant with all local and national labor laws. As the Employer of Record, we take on the legal liabilities as the official employer while you have the right to control them in your workforce. This approach allows you to take advantage of the talented Australian labor market and other business opportunities in the country.
Our innovative platform allows clients to complete payroll in Australia. We handle all tax, HR services and compliance management. We use best practices to provide compliant employment contracts and severance packages. We keep you aware of important employment laws and changes in them. Some of the most important employment laws and standards are discussed below.
Employment Contracts in Australia
Employers are required to follow the requirements of Australia’s main labor law. This includes minimum statutory standards. All employment contracts must detail the ten entitlements required by statute. Under this law, employers can provide a contract, agreement or award regarding employment.
Written employment contracts include the following information:
- Wages and rate of pay information
- Conditions of employment
- Employer and employee names and details about the employment relationship
- Employee date of birth
- Job title
- Employment location
- The amount of work
- Start date of the employment contract
- End date of the employment contract
- Work hours
- Information about leave entitlements and how to take leave
- Job duties
- Performance standards
- Allowances and bonuses, if applicable
Enterprise Agreements establish working conditions for designated groups of employees, usually for one organization. This agreement supersedes awards that cover workplaces. The rate of pay must meet or exceed the award standard. They are the most popular method to define Australian wages and working conditions and cover more details than awards.
An award discusses the minimum employment standards for employees in particular industries within the same occupation. The standards are different for each region, industry and employer but generally include:
- The hourly rate of pay
- Overtime rate of pay
- The amount of work
- Annual salary
- Work conditions like whether different shifts or varying hours will apply
- How leave is provided and taken
- Information on allowances
- How to settle disputes
- How redundancy in the workplace is treated
- Individual terms
Australian employers are required to provide a payslip to workers within one day of them receiving their pay.
Australia recognizes seven national public holidays:
- New Year’s Day
- Australia Day
- Good Friday
- Easter Monday
- Anzac Day
- Christmas Day
- Boxing Day
States and territories establish other public holidays such as Labor Day. When a holiday falls on a weekend, it is observed on the following Monday.
Australia Work Week
The standard workweek in Australia is 38 hours, but employment standards allow for additional hours, if needed.
Australia Vacation Leave
Full-time workers are entitled to at least 28 days of vacation time each year. However, some employers offer additional vacation time as an added benefit. If an employee does not take his or her annual leave, the amount of unpaid leave is paid to the employee at the time the employment relationship terminates.
Personal Leave in Australia
Australia full-time employees are allowed ten days of paid personal leave each year. This time can be used when an employee is sick or needs to care for a relative. If leave is not taken, it accumulates to the next year. However, employees are not paid for unused personal leave when the employment relationship terminates like they are paid for vacation leave.
Maternity and Paternity Leave in Australia
The federal government provides parents with up to 18 weeks of parental leave that is paid at the rate of their base pay if they meet certain requirements. Currently, leave that the employer provides is on top of the leave provided by the federal government. However, some lawmakers in Australia are trying to modify this law so that any leave that the employer provides reduces the amount of leave that the government funds.
To be eligible for the federal government paid parental leave, workers must meet the following requirements:
- Worked at least ten out of thirteen months before the birth or adoption of a child
- Worked at least 330 hours out of the ten months
- Had no more than eight weeks between two working days
- Earned no more than $150,000 in adjusted taxable income in the year before the birth or adoption
- Be the primary caregiver of a newborn or recently adopted child
- Meet residence requirements from the date of birth or adoption until the end date of the parental leave
- Not work during the paid parental leave period
Australia offers Newborn Upfront Payment and Newborn Supplement, but the mother cannot receive this benefit as well as paid parental leave from the government.
Fathers and partners can receive up to two weeks of paid parental leave if their employer is not already providing paid leave for them. They must meet income and work tests.
Australia Work Bonuses
Australia does not mandate annual bonuses. However, many employers offer annual bonuses as an additional work benefit. The standard amount of bonus is 6 to 10% of the employee’s annual pay with executives typically receiving much bigger bonuses.
Termination of Employment, Notice and Severance Requirements in Australia
Notice of Termination
Employers in Australia are required to give employees notice if they plan to sever the employment relationship. They must provide at least the minimum statutory notice, which depends on the employee’s length of service, according to the following chart.
Length of Service
Minimum Statutory Notice
Less than a year of service
Less than three years of service
Less than five years of service
More than five years of service
If the employee is over 45 and has worked for the employer for at least two years, an extra week is added to the notice period.
Employers can opt to pay for the notice period instead of giving notice if they prefer.
Employment contracts may supersede the default national law and require a longer notice period. In some cases, this notice is as long as a year.
Employees are eligible to file an unfair dismissal application if the national workplace relations system covers them and they have worked for the minimum employment period. If the employer is a small business with less than 15 employees, this minimum employment period is one year. Otherwise, the minimum employment period is six months. Additionally, the person must be covered under an enterprise agreement or award. The employee’s annual income must be beneath the income threshold.
If the application is successful, the employee may be reinstated. If reinstatement is not appropriate, compensation for up to six months’ pay may be ordered.
Severance payments may occur if an employer experiences redundancy. If an employer has decided that it no longer wants an employee to perform a particular job and terminates employment, the job becomes redundant. When redundancy occurs, severance payments may be required.
Redundancy occurs when:
- New technology replaces the need for someone to manually perform the job
- A merger or takeover makes the job no longer necessary
- The business reorganizes and the job is no longer necessary
- The employer becomes bankrupt or insolvent
- A downturn in business results in staff reduction
The amount of severance payments depends on how long the employee worked continuously for the employer, according to the following chart:
Employee’s Duration of Service
Severance Pay Period
At least one year but less than two years
At least two years but less than three years
At least three years but less than four years
At least four years but less than five years
At least five years but less than six years
At least six years but less than seven years
At least seven years but less than eight years
At least eight years but less than nine years
At least nine years but less than ten years
At least ten years
Severance pay is not mandatory if the employer has less than 15 employees, the employee worked for less than one year continuously, the employee was an apprentice or casual employee, or if the employee is terminated due to serious misconduct. Additionally, if the employee is employed for a specified period of time and termination ends at this time, severance pay is not required. If the employee works under an enterprise agreement or industry-specific redundancy scheme, which is detailed or incorporated in the award, severance pay is not required.
Australia Payroll Taxes
Australia’s Pay-as-You-Go tax system requires employers to withhold employee taxes and remit them to the government. Payroll taxes may be imposed on wages, superannuation and other employment benefits. These taxes are levied by individual states and are not considered a federal tax. Therefore, the tax rate varies by region.
Employers must contribute an amount equal to 9.5% of their employee’s gross salary each quarter into a superannuation (retirement) fund for each employee who earns more than AUD $450 monthly.
Additionally, employers in Australia who offer fringe benefits must pay a fringe benefit tax on the value of these benefits. Fringe benefits include a company vehicle, parking, free private health insurance and other benefits. A laptop or cell phone for business use does not incur a fringe benefit tax.
Australia’s Health Insurance System
Australia has a national healthcare scheme. Employees who meet the income threshold pay 2% of their taxable income into the Medicare system. Additionally, individuals can purchase private health care insurance for services not covered by Medicare, such as dental care, vision care or accommodation of a private hospital.
Australians who choose not to purchase private insurance and have a taxable income above a particular threshold are charged a surcharge of 1% of their annual taxable income.
While some employers in Australia provide private health insurance to their employees, many employers in Australia often an allowance to employees instead. Private health insurance incurs a fringe benefit tax.
Benefits of Working with New Horizons
Setting up a branch office or separate legal entity in Australia is often expensive and time-consuming. It also involves many complexities and bureaucratic agencies that foreign investors are not familiar with. Australian labor laws provide strong protections for workers, including the ability to receive ample vacation time and long severance payouts. Violating these labor laws could result in significant liability and being banned from conducting business in Australia.
New Horizons makes it much easier to expand into the impressive Australian market. We can help you recruit top talent, handle your human resource functions and manage your payroll in a compliant manner without the need for you to set up a foreign company.
Some of the benefits of using New Horizons as your partner in expansion include:
- You can hire local staff within days instead of months
- Your employee is more productive
- Your employee experiences a better onboarding process
- We ensure all local laws are carefully followed
- We draft compliant employment contracts and adopt best practices
- We remove the hassle of HR functions and administrative tasks
- We administer benefits, handle payroll, take care of all mandatory withholdings and ensure tax compliance
- You can focus on your business while you outsource administrative functions to a local team of experts
- You have peace of mind of knowing that you have dedicated employment experts by your side.
If you would like to learn more about how New Horizons’ PEO solution can help your expansion to Australia, contact us.