Hire in Australia — without an entity
Horizons provides global employment solutions, ensuring that you have a local workforce for your business in Australia, in full compliance with the law. Through our Australia PEO and Employer of Record, we manage payroll, benefits, and expenses for employees based in Australia. We also provide ongoing human resource management, and ensure that employment complies with local labor and tax laws.
Our Australia PEO simplifies your expansion
Horizons enables business expansion into Australia – without setting up a local limited company.
Horizons ensures day-to-day guidance to help your business navigate Australian labor laws and regulations. Horizons also ensures payroll is processed weekly or fortnightly (the standard periods in Australia), and that taxes are withheld as required.
As the Australia Employer of Record, Horizons is responsible for employee income tax withholding, payment of payroll taxes to state authorities, and submission of tax returns to the Australian Tax Office.
Partnering with our Australia PEO is the quickest and most cost-effective way to enter the Australian market.
Employment & Labor Laws in Australia
📝 Employment contracts in Australia
Australia’s National Employment Standards provide multiple mechanisms for employing staff in Australia, depending on the industry. These options include an award, enterprise agreement, or employment contract.
Awards include the minimum standards of employment and outline the rules and conditions for all employees within a certain industry. These cover the basic rate of pay, type of employment, rates for overtime work, annual salary, allowances, redundancy, and stipulations surrounding leave, resignation, and termination.
Enterprise agreements state the working conditions for a group of employees with one employer (a ‘single-enterprise agreement’) or multiple employers (a ‘multiple-employer agreement’.
It is also possible for businesses to establish an enterprise agreement before any employees are onboarded. This is known as an ‘greenfields enterprise agreement’ and is negotiated between the business and union representatives.
Written contracts are traditionally used for employees who do not qualify for an enterprise agreement or award. Contracts should include the employee’s job responsibilities, their pay rate, expected weekly hours, and entitlements for taking leave.
By partnering with our Australia PEO, Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
⏰ Working hours in Australia
In Australia, the National Employment Standards stipulate a 38-hour work week. However, additional hours can be undertaken if necessary.
📅 Holidays in Australia
New Year’s Day
Adelaide Cup, Canberra Day, Labour Day
Anzac Day (in lieu)
Reconciliation Day, Western Australia Day
Picnic Day, Bank Holiday
Ekka People’s Day
Labour Day, Queen’s Birthday
Thank You Day
Melbourne Cup Day
Boxing Day Holiday, Proclamation Day
New Year’s Eve
🏦 Australia payroll and employment taxes
Australia’s Pay-as-You-Go tax system requires employers to withhold employee income 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 territories are not considered a federal tax. As such, the tax rate varies by region.
Employers must contribute an amount equal to 10% of their employee’s gross salary each quarter into a superannuation (retirement) fund for all employees who earn more than AUD $450 per month.
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 healthcare system
🔐 Public insurance
In Australia, there is a universal public healthcare system. Permanent residents in Australia have access to Medicare, which is the state health care provider. Additionally, the government recommends that employees who earn over a particular monetary threshold take out private insurance policies on top of their state coverage. This provides residents with increased coverage while also relieving pressure on the public health system.
Medicare provides basic healthcare coverage for hospital costs, a percentage of specialist costs, and pharmaceutical expenses.
🔑 Private insurance
Higher earning employees in Australia are subject to pay higher taxes if they choose not to take out private insurance. There are three primary kinds of private insurance: ambulance insurance, hospital insurance, and “extras”. Ambulance insurance covers the costs for emergency service vehicles which are not covered by Medicare. Hospital insurance provides coverage for private hospitals and doctors’ offices, while “extras” cover additional healthcare needs like dental and optometry.
♻ Insurance for non-residents
Employees with a work visa in Australia are not entitled to receive Medicare benefits and must take out their own private policy. It is important to make sure that all employees have the minimum required insurance in place. Failure to do so can result in potential hospitalization or medical emergency costs being levied onto the employer.
✅ Annual 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 ceases.
😌 Personal leave
Australian full-time employees are allowed ten day’s paid personal leave each year. This can be used when an employee is sick or needs to care for a relative. If leave is not taken, it accumulates into the following year. However, unlike annual leave, employees are not paid for unused personal leave when the employment relationship ceases.
👶 Maternity and paternity leave
In Australia, female employees are entitled to a set period of 12 week’s paid maternity leave, which is provided by the federal government as part of Australia’s public healthcare system. This amount is paid at the national minimum wage and must be taken in one continuous period.
In addition, female employees are entitled to to up to 30 days of ‘flexible’ paid parental leave. This need not be taken continuously, and should be negotiated with the employer.
To receive full maternity leave benefits, a woman must be the primary caregiver of a newborn child or a child they have recently adopted. Employees must have also been employed with the same company for at least 10 of the previous 13 months. Additionally, employees need to meet local residency requirements, earn less than $150,000 in the preceding fiscal year, and not return to work during the period in which they are receiving maternity leave.
Spouses or partners of the female employee on maternity leave are entitled to two week’s paid leave. This is paid for by the government, so long as the employee is not already receiving paid leave from their employer. It is also paid at the national minimum wage.
In addition, employees are entitled up to 12 months unpaid parental leave.
💰 Termination and severance
Employers are required to provide staff members with notice if they plan to sever the employment relationship. This must include the minimum statutory notice, which depends on the employee’s length 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 in-lieu of the notice period
- Employment contracts may require a longer notice period. In some cases, this notice period is as long as a year
Employees are eligible to file an unfair dismissal application if they are covered by the national workplace relations system and have been employed for the minimum employment period. If the employer is a small business with less than 15 employees, the minimum employment period is one year. Otherwise, the minimum employment period is six months. Employees must be covered under an enterprise agreement or award. Additionally, 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 of up to six month’s 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 a job
- A merger or takeover means the job is 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 depends on how long the employee has worked continuously for the employer.
Severance pay is not mandatory if:
- The employer has less than 15 employees
- The employee has worked for less than one year continuously
- The employee was an apprentice or casual employee
- The employee is terminated due to serious misconduct
- If the employee is employed for a specified period of time and termination ends at this time
- If the employee works under an enterprise agreement or industry-specific redundancy scheme, which is detailed or incorporated in the award
💳 Australia compensation and benefits
Australia compensation laws
The minimum wage in Australia is AU $20.33 per hour (or $722.60 per week for a fulltime worker). This applies to all employees over 21 years old. Australia’s Pay and Classification Scale has an overview of the different pay rates across various states. If a certain position is not featured on the scale, an employee must receive the national minimum wage.
Compensation laws in Australia also stipulate a maximum work week of 38 hours. However, some positions will have greater flexibility to work extended hours.
Employees must receive a payslip within one working day of being paid. In most cases, pay is deposited into an employee’s bank account.
Minimum Wage Country Comparison Chart
(Per month in USD)
Guaranteed benefits in Australia
Employees in Australia have the right to certain benefits, which may or may not include healthcare. Whilst it is not compulsory, many employer’s will provide their employees with an allowance, rather than purchasing a private health insurance plan on their employees’ behalf. All employees with a taxable income over a specified threshold pay 2% of their income to Medicare, the nation’s primary healthcare system.
Employers must make compulsory contributions to state-based Workers’ Compensation schemes which cover employees for injuries suffered on the job.
Employees are eligible for a set number of days off – for vacation, personal leave, and maternity and paternity leave. All full-time employees must receive a minimum of four’s weeks annual leave per year.
Full-time employees are eligible for 10 day’s personal leave per year. There are also protections in place for parental leave, so long as an employee meets certain eligibility requirements.
Australia benefit management
For employers that elect to manage benefits payments themselves, this can be both costly and time-consuming. It’s also imperative for employers to be mindful of Australia’s compensation laws. Otherwise, they may find themselves being penalized with significant fines.
Rather than struggling to manage benefits payments yourself, you can partner with Horizons’ Australia PEO. We source, hire, and onboard your employees; and our global payroll division ensures that your employees receive the most competitive statutory and supplementary benefits.
Benefits and compensation restrictions
Two of the major Australian employment law restrictions that employers need to consider are Australia’s minimum wage and maximum work hours regulations. It is essential that employers stay abreast of these restrictions when hiring staff members.
Horizons will assist your company to distribute benefits and compensation accurately and on-time. Our in-house recruitment experts will hire your employees; whilst our payroll division will distribute benefits and compensation, in compliance with Australia’s workplace regulations.