How to hire employees in Australia with an Employer of Record

Hiring employees in Australia gives you access to one of the most skilled and stable workforces in the Asia-Pacific region. But Australia’s employment framework is more layered than it appears from the outside. Modern Awards, the National Employment Standards, state-based obligations, and strict contractor classification rules mean foreign employers need to get the details right from day one.

This guide walks through the full hiring process, the obligations you need to understand, and how an Employer of Record removes the complexity so you can build your Australian team with confidence. For a complete reference on Australian employment law, see our guide to employment in Australia.

Australia’s economy is the 13th largest in the world, with deep talent pools in technology, financial services, mining and resources, healthcare, and professional services. English is the primary language of business, the legal system follows common-law principles, and the regulatory environment is well established and transparent.

For companies based in the US, UK, or Europe, Australia also offers practical advantages. The time zone provides coverage across the Asia-Pacific trading day, the university system produces highly skilled graduates, and the workforce has strong English proficiency and familiarity with international business practices.

Australia’s migration programme also means the workforce includes a large pool of skilled migrants. More than 30% of Australia’s resident population was born overseas, and the country has a well-developed employer-sponsored visa system for filling genuine skill shortages.

Set up an Australian entity. You can register a company with the Australian Securities and Investments Commission (ASIC), obtain an Australian Business Number (ABN), register for GST, set up PAYG withholding with the Australian Taxation Office (ATO), register for workers’ compensation insurance in the relevant state, and open an Australian bank account. ASIC company registration can be done online in one to three days, but becoming fully operational, with all tax registrations, state-level insurance, and a functioning payroll, typically takes four to eight weeks. This option makes sense if you are building a long-term presence with a growing team.

Hire independent contractors. You can engage workers as independent contractors without establishing a local entity. However, Australia has some of the strictest sham contracting laws in the world. The Fair Work Act prohibits misrepresenting an employment relationship as an independent contracting arrangement, and penalties are severe. Fines of up to $99,000 per contravention for companies (or higher for larger employers), back-payment of entitlements, superannuation liabilities, and PAYG withholding penalties can all apply. The Closing Loopholes Act 2023 added criminal penalties for intentional wage theft, including up to 10 years’ imprisonment. Having an ABN, issuing invoices, and being registered for GST do not determine a worker’s status. If the substance of the relationship is employment, the worker is an employee regardless of the paperwork.

Use an Employer of Record. An Employer of Record employs your team members on your behalf through its own Australian entity. It handles employment contracts, payroll, PAYG withholding, superannuation, leave administration, and compliance with the Fair Work Act, the National Employment Standards, and any applicable Modern Award. You manage the employee’s day-to-day work. The EOR manages the legal and administrative relationship. This option lets you hire in Australia in a matter of weeks, without registering a local entity or managing Australian payroll directly.

The process from decision to first day typically takes two to four weeks.

Step 1. You identify and select your candidate. The recruitment process is yours. You find the right person, agree on role, responsibilities, and compensation.

Step 2. The EOR determines the correct employment framework. This is one of the most important steps in Australian hiring. The EOR identifies whether a Modern Award applies to the role and, if so, which one. Australia has over 120 Modern Awards that set minimum pay rates, overtime, penalty rates, allowances, and conditions for specific industries and occupations. Getting the award classification wrong can result in underpayment claims. If no award applies, the National Employment Standards (NES) set the minimum entitlements.

Step 3. The EOR prepares a compliant employment contract. The contract must meet or exceed the minimum conditions in the applicable award and the NES. The EOR drafts the contract, and you review and approve it.

Step 4. The EOR onboards the employee. This includes registering the employee for PAYG withholding, setting up superannuation contributions into the employee’s chosen (or stapled) super fund, registering for workers’ compensation insurance in the relevant state, and configuring payroll.

Step 5. The EOR runs payroll each pay cycle. The EOR processes gross-to-net calculations including income tax, Medicare levy, and any HECS-HELP repayments. It pays superannuation at 12% of ordinary time earnings (with payday super requirements taking effect from 1 July 2026), administers leave, and handles all ATO reporting.

Step 6. You manage the work. You direct the employee’s day-to-day tasks, performance, and development. The EOR handles the ongoing compliance, leave administration, and statutory obligations.

Australia’s employment framework has two layers that foreign employers need to understand.

The National Employment Standards (NES) are 11 minimum entitlements that apply to all employees in the national workplace system. They cover maximum weekly hours, requests for flexible working, parental leave, annual leave, personal/carer’s leave, compassionate leave, family and domestic violence leave, community service leave, long service leave, public holidays, notice of termination and redundancy pay, and the Fair Work Information Statement. These cannot be contracted out of.

Modern Awards sit on top of the NES and apply to most employees based on their industry or occupation. An award sets out minimum pay rates (which are typically higher than the national minimum wage), overtime rates, penalty rates for weekends, public holidays, and late-night or early-morning work, shift allowances, and other conditions. If an employee is covered by an award, the employment contract must meet or exceed every condition in that award. Underpayment of award entitlements is a common compliance failure for foreign employers who are not familiar with the system.

The national minimum wage for 2025-26 is A$24.95 per hour (A$948.00 per week for a 38-hour week). The Fair Work Commission announced its 2026 Annual Wage Review on 3 June 2026, increasing the national minimum wage by approximately 6% to A$26.44 per hour from 1 July 2026. Modern Award minimum rates will increase by 4.75% from the same date.

Enterprise agreements are another possibility. These are negotiated between an employer and a group of employees and must be approved by the Fair Work Commission. They can override award conditions but must leave employees better off overall. Most foreign employers hiring a small team through an EOR will operate under the relevant award rather than negotiating an enterprise agreement.

The total cost of employing someone in Australia goes beyond their gross salary. The main employer costs are superannuation (12% of ordinary time earnings), workers’ compensation insurance (state-based, varies by industry and state), payroll tax (state-based, applies above a threshold), and the cost of leave entitlements under the NES and any applicable Modern Award.

For a detailed look at what makes a competitive benefits package in Australia, see employee benefits in Australia.

If your new hire is not an Australian citizen or permanent resident, they will need a valid work visa. The most common route for employer-sponsored hires is the Subclass 482 visa, which now operates under the Skills in Demand (SID) framework introduced in December 2024.

Standard Business Sponsor (SBS) approval. Before you can sponsor a worker, the employing entity must be approved as a Standard Business Sponsor by the Department of Home Affairs. This requires two years of financial statements and evidence of a genuine, lawfully operating business. SBS approval lasts five years.

Nomination. The employer nominates the worker for a specific position. The role must be on the Core Skills Occupation List (CSOL) or meet the salary threshold for the Specialist Skills stream (A$135,000 from 1 July 2026). The Core Skills stream requires a minimum salary of A$73,150, increasing to approximately A$79,499 from 1 July 2026.

Visa application. The worker applies for the visa. They must demonstrate relevant qualifications and at least two years of full-time work experience in the nominated occupation, and meet English language requirements. Processing times vary from a few days to several months depending on the stream and circumstances.

When you hire through an Employer of Record, the EOR holds the SBS approval and manages the nomination and visa support process. This is one of the practical benefits of the EOR model for companies sponsoring workers into Australia.

Australia’s Fair Work system is well funded and actively enforced. These are the areas where foreign employers most commonly encounter problems.

Award misclassification. Applying the wrong Modern Award, or failing to apply one at all, can result in underpayment of minimum wages, overtime, and penalty rates. The Fair Work Ombudsman (FWO) actively investigates and prosecutes underpayment claims. High-profile cases against major employers in recent years have resulted in back-payment orders running into hundreds of millions of dollars.

Sham contracting. As described above, engaging workers as contractors when the relationship is one of employment carries civil penalties and, since 2025, potential criminal penalties. The ATO and FWO coordinate enforcement.

Superannuation non-compliance. Employers who fail to pay the correct superannuation amount by the due date must pay the Superannuation Guarantee Charge (SGC), which includes the unpaid amount, interest, and an administration fee. From 1 July 2026, payday super requires employers to pay superannuation contributions within seven days of each pay run, replacing the current quarterly deadline. This is a major compliance change.

Unfair dismissal claims. Employees who have completed the minimum employment period (six months, or 12 months for small businesses with fewer than 15 employees) can bring unfair dismissal claims through the Fair Work Commission. Foreign employers unfamiliar with Australian dismissal processes, including the requirement for procedural fairness and genuine redundancy criteria, are at higher risk.

State-based obligations. Workers’ compensation insurance, payroll tax, and long service leave are administered at the state and territory level. The rules, thresholds, and rates differ between New South Wales, Victoria, Queensland, Western Australia, South Australia, Tasmania, the ACT, and the Northern Territory. A company hiring employees in multiple Australian states may face different obligations for each.

There is no fixed employee count at which an entity becomes necessary. Companies with a single employee in Australia can operate through an EOR indefinitely. The decision depends on your growth plans, your appetite for managing multi-layered compliance, and whether you need a physical presence for commercial or regulatory reasons.