Hiring employees in Australia requires navigating the Fair Work Act, superannuation obligations, and strict payroll compliance.

This guide covers the essential taxes, laws, and requirements for employing workers in Australia in 2026.

Key Takeaways

  • Minimum wage is $24.95 AUD per hour (as of July 2025)
  • Employers must contribute 12% superannuation to employee retirement funds
  • Single Touch Payroll (STP) reporting is mandatory for all employers
  • Employees receive 4 weeks paid annual leave and 10 days paid personal/carer's leave
  • Intentional wage underpayment is now a criminal offence with penalties up to $7.8 million

Australian Employment Laws You Must Follow

The Fair Work Act 2009 governs employment in Australia. All employers must comply with the National Employment Standards (NES), which set minimum entitlements for employees including maximum weekly hours, leave, and termination notice.

Modern Awards provide industry-specific minimum pay rates and conditions. These often exceed NES minimums and cover overtime, penalty rates, and allowances. Employees must be correctly classified under the applicable Modern Award.

Written employment contracts are required.
Contracts cannot offer less than NES or Modern Award minimums.

Taxes and Payroll Obligations

1. PAYE Income Tax

Employers must withhold income tax under the Pay-As-You-Go (PAYG) system.

Tax rates are progressive:

  • 0% on income up to $18,200
  • 19% on $18,201–$45,000
  • 32.5% on $45,001–$120,000
  • 37% on $120,001–$180,000
  • 39% on income over $180,000
Plus 2% Medicare Levy on taxable income.

2. Superannuation Guarantee

Employers contribute 12% of ordinary time earnings to a complying superannuation fund. Contributions are currently paid quarterly, but from July 2026, Payday Super rules require contributions with each pay cycle.

3. Single Touch Payroll

All employers must report salary, tax withheld, and superannuation details to the ATO in real-time with every pay run via STP Phase 2.

4. State Payroll Tax

Payroll tax varies by state (1.85%–6.85%) and applies once total wages exceed state-specific thresholds. Industries like construction may have additional workers compensation requirements based on risk classification.

Employee Leave Entitlements

Australian employees receive generous statutory leave under the NES:

hiring in australia in 2026

Public holidays total 10–13 days depending on state.
Employees working on public holidays receive 1.5x pay plus an alternative day off.

Termination and Notice Periods

Notice periods are based on length of service:

  • Under 1 year: 1 week
  • 1–3 years: 2 weeks
  • 3–5 years: 3 weeks
  • Over 5 years: 4 weeks
Add 1 week if the employee is over 45 with at least 2 years of service.

Redundancy pay ranges from 4–16 weeks based on continuous service. Small businesses (under 15 employees) are exempt from redundancy pay requirements.

Hiring Foreign Workers

Foreign nationals need valid work visas.

Common options include:

Employers must verify visa status before employment begins.

How to Hire in Australia Without a Local Entity

employer of record

You can hire Australian employees immediately through an Employer of Record (EOR). The EOR becomes the legal employer, handling payroll, superannuation, tax filings, and compliance while you manage day-to-day work.

This eliminates the need to register a Pty Ltd company, set up local bank accounts, or navigate complex ATO requirements yourself.

Conclusion

Expanding into Australia doesn't require months of entity setup or deep knowledge of Fair Work regulations.

Rise handles all employment compliance, superannuation contributions, STP reporting, and leave administration so you can focus on building your workforce.

Book a demo with Rise to start hiring in Australia within days.

FAQs:

1. How much does it cost to employ someone in Australia?

Employer costs add approximately 16–18% on top of base salary. This includes 12% superannuation, workers' compensation insurance (0.5–3% depending on industry), and state payroll tax if applicable. You must also budget for 4 weeks annual leave and 10 days personal leave per year.

2. What is superannuation and do I have to pay it?

Superannuation is Australia's mandatory retirement savings system. Yes, all employers must contribute 12% of each employee's ordinary time earnings to a complying super fund. From July 2026, these contributions must be paid with each pay cycle rather than quarterly.

3. Can I hire someone in Australia without setting up a company?

Yes. An Employer of Record like Rise acts as the legal employer on your behalf. You avoid entity registration, ATO compliance, and ongoing payroll administration while retaining full control over your employee's work and responsibilities.

4. What happens if I underpay an employee in Australia?

Intentional wage underpayment became a criminal offence in January 2025. Penalties include fines up to $7.8 million for corporations and up to 10 years imprisonment for individuals. Even accidental underpayment can result in back-pay orders and Fair Work Ombudsman penalties.

5. How much annual leave do Australian employees get?

Full-time employees receive 4 weeks (20 days) of paid annual leave per year. Certain shift workers receive 5 weeks. Leave accumulates from the first day of employment and can be taken once accrued. Unused leave carries over year to year.

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