How To Hire And Pay Employees In Australia

Emerald Technology's guide to hiring employees in Australia

CURRENCY

Australian dollar is the official currency of Australia. Its currency symbol is $, AUD.

CAPITAL CITY

Canberra is the capital of Australia, which sits between Sydney and Melbourne.

LANGUAGE

There is not an official language, but English is by the most commonly spoken language.

POPULATION The current population of Australia is 25.74 Million 2021 based on World bank numbers.
PAYROLL FREQUENCY

Employees must be paid at least monthly for the work they do. Most awards, enterprise agreements or registered agreements will set out when employees must be paid (weekly, fortnightly or monthly).

PUBLIC HOLIDAYS

Australia has public holidays.

GROW YOUR TEAM IN AUSTRALIA

NO ENTITY, NO PROBLEM

To start growing your team in Australia, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN AUSTRALIA

Australia is a country with a rich history and culture. It is also one of the most developed countries in the world. The country has a stable economy, which makes it an attractive place for businesses to set up shop. The Australian government has been working hard to make the country more business-friendly by reducing taxes and simplifying regulations. This has made Australia an attractive destination for foreign investors and entrepreneurs alike. 

The Australian labour market is one of the most competitive in the world. The country has a population of 24 million people and a workforce of 12 million. The Australian labour market is also very diverse, with many cultures and languages represented in the workforce. 

However, there are some challenges that come with doing business in Australia as well. For example, the cost of living is high and there are strict labour laws that can make it difficult to hire international employees. Also, Australia has an ageing population, which means that there will be fewer people entering the workforce in coming years. This will put more pressure on employer to find skilled workers either from different global locations, or train their own employees to fill these gaps.

WHY AUSTRALIA IS GOOD FOR REMOTE WORKERS

Australia is a great place for remote working and digital nomads, with many benefits to be gained. Being known as one of the top most liveable countries, with excellent internet access makes Australia perfect for remote working connecting people globally no matter where. Australia benefits from some of the world’s highest wages, which makes it extremely attractive and competitive to international workers. Australia offers excellent coworking spaces and opportunity to meet and work with like minded people from different cultures.

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN AUSTRALIA

The standard working week in Australia is 38 hours per week (7.6 hours per day), usually worked Monday to Friday. All time worked beyond 38 hours per week is classed as overtime and, in most cases, attracts a premium of 1.5x the ordinary rate of pay for the first 3 hours and double time thereafter.

ANNUAL LEAVE AND PUBLIC HOLIDAYS

All full-time workers are guaranteed a minimum of 4 weeks’ paid annual leave. Shift workers in some industries may be entitled to 5 weeks.

Australia has 8 public holidays. 

January 1st: New Year's Day 
January 3rd: Additional public holiday for New Year's Day 
January 26th: Australia Day
April 15th: Good Friday 
April 18th: Easter Monday 
April 25th: Anzac Day 
December 25th: Christmas Day 
December 26th: Boxing Day 

PROBATION PERIOD IN AUSTRALIA

Probation periods in Australia typically last 3-6 months.

RESIGNATION AND DISMISSAL IN AUSTRALIA

When an employer dismisses an employee, they have to give them notice. The notice period starts from the day after the employer notifies the employee of the termination. Notice must be given in accordance with the following schedule at a minimum:

  • Up to 1 year's employment: 2 weeks
  • 1-3 year's employment: 2 weeks
  • 3-5 year's employment: 3 weeks
  • 5+ years' employment: 4 weeks

 

If an employee is made redundant, they are entitled to a payment based on years of continuous service, in accordance with the following schedule:

  • 1-2 years: 4 weeks
  • 2-3 years: 6 weeks
  • 3-4 years: 7 weeks
  • 4-5 years: 8 weeks
  • 5-6 years: 10 weeks
  • 6-7 years: 11 weeks
  • 7-8 years: 13 weeks
  • 8-9 years: 14 weeks
  • 9-10 years: 16 weeks
  • 10+ years: 12 weeks

Therefore, the maximum statutory redundancy pay is 16 weeks' pay for someone with 9-10 years' service with one employer.

RESTRICTIVE COVENANTS

Restrictive covenants that protect the employer's legitimate business interests may be enforced to the extent reasonably necessary to protect those interests in all circumstances. 

Non-compete clauses are typically enforceable for no longer than 12 months, with some exceptions. Employee and customer non-solicitation clauses are also permissible.

READY TO HIRE YOUR EMPLOYEES IN AUSTRALIA?

CONTRACT OF EMPLOYMENT IN AUSTRALIA

Australian workers can be covered by a contract, an agreement, or an award. This draws from the National Employment Standards and state and federal laws.

 

  • Becoming less popular, awards generally include the minimum employment standards, and set conditions for all employees in the same occupation. The award standards may vary between the state, employer, and industry.
  • An Enterprise Agreement sets out the work conditions for a group of employees at one or more places of work, and usually of one An enterprise agreement will supersede an award that would otherwise cover employees in a workplace but only where it, at least matches the pay set out in the award. Enterprise Agreements are the most common way of defining wages and workplace conditions in Australia and generally cover more issues than do awards.
  • Written employment contracts, which include wages and conditions, are used for employees who are not covered by an award or an enterprise agreement. 

MATERNITY LEAVE IN AUSTRALIA

Employees are entitled to 52 weeks of unpaid parental leave, and may also request an additional 52 weeks of leave. Pregnant employees can begin leave up to six weeks before their due date (from week 34 of the pregnancy).

 

This leave is available to either parent, provided that both are working and are eligible (although only 8 weeks can be taken at the same time).

SICKNESS LEAVE IN AUSTRALIA

Full-time employees are entitled to 10 days of sick or carer’s leave each year. The balance of leave you accrue each year can be carried over into the next year. Part-time employees receive a prorata entitlement.

SOCIAL SECURITY

No Social Security is payable in Australia.

HEALTHCARE AND INSURANCE

Medicare Levy: Whilst Australia does not have a social security system, a Medicare Levy of 2% of taxable income is payable by resident individuals for health services (provided that they qualify for Medicare services). An exemption from the Medicare Levy may apply if the individual is from a country that has not entered into a Reciprocal Health Care Agreement with Australia.

 

High income resident tax payers who do not have adequate private health insurance may be subject to an additional 1-1.5% Medicare Levy surcharge. High-income taxpayers whose private hospital insurance carries an excess payment (amount for which the insured is responsible before the insurance begins to pay) of more than AUD 500 for single individuals or AUD 1,000 for couples or families are also subject to the Medicare Levy surcharge.

 

Superannuation (pension): Australia also has a compulsory private superannuation (pension) contribution system. Under this system, employers must contribute a minimum percentage of the employee’s ordinary time earnings (OTE) base to a complying superannuation fund for the retirement benefit of its employees. The minimum percentage is currently 10.5% (as of July 2022).

Employment of

FOREIGN NATIONALS IN AUSTRALIA

An individual wishing to enter Australia for employment reasons may apply for a temporary work short stay specialist (subclass 400) visa, temporary activity (subclass 408) visa or temporary skill shortage (subclass 482) visa.

The temporary work short stay specialist visa

The temporary work short stay specialist (subclass 400) visa applicants must have highly specialised skills, experience, or knowledge that can help Australian business that can’t be reasonably found in Australia. The visa holder can only do work or activities for which the visa was granted. Depending on circumstances, the visa can be issued for up to 6 months. Generally, for a stay period of longer than 3 months, a strong business case must be provided with the application. This visa cannot be extended.

The temporary activity visa

The temporary activity (subclass 408) visa allows applicants to come to Australia to participate in events which are endorsed by the Australian Government. The applicant must be sponsored or supported and the visa is valid for the duration of the event, or up to 4 years.

The temporary skill shortage visa

The temporary skill shortage (subclass 482) visa enables employers to address labour shortages by bringing in skilled workers where employers can't source and appropriately skilled Australian worker. 

Applicants must have relevant and required skills that are short in Australia and be nominated for a skilled position by an approved sponsor. Visa holders can stay for up to 2 years, or up to 4 years if an International Trade Obligation (ITO) applies. 

START PAYROLLING YOUR EMPLOYEES IN AUSTRALIA

Salary Taxes

MINIMUM WAGE IN AUSTRALIA

The national pre-tax minimum wage in Australia is $21.38 per hour ($812.60 per 38 hour weeks). Casual employees covered by the national minimum wage also receive a 'casual loading' of at least 25%.

INCOME TAX

Taxable income bands for residents:
Taxable Income Band

National Income Tax Rates

0 - 18,200 0%
18,201 -37,000 19%
37,001 - 90,000 32.5%
900,001 - 180,000 37%
180,000+ 45%

 

Taxable income bands for non-residents

Taxable Income Band National Income Tax Rates
0 -90,000 0%
90,001 - 180,000 19%
180,001+ 32.5%

 

SALARY PAYMENTS IN AUSTRALIA

Employees must be paid at least monthly for the work they do. Most awards, enterprise agreements or registered agreements will set out when employees must be paid (weekly, fortnightly or monthly). Employees need to be given a payslip within 1 working day of being paid.

SOCIAL SECURITY CONTRIBUTIONS IN AUSTRALIA

Resident individuals pay 2% of their taxable income as a Medical Levy, with some exceptions. High income resident taxpayers who do not have adequate private health insurance may be subject to an additional 1-1.5% Medicare Levy surcharge. High-income taxpayers whose private hospital insurance carries an excess payment of more than AUD 500 for single individuals or AUD 1,000 for couples or families are also subject to the Medicare Levy surcharge.

WORKER MISCLASSIFICATION IN AUSTRALIA

Similar to other countries, Australia has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

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