Oceania

Australia

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Employer of Record (EOR) in Australia

What you'll learn

  • Country Introduction
  • Employment Terms
  • Minimum Wage and Working Hours
  • Statutory Leave Laws
  • Termination Process
  • Additional Information
Australia Introduction

Australia is the largest country in the Oceania region and the sixth-largest country in the world. Its size gives it a wide variety of climates and landscapes, with lots of desert, tropical rainforests, and mountain ranges.

Australia is a highly developed country and ranks amongst the highest in the world for quality of life, health, education, democracy, economic freedom, civil liberties, political rights, and safety. Employees in Australia have what’s called a superannuation fund, which is an an employment-funded pension that they can access after retiring from work.

Employment Terms

Types of Contracts

Employment can be offered on a:

  • Fixed term; or
  • Indefinite term.

As of December 6, 2023, employers must give every employee engaged under a new fixed term contract a copy of the Fixed Term Contract Information Statement (FTCIS). The FTCIS needs to be given when the employee enters, or as soon as possible after entering, the fixed term contract.

The maximum length of a fixed-term contract is 2 years, including any extensions or renewals. Fixed-term contracts cannot be renewed more than once.

Consecutive Contract Limitations

An employee can not be offered a new fixed term contract if the first 3 points below all apply, and one or more of the scenarios in the 4th point applies.

  1. Their previous contract was also for a fixed term;
  2. Their previous contract and the new contract are for mainly the same work;
  3. There is substantial continuity in the employment relationship between the previous and new contracts, and
  4. Either:
    • The previous contract contained an option to extend that was used;
    • The total period of employment for both the previous and new fixed term contract is more than 2 years;
    • The new fixed term contract contains an option to renew or extend; or
    • There was an initial contract in place (before the previous contract):
      • That was for a fixed term,
      • That was for the same or similar work, and
      • Where there was substantial continuity in the employment relationship.

Note: The limitations do not apply to fixed-term contracts entered into before December 6, 2023. However, these contracts must be considered when applying the limitations to a new fixed-term contract.

Job Title Restrictions

In Australia, it’s not possible to hire blue-collar workers under the EOR model. These workers are defined as those who are employed in manual labor work; they build and maintain many of the objects and structures: cars, buildings, homes, technology, trucks, trains, and roads, among others)

Working Hours

The maximum working hours in Australia is 38 hours weekly for full-time employees, plus reasonable additional hours. Note that there’s no formal definition of what’s considered reasonable, as it depends on the nature of work, salary and personal circumstances of the employee.

Minimum assignment length: The hours required for a shift will vary depending on the employment contract. But shift work usually requires more than 2 hours per shift.

Overtime

In Australia, there are a number of rules governing overtime:

  1. Maximum Working Hours for Casual Employees:
    • Casual employees in Australia are restricted to working a maximum of 12 hours in a single day or shift.
    • After reaching this limit, they must be provided with time off, including adequate meal breaks.
  2. Opt-Out Option:
    • Employees can only opt out of maximum working hours under limited circumstances.
    • Individual flexibility arrangements or enterprise agreements can vary working hours, but only if they offer an overall benefit to the employee.
  3. Overtime Compensation:
    • Overtime rates are defined differently in each Modern Award or enterprise agreement.
    • Typically, overtime compensation involves:
      • Time and a half (150% of the standard rate) for the first 3 hours of overtime.
      • Double time (200% of the standard rate) for each subsequent hour of overtime and work undertaken on Sundays.
  4. Employee Time Tracking Obligations:
    • Employers are obligated to maintain accurate records of employee work hours.
    • These records must:
      • Be in English, legible, and available for inspection by a Fair Work Inspector.
      • Not be altered except for correcting errors.
      • Be retained for seven years.
    • Records should specify:
      • The number of overtime hours worked each day.
      • Start and finish times for overtime hours (if applicable).
      • Hours worked by casual or irregular part-time employees paid based on time worked.

Minimum Wage

The minimum wage in Australia is AUD 23.23 per hour.

Taxes & Local Employment Costs

Employee Taxes

Australia has a progressive tax system with different tax rates for different income brackets. As of the 2023-2024 financial year, the tax rates for residents are as follows:

  • AUD 0 - AUD 18,200 = 0%
  • AUD 18,201 - AUD 45,000= 19%
  • AUD 45,001 - AUD 120,000 = 32.5%
  • AUD 120,001 - AUD 180,000 = 37%
  • AUD 180,001 and over = 45%

Medicare Levy and Medical Levy Surcharge

In addition to income tax, most taxpayers are also required to pay the Medicare Levy, which helps fund Australia's public healthcare system.  Medicare levy is a universal health program that provides basic medical and hospital care free of charge. The standard rate is 2% of taxable income, although some individuals may be exempt or entitled to a reduced levy.

Medicare levy may reduce if an employee’s taxable income is below a certain amount. In some cases, they may not have to pay this levy at all.

However, high-income earners who do not have private hospital insurance may be subject to an additional Medicare Levy Surcharge of either 1%, 1.25% or 1.5% . This surcharge applies to individuals earning above certain thresholds and varies depending on income and marital status.

Employer Taxes & Contributions

Mandatory taxes for employers include superannuation (11%), Payroll Tax (4.85%), and Workers Compensation Insurance (1.645%).

Superannuation

Super is a way of saving for retirement.  In 2024, the employer must pay 11% of the employee’s base salary into their super account, and the super fund invests the money until the employee retires.

Note: Super can be withdrawn by the employee upon:

  • Retirement for permanent residents and Citizens; or
  • Expiration of the temporary visa for non- residents.

Workers Compensation Insurance

Workers compensation is a form of insurance payment to employees if they are injured at work or become sick due to their work. Workers'. It aims to provide financial support to employees who sustain work-related injuries or illnesses. It covers medical expenses, rehabilitation costs, and a portion of lost wages during the recovery period.

Legislation: Each state and territory in Australia has its own workers' compensation scheme governed by legislation specific to that jurisdiction. However, these schemes generally operate under similar principles and provide comparable benefits to eligible workers.

Coverage: Workers' compensation insurance typically covers all employees, including full-time, part-time, casual, and self-employed individuals, regardless of industry or occupation. Coverage extends to injuries or illnesses sustained while performing work-related duties, including accidents on company premises, during work travel, or while engaged in work-related activities off-site.

Benefits: The benefits provided under workers' compensation insurance include:

  • Medical treatment and rehabilitation expenses: Coverage for medical expenses related to the treatment of work-related injuries or illnesses, including hospital bills, doctor's visits, medications, and rehabilitation services.
  • Income replacement: Compensation for a portion of lost wages during the period of temporary or permanent disability resulting from a work-related injury or illness.
  • Lump-sum payments: Compensation for permanent impairments or disabilities resulting from work-related incidents, calculated based on the severity of the injury and its impact on the individual's earning capacity.
  • Death benefits: Financial support for dependents of workers who die as a result of a work-related injury or illness, including funeral expenses and ongoing financial assistance.

Employer Obligations: Employers in Australia are generally required to hold workers' compensation insurance to cover their employees. They must comply with reporting requirements, promptly investigate workplace incidents, and facilitate the claims process for injured workers.

Types of Leave

Annual Leave

Full-time and part-time employees get 4 weeks of annual leave, based on their ordinary hours of work.  Annual leave accumulates from the first day of employment, even if an employee is in a probation period. The leave accumulates gradually during the year and any unused annual leave will roll over from year to year.

Annual leave accrues during periods of paid leave, including annual leave, sick leave, carer's leave, family and domestic violence leave, community service leave (such as jury duty), and long service leave. However, it does not accrue during periods of unpaid annual leave, unpaid sick/carer's leave, or unpaid parental leave.

Requesting Annual Leave

The process for requesting annual leave is often set out in a company policy or contract of employment.  An employer can only refuse an employee's request for annual leave if the refusal is reasonable. There is no minimum or maximum amount of annual leave that can be taken at a time.

Annual Leave Expiry and Carryover

There are no statutory provisions governing annual leave expiry or carryover. The conditions for expiry and carryover of annual leave depend on the agreement between the employer and the employee, as outlined in the company policy or employment contract.

Annual leave entitlements may expire on a certain date if not taken within the specified timeframe. However, some employers may allow employees to carry over a certain number of unused annual leave days with prior approval.

Sick Leave

Full-time employees are entitled to 10 sick days per year. The leave is pro-rata for part-time employees. This can be calculated as 1/26 of an employee’s ordinary hours of work in a year.

An employee can also take paid carer's leave to care for or support a member of their immediate family or household who is:

  • Sick
  • Injured, or
  • Has an unexpected emergency.

Employees must provide evidence to their employer if requested.

Full-time and part-time employees accumulate sick and carer's leave during each year of employment. It starts accumulating from an employee's first day of work and is based on their ordinary hours of work.

Note: Sick and carer's leave are part of the same leave entitlement and can be carried over to the next year.

Parental Leave

Permanent employees typically have access to 12 months of unpaid parental leave, which can be extended for an additional 12 months upon request and meeting specific criteria. Adequate notice, usually at least 10 weeks in advance, is required, detailing the start and end dates of maternity leave. Employers must adhere to laws prohibiting dismissal or discrimination against employees taking maternity leave and should be ready to address related concerns.

Additionally, eligible employees caring for a newborn or newly adopted child can receive up to 20 weeks of Parental Leave Pay through the Paid Parental Leave Scheme, with the option to take unpaid leave concurrently for up to a total of 12 months, subject to varying rules and entitlements depending on the stage of parental leave.

Public Holidays

The public holidays observed in Australia vary according to state or territory, ranging between 12 and 14 per year.

Benefits

Medical Insurance

Employers have the option to provide private medical insurance for employees, but it is not mandatory. While not very common, many large tech companies often offer coverage for employees and their dependents, including private healthcare and dental insurance.

Private Health Insurance Rebate:

The private health insurance rebate is an amount contributed by the government towards the cost of private health insurance premiums.Income Testing:

The rebate eligibility is income-tested, meaning it depends on your income for surcharge purposes. If you have a higher income, your rebate entitlement may be reduced, or you may not be entitled to any rebate at all.

Adjustment of Rebate Percentage:

The rebate percentage is adjusted annually on 1 April. It's important to stay updated on any changes to ensure you're maximizing your rebate entitlement.

Private Pension

It is required to have a private pension/retirement. It is a government statutory regulation.

Superannuation: Employers must contribute a minimum of 11% of an employee's earnings base (capped earnings level of $60,220 per quarter for the 2022-23 financial year) to a registered superannuation fund or retirement savings account (RSA) on behalf of the employee. Employees may choose to make before-tax concessional contributions capped annually at $27,500.

The rate that employers need to contribute will increase by 0.5% every year, reaching 12% by July 2025 when it will be capped.

Termination Process

Process

In certain instances, the Department of Human Services may request employers to fill out an Employment Separation Certificate upon an employee's departure from their position. This certificate should detail final pay payments. Failure to provide adequate notice by the employer may result in owed compensation for the employee. Additionally, in cases of redundancy, employees may be eligible for redundancy pay

Notice Period

While on probation, employees continue to receive the same entitlements as someone who is not in a probation period. The minimum notice period for terminating an employment depends on the employee’s length of service:

  • Less than 1 year = 1 week notice
  • 1-3 years = 2 weeks notice
  • 3-5 years = 3 weeks notice
  • 5+ years = 4 weeks notice

Under the NES, an employer does not need to provide notice of termination (or payment in lieu of notice) to employees who:

  • are casual
  • are employed for a specified period of time, task or season (for example, a fixed term contract or a seasonal fruit picker)
  • are fired because of serious misconduct (for example, engaging in theft, fraud, sexual harassment or assault)
  • have a training arrangement and are employed for a set period of time or for the length of the training arrangement (other than an apprentice)
  • are daily hire working in the building and construction industry or the meat industry in connection with the slaughter of livestock.
  • are weekly hire working in connection with the meat industry and whose termination depends on seasonal factors (but not where termination is due to other reasons).

Severance Pay

Employees in Australia are entitled to the following payments at the end of employment:

  • Outstanding wages for hours they have worked, including penalty rates and allowances;
  • Any accumulated annual leave, including annual leave loading if it would have been paid during employment*;
  • if it applies:
    • accrued or pro rata long service leave
    • payment in lieu of notice
    • redundancy pay.
  • Sick and carer’s leave is not paid out when employment ends.

The annual leave payment has to be the same amount that the employee would have received if they’d taken the annual leave during their employment. For example, if an employee would have been entitled to annual leave loading or other payments when they took their annual leave, these loadings and other payments have to be included in the final payment.

Additional Information

In Australia, few employers offer supplemental health insurance to employees due to the country having a robust public health system. Employees in Australia also have a superannuation fund, which is an employment-funded pension plan that they can access after retiring. Employers are mandated to contribute to this fund for their employees at a rate of 10% of the salary. Additional employee contributions are allowed, but not required.

As of 2023, employers in Australia are required to consider every employee’s request for flexible work, and they can only refuse it if there is a valid reason and they discuss it with the employee.

OVERVIEW
Language(s):
English
Currency:
Australian Dollar (AUD)
Capital City:
Canberra
Population:
26.1 Million
Cost of Living Rank:
12th
VAT (Valued Added Tax):
10%
Employer TaxES
17.5%
(estimated)

★  4.85% - State Payroll Tax

★  1.645% - Workers Compensation Insurance

★  11% - Superannuation

Get Started in 3 Steps

1

Remote candidate

You've sourced a full-time employee or contractor located in a country where your company is not incorporated.

2

Cost Calculation

Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.

3

Onboarding & Admin

Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.

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How Remofirst employs in Australia

It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.

How employees in Australia get paid
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. Remofirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), Australian Dollars (AUD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees in Australia are paid on time in Australian Dollar (AUD). To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Full-time Employees vs Global Contractors

Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.

Dependable support for employees
Whenever the employee or employer has a question about benefits, Visas, or anything else related to international employment in Australia, they can speak with our customer support team to get answers from our team of experts.