Australia consistently ranks among the world’s top choices for remote hiring. However, many international employers are daunted by the country’s complex employment laws, which strongly prioritize worker protections.
Australia's labor regulations create multiple compliance obligations that might come as a surprise to international employers — from mandatory superannuation contributions to termination procedures that can take months to execute properly.
The financial stakes of getting it wrong are substantial. Companies face penalties up to AUD 469,500 for serious violations, making compliance errors extremely costly.
This guide covers the essential requirements for hiring Australian employees without running into these expensive pitfalls.
Key takeaways:
- Australia's Fair Work Act 2009 creates mandatory employment standards that apply nationwide, covering everything from minimum wages to termination procedures — with penalties for non-compliance.
- Employers must contribute 12% of employee salaries to superannuation funds quarterly, with failure to comply triggering automatic charges plus interest and administrative fees.
- Misclassifying employees as contractors can result in costly penalties, plus back payment of all employee entitlements, including leave and superannuation.
Labor Laws in Australia: What You Need to Know
The Fair Work Act 2009 governs employment relationships across Australia, establishing the framework for wages, working conditions, and employee rights. This legislation applies to most employers.
Under this Act, the National Employment Standards (NES) established 10 minimum entitlements. These standards create a baseline that every Australian employee receives, regardless of industry or employer size.
The NES includes:
- Maximum weekly working hours and overtime provisions
- Right to request flexible working arrangements
- Parental leave entitlements up to 12 months
- Four weeks minimum of annual leave
- 10 days personal/carer's leave annually
- Community service leave for jury duty and emergency services
- Long service leave after extended employment
- Public holiday entitlements and pay
- Minimum notice periods for termination
- Mandatory provision of Fair Work Information Statements
Australia also enforces strong anti-discrimination workplace laws at the federal and state levels. Key legislation includes:
- Disability Discrimination Act 1992
- Sex Discrimination Act 1984
- Age Discrimination Act 2004
- Racial Discrimination Act 1975
These laws prohibit discrimination in hiring, pay, and employment terms based on attributes such as age, sex, race, disability, or family responsibilities.
Who Is Covered by Employment Laws in Australia?
Most employees — including full-time, part-time, and casual employees — are covered under the national workplace relations system. This includes workers in private sector businesses and some not-for-profit organizations.
Independent contractors, however, are not covered by the NES. They are regulated by separate legislation, and businesses must ensure contractors meet the legal definition to avoid misclassification.
Employment Contracts & Probation Periods
Employment contracts can be verbal or written, but written agreements protect both parties and help prevent future disputes. Contracts should specify job responsibilities, compensation, working hours, leave entitlements, and termination procedures.
Probation periods typically range from three to six months and must be clearly stated in the employment contract. During probation, employers can evaluate employee performance and apply shorter notice periods for termination.
Specific industries operate under enterprise agreements or modern awards that set conditions above the NES minimums. Manufacturing, construction, retail, and hospitality commonly use these collective bargaining agreements, which may provide enhanced benefits, including higher wages, additional leave, or improved working conditions.
Working Hours & Wages
Australian law sets the maximum weekly hours of work at 38, though some employees may work additional "reasonable" hours depending on their role, seniority, compensation, and personal circumstances.
What constitutes reasonable additional hours varies based on factors including advance notice, workplace safety requirements, and the employee's ability to refuse.
The national minimum wage as of July 2025 is AUD 24.95 per hour or AUD 948 per 38-hour workweek.
Overtime is paid at time-and-a-half (150%) for the first three extra hours, and increases to double time (200%) for hours worked beyond that. However, the exact rates can vary depending on the specific agreement.
Some senior employees may be exempt from overtime provisions based on their salary level and responsibilities.
Health & Safety Standards
The Work Health and Safety (WHS) Act 2011 requires employers to ensure safe working environments for employees and visitors. This includes providing safety equipment, implementing safe work procedures, and offering appropriate training and supervision.
Employers must consult with workers on health and safety matters, investigate workplace incidents, and comply with relevant safety codes and regulations. Regular workplace assessments and safety training are typically required across all industries.
Employer Taxes
Australian employers contribute a percentage of employee salaries to several mandatory programs.
Payroll tax applies to employers with annual payrolls exceeding state-specific thresholds, ranging from AUD 1 million to AUD 2 million, depending on location. Tax rates typically range between 4.75% and 6.85% of total payroll costs.
Workers' compensation insurance is mandatory across all states, with premiums varying by industry risk levels.
Retirement Contributions
As of July 2025, the superannuation guarantee mandates employer contributions of 12% of employees’ regular earnings to approved retirement funds.
Contributions must be paid quarterly, and employers who miss payments face the Superannuation Guarantee Charge, which includes unpaid contributions, interest calculated from the original due date, and an administration fee.
Serious violations can trigger additional penalties up to 200% of the unpaid amount.
Termination Guidelines & Severance Pay
Australian employees can only be dismissed for valid reasons, including poor performance after warnings, serious misconduct, redundancy due to operational changes, or genuine operational requirements. Termination of employment procedures must follow due process requirements.
Minimum notice periods depend on service length, starting at one week for less than one year of service, increasing up to four weeks for employees with five or more years under their belt. Employees over 45 with at least two years of service receive an additional week's notice.
Redundancy pay applies when positions are eliminated due to operational changes. Employees with at least one year of service receive payments ranging from four weeks' pay for one to two years of service up to 16 weeks for 10 or more years with the same company. Small businesses with fewer than 15 employees may have reduced obligations.
Health Insurance
Australia's Medicare system provides universal healthcare coverage through taxation, without direct employer contribution requirements. However, many employers provide private health insurance benefits to attract talent, offering faster access to specialists and private hospital treatment.
Paid Leave Laws
Australian employees receive comprehensive paid leave entitlements that employers must provide regardless of company size.
Vacation and Holiday Leave
Employees accrue four weeks of paid annual leave per year, although many receive five to six weeks. Some shift workers and specific industries receive additional annual leave entitlements.
National public holidays include:
- New Year's Day
- Australia Day
- Good Friday and Easter Monday
- Anzac Day
- King's Birthday
- Christmas Day and Boxing Day
Additional state and territory holidays may apply based on work location.
Sick Leave
Employees accrue 10 days of sick and carer’s leave annually to use for personal illness or caring for family members. This leave accumulates if unused and provides full pay funded by the employer. Medical certificates typically aren’t required for absences lasting less than three days.
Parental Leave
Employees are entitled to up to 20 weeks of paid parental leave following the birth of a child, which can be shared between both parents, with the option to take unpaid parental leave concurrently for up to 12 months.
Partners receive up to two weeks of unpaid partner leave, which can be taken concurrently with primary carer leave or separately within 12 months of birth or adoption.
Australian Independent Contractors
Companies can work with independent contractors, but they must clearly differentiate between true contractor roles and what could be considered employment disguised as contracting.
The Independent Contractors Act 2006 provides contractor protections, including the right to challenge unfair contracts and protection from certain discrimination.
Key indicators that someone is a contractor include:
- Control over work methods
- Provision of own equipment
- Financial risk bearing
- Ability to delegate work
Misclassification triggers significant penalties and requires back payment of employment entitlements, including superannuation, leave accruals, and other benefits.
Penalties for Not Following Australian Labor Laws
Employment law violations carry substantial penalties under the Fair Work Act. Civil penalties start at AUD 19,800 for individuals up to almost AUD 5 million for corporations for serious contraventions, including wage underpayment, failure to provide mandatory leave, and unfair dismissal.
Superannuation guarantee failures trigger automatic charges, while workplace safety violations can result in penalties up to AUD 11.5 million for corporations in cases involving death or serious injury.
How to Stay Compliant When Hiring in Australia
Companies can establish local legal entities by incorporating in Australia, registering for various taxes, implementing payroll systems, and maintaining ongoing compliance with employment laws. This approach provides direct control but requires significant time, cost, and ongoing legal expertise.
Alternatively, Employer of Record (EOR) services enable companies to hire Australian employees without establishing a local entity. The EOR becomes the legal employer, managing compliance, payroll, benefits, and regulatory reporting while clients maintain operational control of their employees.
Hire in Australia with RemoFirst
Ready to access Australia's skilled workforce without wrestling with complex employment regulations? RemoFirst eliminates the administrative burden of Australian hiring.
As your Employer of Record, we handle employment contracts, payroll processing, superannuation contributions, leave management, and all compliance requirements. We enable companies to hire in 185+ countries — including Australia — and contractors in 150+ countries.
Our Australian employment law expertise ensures full regulatory compliance. From software engineers in Sydney to marketing specialists in Melbourne, we make hiring straightforward and worry-free.
Book a demo to discover how RemoFirst can help you employ Australia's top talent while maintaining complete compliance with local labor laws.
