Key takeaways
Australia at a glance
Three things to know before you hire in Australia
You've identified the talent. The role is approved. Now you need to hire someone in Sydney or Melbourne, and you're realizing that Australian employment law is not a single document you can read over a weekend. It's a layered system: federal law, state-specific obligations, and industry-specific awards. Getting any one layer wrong creates real liability.
Why Australian employment law is harder than it looks
Yes, Australian payroll is genuinely complex, and the federal/state split is the core reason. The Fair Work Act 2009 governs national employment relationships, setting the floor for pay, leave, and termination rights. But state governments run their own payroll tax regimes, workers compensation insurance schemes, and long service leave rules, each with different thresholds, rates, and deadlines.
On top of that, Modern Awards sit between the national minimum wage and individual contracts, setting legally binding pay rates and conditions for specific industries and occupations. And superannuation obligations exist entirely independently of all of the above. These systems don't replace each other, but they stack. A single hire in New South Wales triggers obligations under federal law, NSW payroll tax rules, NSW workers compensation, and potentially a Modern Award, all simultaneously.
The decision this page helps you make
If you're weighing an employer of record against setting up a local entity or engaging contractors, this page gives you the facts to decide. Here's what you'll find:
- How Australian employment law actually works, including Modern Awards, the NES, and superannuation
- What it costs to employ someone in Australia, broken down clearly
- How an EOR compares to a Pty Ltd setup, with honest trade-offs
- What's changed in Australian law in 2024 and 2025 that affects your hire today
An EOR lets you hire in Australia without establishing a local company. You retain day-to-day control of your employee's work. The EOR carries the legal employer obligations.
Australia at a glance for global employers
Australia has a population of approximately 25.98 million across six states, each with its own payroll tax threshold, workers compensation insurer, and long service leave rules. English is the de facto business language, contracts are written in English, and the time zone spread — AEST (UTC+10), ACST (UTC+9:30), AWST (UTC+8) — means your Sydney and Perth hires may not overlap at all.
What the numbers mean for your hiring costs
The headline employer cost above gross salary is approximately 13–15%. The largest component is superannuation: currently 11.5% of ordinary time earnings, rising to 12% on July 1, 2025. Unlike pension schemes in some markets, superannuation applies to every employee — full-time, part-time, and casual — from their first day. There is no minimum earnings threshold that exempts casual workers, which surprises many international employers who assume casual staff are outside the system.
Workers compensation insurance is mandatory and state-based. You purchase it through private insurers (or state schemes, depending on the state), and rates vary by industry and claims history. This is a real cost that belongs in your budget, not a footnote.
State payroll tax applies when your total Australian wage bill exceeds the state-specific threshold. In New South Wales, that threshold is currently AUD $1.2 million annually. Below that, you pay nothing. Above it, you pay a percentage on the excess. For a single hire, you're unlikely to trigger payroll tax immediately — but as your team grows, it becomes a planning consideration.
The minimum wage is AUD $24.95 per hour (AUD $948.00 per 38-hour week) from July 1, 2025, reviewed annually by the Fair Work Commission. Superannuation is the clearest expression of Australian law's requirement to care for your team's long-term financial wellbeing, and it's non-negotiable.
What hiring in Australia actually looks like
The mechanics of employing someone in Australia involve more steps than most international employers expect. Here's what the process looks like in practice.
A quick scenario for your first Australian hire
Imagine you're hiring a product manager in Sydney. Your first instinct might be to set up a Pty Ltd. That takes 3–6 months and involves ASIC registration, payroll tax registration in each state, and director obligations.
It also requires Modern Award assessments, annual wage review compliance, and workers compensation insurance procurement. For one hire, that overhead is hard to justify.
Instead, you engage an EOR. The EOR becomes the legal employer in Australia. They run the Modern Award check — is this product manager covered by an Award, or do they earn above the AUD $110,000 high-income threshold that makes them Award-free? They draft the compliant employment agreement, register for superannuation, and deliver the Fair Work Information Statement on day one. They also complete the right to work check via VEVO and register the employee's Tax File Number with the ATO. Your product manager is productive within days of offer acceptance, not months.
What is an employer of record in Australia
An employer of record is a third-party service that acts as the legal employer on your behalf, handling payroll, compliance, contracts, and benefits without you needing an Australian entity. You retain day-to-day control of the employee's work. The EOR carries all employment obligations under the Fair Work Act.
How an EOR becomes the legal employer in Australia
An employer of record in Australia is a company that employs workers on behalf of another business, taking on the legal responsibilities of employment while the client company directs the work. The EOR registers as the employer with the ATO, pays superannuation into the employee's chosen fund, and withholds PAYG tax. It also lodges Business Activity Statements and ensures the employment agreement meets or exceeds the National Employment Standards. The client company tells the employee what to do. The EOR makes sure everything behind the scenes is compliant.
This arrangement is legal and common for international employers who cannot or do not wish to establish a Pty Ltd. It's not a workaround — it's a recognized employment structure that Australian law accommodates.
EOR versus setting up an Australian entity yourself
Setting up a Pty Ltd takes 3–6 months. It involves ASIC registration, ABN and TFN registration, and payroll tax registration in each relevant state.
Workers compensation insurance, superannuation fund selection, and PAYG withholding registration add further requirements. Directors have personal obligations, and accountants and lawyers are ongoing costs.
An EOR eliminates all of that. No setup time, no ongoing entity maintenance, no director obligations. The EOR handles Modern Award assessments, annual wage review compliance, workers compensation, and superannuation — everything that would otherwise fall on your local entity.
For a single hire or a market you're testing, EOR is almost always more practical. Entity setup makes sense when you have 15 or more employees in-country and the overhead of the EOR service fee exceeds the cost of running your own entity. Below that threshold, the math rarely works in favor of the Pty Ltd.
Is using an EOR legal in Australia
EOR arrangements are fully legal in Australia. The distinction that matters is between a genuine EOR arrangement and sham contracting, which is illegal under the Fair Work Act. Sham contracting occurs when an employer misrepresents an employment relationship as an independent contractor arrangement to avoid employment obligations. An EOR does the opposite: it creates a genuine employment relationship, paying Award wages, superannuation, and all statutory entitlements, with the EOR as the legal employer of record. There is no misrepresentation. The worker is genuinely employed, with full rights under Australian law.
Australian employment laws your EOR handles for you
The Fair Work Act 2009 governs all national employment relationships. Modern Awards and the National Employment Standards sit on top of it, and your EOR must navigate all three simultaneously for every hire.
Modern Awards and what they mean for your contracts
Modern Awards are legally binding instruments that set minimum pay rates and conditions for specific industries and occupations — and they apply regardless of what your employment contract says. If a Modern Award covers your employee's role, the Award minimums are the floor. Your contract can exceed them. It cannot go below them.
Employees earning AUD $110,000 and below must be assessed for Modern Award coverage. Above that threshold, employees are generally Award-free, and the National Employment Standards become the primary reference point. Getting this classification wrong exposes you to back-payment liability — the EOR absorbs that risk by conducting the assessment before the contract is drafted.
There are more than 100 Modern Awards covering industries from retail to professional services to construction. A product manager in a tech company might be Award-free, while a customer service representative might fall under the Clerks Award.
The EOR identifies which Award applies (if any) and ensures the contract and compensation meet or exceed the relevant minimums.
Annual leave, sick leave, and parental leave in Australia
The National Employment Standards set the minimum leave entitlements that apply to every employee, regardless of Award coverage or contract terms. Your EOR administers all of these:
- 4 weeks paid annual leave per year (5 weeks for shift workers); accrues from day one and rolls over without expiry while employed
- 10 days paid personal/carer's leave for full-time employees (pro-rated for part-time)
- 2 days compassionate leave per occasion
- 10 days paid family and domestic violence leave for all employees, including casual workers
- Up to 12 months unpaid parental leave after 12 months of service, with return-to-work protection
- Up to 22 weeks government-funded paid parental leave at the national minimum wage for eligible employees
- 8 federal public holidays plus state and territory-specific holidays
Annual leave accrues continuously and cannot be forfeited while the employee remains employed. This is a meaningful liability on your books, so factor it into your workforce planning for long-tenured employees.
Payroll taxes and employer contributions you owe
International companies do pay tax in Australia through PAYG withholding and payroll tax obligations. Here's what applies to every Australian hire:
- PAYG withholding: Mandatory registration before paying employees. The EOR registers, withholds income tax from each payroll run, and lodges Business Activity Statements with the ATO.
- Superannuation guarantee: Currently 11.5% of ordinary time earnings, rising to 12% on July 1, 2025. Paid quarterly into the employee's chosen super fund, with TFN declaration lodged with the ATO.
- Workers compensation insurance: State-based, purchased through private insurers. Rates vary by industry and state.
- State payroll tax: Applies when total Australian wages exceed the state-specific threshold. Varies by state — NSW threshold is AUD $1.2 million annually.
- Fringe Benefits Tax (FBT): 47% applies to non-salary benefits if offered. Most employers structure compensation as salary to avoid FBT complexity.
The EOR handles PAYG registration, BAS lodgement, super fund payments, and TFN declarations. You see the total employer cost. The compliance machinery runs in the background.
How notice periods and redundancy pay work in Australia
Statutory notice periods scale with tenure: 1 week for under 1 year of service, up to 4 weeks for over 5 years. Employees over 45 with 2 or more years of continuous service receive one additional week. Payment in lieu of notice is permitted. Garden leave is permitted if contractually specified.
Redundancy pay is separate from notice and applies only on genuine redundancy: 4 weeks for 1–2 years of service, scaling to 16 weeks for 9–10 years. No severance applies outside genuine redundancy situations.
All terminations through Oyster go through Oyster's People Services team to ensure procedural fairness under the Fair Work Act. Unfair dismissal claims can be filed after 6 months of employment at most businesses, with compensation capped at AUD $87,500 for 2024–25. Getting the process right from the start is far less expensive than defending a claim.
Recent Australian law changes that affect your hire
Several significant changes have taken effect in the past 18 months, and more are coming. Your EOR tracks and applies all of these automatically:
- Right to disconnect (August 26, 2024 for large employers; August 26, 2025 for small employers): Employees may refuse contact outside working hours unless the refusal is unreasonable. This is now a legal right, not just a policy preference.
- New casual employee definition (August 26, 2024): Casual status is now determined by actual work patterns, not just the contract label. The casual conversion pathway has been strengthened.
- Fixed-term contract limitations (from December 6, 2023): Fixed-term contracts are capped at 2 years with limited renewal rights.
- Superannuation increase to 12% (July 1, 2025): Budget for this now if you're making offers for roles starting after that date.
- National minimum wage increase to AUD $24.95/hour (July 1, 2025): Effective for the first full pay period after July 1.
The Australian workforce and what it offers you
Australia's talent market is genuinely strong in several sectors, and the case for hiring there goes well beyond cost.
Where Australian talent is strongest across industries
English is the de facto business language — no translation requirements on contracts, no language barrier in communication. Australia has a strong university system and high adaptability to remote and distributed work. Quality-of-life metrics consistently attract and retain senior professionals who might otherwise move to larger markets.
Deep talent pools exist in technology (Sydney and Melbourne tech hubs), financial services (Sydney), healthcare and life sciences, and resources and engineering (Perth and Brisbane). The mining sector also has a significant FIFO (fly-in fly-out) work culture, which creates irregular work patterns that an EOR must handle compliantly — including Award coverage for FIFO roles and appropriate allowances.
What Australian employees typically expect to earn
The national minimum wage is AUD $24.95 per hour (AUD $948.00 per 38-hour week) from July 1, 2025. Modern Award minimum rates apply by industry and may exceed the national minimum — the Clerks Award, for example, sets rates above the national floor for administrative roles.
Professional and managerial roles in technology and financial services commonly command AUD $80,000–$180,000+ annually. Factor superannuation (11.5–12% on top of base) into your all-in employer cost when building offer models. Oyster's benchmarking tool helps you make fair, competitive offers that reflect local market rates.
How to choose an EOR in Australia
Australia's layered compliance environment means EOR quality differences are amplified compared to simpler markets. An EOR that handles NES basics but misses Modern Award assessments or annual wage review updates creates real liability for you.
Four criteria that matter most when you compare EORs
When evaluating EOR providers for Australia, focus on these four areas — each is addressed in the sections that follow:
- Compliance depth: Does the EOR actually conduct Modern Award assessments? Do they track annual wage reviews and update contracts automatically?
- Pricing transparency: Flat fee per employee, no hidden costs, no termination fees? Or a percentage-of-salary model that grows as your team's salaries grow?
- Onboarding speed: How quickly can your employee actually start? Days or weeks?
- Human support: Do you have a dedicated contact, or are you in a shared support queue when something goes wrong?
Your EOR keeps you Fair Work Act compliant
Oyster's Australia-specific employment agreements are reviewed by in-house legal specialists, and updated each time the Fair Work Commission issues a new determination.
How Oyster manages Modern Award and NES compliance
Oyster's compliance actions for every Australian hire include:
- Modern Award classification assessment for employees earning AUD $110,000 and below
- Employment agreement drafting aligned with NES minimums
- Right to work checks via VEVO and Veriff for visa holders
- Fair Work Information Statement delivery on commencement
- Ongoing monitoring of Award rate changes
- Super fund TFN lodgement with the ATO
Misclassification of Modern Award coverage exposes the employer to back-payment liability, Oyster absorbs that risk as the legal employer of record. Oyster's legal team continuously monitors Fair Work Commission determinations, annual minimum wage reviews, and Modern Award updates, so your contracts stay current without any action on your part.
Transparent pricing with no hidden fees
Oyster charges flat, predictable pricing per employee with no termination fees and no surprise invoices. See the full pricing breakdown for a quote tailored to your Australia hire.
What to look for in Australian EOR pricing
Two pricing models dominate the EOR market: flat per-employee fees and percentage-of-salary models. Percentage models cost more as your team's salaries grow — a meaningful difference when you're hiring senior engineers or financial services professionals in Australia at AUD $150,000+.
Watch for one-time setup fees (should be absent), termination fees (should be absent), and off-cycle payroll costs. Some providers charge AUD $250 or more for off-cycle payroll runs, so ask any EOR you evaluate whether this applies.
One important distinction: the statutory employer cost above gross salary (approximately 13–15%) is not an EOR markup. It's what you owe under Australian law regardless of how you employ. The EOR service fee is separate. Understanding this distinction helps you compare total cost of employment accurately across providers.
Get your first Australian hire started in 48 hours
Oyster can onboard an employee in Australia in as few as 48 hours, with no entity needed, no waiting for bank account registration, no payroll setup from scratch. Oyster's Australian payroll runs monthly through Nexia Australia as payroll partner.
How Oyster onboards your Australian employee fast
The onboarding sequence is straightforward (and this is exactly what the Sydney product manager scenario looks like in practice with Oyster handling the compliance layer):
- You accept an offer with your candidate
- You create the hire in Oyster's platform
- Oyster runs the Modern Award check and drafts the compliant employment agreement
- Employee signs digitally — wet signatures are not legally required in Australia
- Oyster delivers the Fair Work Information Statement
- Oyster completes the right to work check and TFN/super registration with the ATO
- Employee appears in your first Australian payroll run
Compare that to the 3–6 month Pty Ltd setup timeline, and the value of the EOR model becomes concrete.
How Oyster compares to other EOR providers in Australia
Australia's compliance complexity rewards EOR providers with genuine local expertise. Ask any EOR you evaluate how they manage Modern Award assessments and who actually handles compliance questions when something changes.
Oyster versus Deel, Remote, and Rippling in Australia
Versus Deel: Oyster employs an in-house team of country specialists and HR experts who understand your context. Deel is more product-led, with support often reliant on AI and chatbots. Oyster is B Corp certified.
Versus Remote: Oyster provides a dedicated point of contact backed by a team of specialists, and charges no termination fees. Remote offers more self-serve support, often via email or chat, with access to experts priced as an add-on.
Versus Rippling: Oyster is an EOR-first platform, purpose-built for global employment. Rippling is a broader workforce platform with a newer EOR module among many HR and payroll modules. Oyster's Australia compliance depth covers Modern Awards, not just NES basics.
Oyster is the only B Corp-certified EOR. It combines ethical employment practices with technology and in-house human specialists who handle complexity that self-service tools leave behind. When software fails, people step in, and with Australian employment law, that moment comes more often than most platforms acknowledge.
Start hiring in Australia with Oyster today
Australia is a strong market for global talent, and the compliance environment is manageable with the right partner.
Book a Demo and hire your first Australian employee
In one conversation, Oyster can walk you through the Modern Award classification for your role, the all-in employer cost estimate for Australia, and a timeline for your first hire going live. No long contracts. No entity. No compliance guesswork.
Book a Demo to see how Oyster handles Australian employment end to end.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
