Looking for a PEO in Australia? Here’s what you need to know

These days, it's no longer necessary to limit your hiring to a strictly defined geographic market, as international migrants now play a crucial role they play in the global economy, comprising 4.7% of the labor force in 2022. Thanks to modern communication and collaboration tools, teams can work together across distances—meaning hiring managers and HR leaders can look further afield when sourcing talent.

If your company is considering hiring across borders, Australia is one country you might want to look at, fitting a global trend where most migrant workers are concentrated in high-income countries. The Land Down Under has a well-educated, skilled workforce of predominantly native English speakers, which is a big plus if your shared company language is English.

Before you start hiring, do your due diligence regarding Australia's labor laws. Regulations surrounding details like parental leave and minimum holiday requirements vary between countries, so it's important to always familiarize yourself with the local legislation before hiring in another jurisdiction.

A professional employer organization (PEO) can help you address both legal and practical concerns. A PEO is an HR outsourcing company that partners with businesses to co-employ and manage staff, subsequently sharing the liability for those employees. This shared liability distinguishes a PEO from an employer of record (EOR), which acts as the sole legal employer on a company's behalf and thus assumes full liability for employees.

Working with an Australian PEO can minimize liability risks and streamline hiring. Learn more about hiring in Australia and discover how a PEO can simplify the process below.

Looking to onboard top international talent? Scale your global team compliantly with Oyster.

What Is A PEO And How Does It Differ From An EOR?

A PEO requires you to have a local entity and shares employment responsibilities, while an EOR becomes the full legal employer without requiring your own entity. Here's how these two models differ for Australian hiring.

A Professional Employer Organization (PEO) enters into a co-employment agreement with your company. This means you must have your own local legal entity in Australia. The PEO then takes on many of your administrative HR tasks, like payroll and benefits, while you manage your employee's daily duties. You and the PEO share the legal responsibilities of employment.

An Employer of Record (EOR), on the other hand, becomes the full legal employer of your team member in Australia. This means you do not need to set up your own entity. The EOR handles all legal and HR responsibilities—from contracts and payroll to compliance and benefits—while you still direct your employee's day-to-day work. This model is designed for companies that want to employ talent in a new country without the time and cost of establishing a legal presence.

A Few Things To Know About Hiring In Australia

Every country has its own employment rules, and Australia is no exception. Before you can hire there, you'll typically need to establish a legal presence.

Key requirements include:

• Legal entity: Register a business entity in Australia
• Long-term operations: Create a subsidiary through the Australian Securities and Investments Commission (ASIC)

So what are the key employment rules you need to know? Here are the essentials:

• Contract language: All employment contracts must be written in English
• Standard workweek: 38 hours, with additional hours requiring pre-negotiation
• Pension contributions: Minimum 11.5% contribution to employee pension funds required
• Notice periods: One week for employees under one year, two weeks for one to three years of service

IP protection and non-compete agreements are other considerations when drafting employee contracts. For example, if a non-compete clause is included after an employee's original offer of employment is made, it may be compensated with a salary increase or bonus.

Other considerations to take into account include points like retirement benefits, health insurance, and parental leave. For example, in Australia, parents are entitled to 22 weeks of paid parental leave, as well as 52 weeks of unpaid leave in which their jobs remain protected.

To learn more, check out our comprehensive guide to hiring employees in Australia.

Benefits Of Using A PEO In Australia

Partnering with a PEO in Australia can offer several advantages, especially for companies that already have a local entity but want to offload HR administration. Key benefits include:

• Compliance assurance: PEOs have local experts who stay on top of Australia's complex and changing labor laws, tax regulations, and statutory benefits, reducing your compliance risk.
• Administrative relief: A PEO handles time-consuming tasks like payroll processing, tax filings, and benefits administration, freeing up your team to focus on strategic goals.
• Access to better benefits: By pooling employees from multiple companies, PEOs can often provide access to more competitive and affordable health insurance and retirement plans than a small or medium-sized business could secure on its own.

How Does A PEO Work In Australia?

The PEO model in Australia operates on a co-employment basis. While the specifics can vary by provider, the process generally follows these steps:

1. You establish a local entity: First, your company must be registered as a legal business entity in Australia.
2. You partner with a PEO: You sign a service agreement with a PEO provider, establishing a co-employment relationship for your Australian employees.
3. The PEO manages HR administration: The PEO becomes the administrative employer, handling payroll, tax withholding, benefits enrollment, and other HR tasks under its tax ID.
4. You manage your team: You remain the worksite employer, retaining control over your employees' daily responsibilities, performance management, and company culture.

Working With A PEO In Australia

A PEO can simplify hiring in Australia and reduce the administrative burden by co-employing individuals with your company. Although PEO services vary depending on the provider, you can generally expect them to address the following:

• Compliance issues: A PEO will usually have its own in-house team of experts on everything from labor laws to tax regulations. This provides a wealth of knowledge you can tap into, ensuring you don't run afoul of any local legislation.
• Hiring and onboarding: Some PEOs will manage the hiring process for you, sourcing local talent in line with relevant legal requirements. A PEO can even take care of onboarding practicalities, like getting employee payments and technology set up.
• Payroll and benefits: Processing payroll is a tedious task that can take up valuable HR time. A PEO can take care of payroll for you and also manage benefits like dental and retirement coverage.

How do you choose the right Australian PEO? Focus on these key factors:

• Service alignment: Ensure they offer what you need most—compliance support, benefits management, or payroll processing
• References: Ask for customer references beyond just checking accreditation
• Cost structure: Understand their fee structure, as this adds to your overall costs of hiring employees in Australia

PEO Alternatives: Simplify Hiring In Australia With Oyster

But here's the thing—PEOs aren't perfect for every situation. You'll still need a local entity in Australia to co-employ staff. Plus, you won't be completely free from legal liability, and you'll still need some HR capabilities in-house.

You might also consider working with an employer of record in Australia, which would take on full legal responsibility for hiring employees on your behalf. However, if you're planning to hire in multiple countries, this would mean looking for local EOR partners in each location, which can be tedious and time-consuming.

With over 167.7 million migrants in the global labor force as of 2022, a better alternative for hiring in Australia (and around the world) is to work with a global employment platform like Oyster. Our end-to-end, automated global employment solution can help you hire in over 180 countries worldwide, providing pre-populated statutory terms and legal-reviewed agreements to ensure compliance. You'll also benefit from deep local intelligence and insights, and can make decisions with confidence using our suite of global employment tools. Oyster takes care of compliance, payroll, benefits, and more—so you can focus on your team.

Learn more about how Oyster can transform your global talent strategy.

Making The Right Choice For Your Australian Expansion

So which option is right for you? It depends on your situation:

Ready to build your team in Australia with confidence? Start hiring globally with Oyster.

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. We let growing companies give valued international team members the experience they deserve, without the usual headaches and expense of hiring abroad.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll and great local benefits and perks.