Hire employees in Australia
What a foreign company needs to know before employing people in Australia: whether you need an entity, what an employee really costs once superannuation, payroll tax and workers' compensation are counted, how the Fair Work Act and Modern Awards set your wage floor, which leave is mandatory, and why dismissal carries more litigation risk than expected. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first. Detail follows below.
Do I need a local Australian entity to hire?
No. Foreign companies can employ people in Australia through three routes:
- Employer of Record. Dryft Global is the legal employer through its Australian entity. We classify the role against the Modern Award system, issue a contract that meets the National Employment Standards, report every pay run through Single Touch Payroll, remit superannuation and carry payroll tax and workers' compensation. You direct the work.
- Direct entity (Pty Ltd or registered branch). A proprietary limited company needs an Australian-resident director, a registered office, an ACN and ABN, and registrations for PAYG withholding, GST, payroll tax and workers' compensation in every state where someone works.
- Genuine independent contractor. Only for autonomous business-to-business work where the contractor controls how and when the work happens, invoices under an active ABN and carries real commercial risk. See below.
When should I use an EOR instead of setting up a Pty Ltd?
An EOR makes commercial sense when you are:
- Onboarding in days, not the 8 to 12 weeks a Pty Ltd takes.
- Testing the Australian and New Zealand market without permanent corporate tax filing obligations.
- Employing people across several states without registering for payroll tax and workers' compensation in each one.
- Keeping permanent establishment risk down for engineering and support roles that do not close deals.
A Pty Ltd becomes the right answer when you bill Australian customers directly, bid for government work, hold local assets, or scale past roughly 15 to 20 people.
What does an employee actually cost beyond salary?
Budget 16% to 22.5% on top of gross base salary for statutory items alone: the Superannuation Guarantee, state payroll tax once your wage bill clears the threshold, a workers' compensation premium priced on your industry class, and 17.5% leave loading on four weeks of annual leave. Market benefits sit on top. Full breakdown below.
How difficult is termination in Australia?
Harder than the contract suggests, because there is no at-will employment. You owe written notice of 1 to 5 weeks by tenure, plus a week for employees over 45 with two years of service, and redundancy pay of up to 16 weeks where a role genuinely goes. Once someone clears the minimum employment period (6 months, or 12 in a small business) they can bring an unfair dismissal claim at the Fair Work Commission, which can order reinstatement. The bigger exposure is a general protections claim: available from day one, uncapped, with the burden of proof on you.
Can Dryft Global legally employ my team in Australia?
Yes. Dryft provides Employer of Record and payroll services through an established Australian entity. We handle Modern Award classification and the set-off clause, the Fair Work Information Statement, tax file number and stapled super fund onboarding, Single Touch Payroll reporting, SuperStream remittance, workers' compensation and multi-state payroll tax, while you direct delivery.
Hiring routes compared
Foreign companies weigh speed, the resident director rule, multi-state registration and industrial relations risk.
| Factor | Direct entity (Pty Ltd or branch) | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Speed to onboard | 8 to 12 weeks for registration, director, bank account | 2 to 3 business days | 1 to 3 business days |
| Local entity required | Yes, incorporated Pty Ltd or registered foreign branch | No, employed through Dryft's Australian entity | No, direct commercial contract |
| Resident director | Mandatory, at least one ordinarily resident in Australia | Handled by Dryft | Not applicable |
| Payroll tax and workers' comp | Register in every state where staff work | Consolidated multi-state payroll and cover | Not applicable unless deemed an employee |
| Modern Award compliance | You classify roles and track award terms | Award classification and BOOT alignment by Dryft | High breach risk if reclassified |
| Permanent establishment risk | Creates an immediate corporate tax presence | Largely mitigated for non-sales roles | High if the contractor acts as a sales agent |
| Best fit | 20+ staff, local customer contracting, physical operations | 1 to 20 remote, technical or commercial hires | Discrete, specialised, autonomous deliverables |
What an employee costs in Australia
Australia has no social insurance stack in the European sense. You fund a retirement contribution, a state tax on your own payroll and an insurance premium priced by industry, plus leave loading. Superannuation stops at a quarterly cap and payroll tax only bites above the state threshold, so the effective rate moves with headcount and location.
| Component | Employer share | Notes |
|---|---|---|
| Superannuation Guarantee | 11.5% | Of ordinary time earnings, legislated to reach 12.0% |
| State payroll tax | ~4.75% to 6.85% | Above state thresholds, grouping rules apply |
| Workers' compensation | ~0.80% to 2.20% | Priced by industry class; tech and office sit at the low end |
| Annual leave loading | ~1.35% | 17.5% applied to the four weeks of annual leave |
| Statutory subtotal | ~16.0% to 22.5%+ | Of gross base salary, before optional benefits |
| Market-standard benefits | Varies | Private health subsidy, wellness and home office stipends, equity |
| Total employer on-cost | ~16% to 22.5%+ plus benefits | Above base salary |
For a senior engineer in Sydney on AU$160,000, budget about AU$190,700 all-in: AU$18,400 superannuation, AU$8,720 NSW payroll tax, AU$1,440 workers' compensation and AU$2,154 leave loading, a markup of roughly 19.2%. Ask us for a cost model with your state and industry class applied.
Payroll and tax
Pay cycles are weekly, fortnightly or monthly, and some Modern Awards dictate the frequency for covered staff. You withhold income tax under Pay As You Go and report gross pay, allowances, withholding and super to the Australian Taxation Office through Single Touch Payroll Phase 2, on or before every payday. Payslips must reach the employee within one working day and show the ABN, hours and rate where hourly, itemised allowances and overtime, tax withheld, and the super amount with the receiving fund. Super is remitted at least quarterly through a SuperStream gateway, and records kept for 7 years.
Income tax bands
Resident rates run from a tax-free threshold of AU$18,200, then 16% to AU$45,000, 30% to AU$135,000, 37% to AU$190,000 and 45% above. A Medicare levy of 2.0% applies to residents on top.
Minimum wage and the Modern Award trap
The Fair Work Commission reviews the National Minimum Wage each year, with the new rate taking effect on 1 July. The benchmark is AU$24.10 an hour, AU$915.90 for a 38-hour week. That is only the floor of the floor. Over 120 Modern Awards set binding wage grids, classification levels, overtime, penalty rates and allowances by industry, and they cover far more professional roles than foreign employers expect, the Professional Employees Award among them. If you pay an annualised salary, the contract needs a set-off clause stating that it satisfies all award entitlements, and the package must pass the better off overall test across the year. Only employees guaranteed earnings above the high income threshold, AU$175,000 can be taken outside award coverage, through a formal guarantee of annual earnings, and the National Employment Standards still apply.
Leave and mandatory benefits
- Annual leave. 4 weeks paid a year, 5 for qualifying shiftworkers, accruing progressively and rolling over indefinitely. Cashing out needs an award or written agreement and a remaining balance of 4 weeks. Most awards add 17.5% loading.
- Personal and carer's leave. 10 paid days a year for illness, injury or caring for immediate family. Accrues and carries over.
- Compassionate leave. 2 paid days per occasion for the death or serious illness of immediate family.
- Family and domestic violence leave. 10 paid days per 12 months, available in full from day one.
- Parental leave. Up to 12 months unpaid with a right to request another 12, alongside the government funded Paid Parental Leave scheme paid at the national minimum wage.
- Long service leave. A state-based entitlement with no equivalent in most countries: broadly 2 months paid after 10 years with the same employer, pro-rata on exit after about 7 years.
- Public holidays. 10 to 13 paid days depending on state. You can ask someone to work one only if the request is reasonable, and awards price that work at 200% to 250%.
- Superannuation. Mandatory contributions to a complying fund. Employees choose the fund; if they do not, ask the tax office for their stapled fund rather than opening a new one.
- Working time. 38 ordinary hours a week plus reasonable additional hours. Since 2024 employees also have a right to disconnect: they may refuse contact outside working hours unless refusal is unreasonable.
Termination and notice periods
Contracts commonly set probation at 3 to 6 months, but the number that matters is the statutory minimum employment period: 6 months, or 12 in a business with fewer than 15 employees. Below it an employee cannot bring an unfair dismissal claim, though every other claim stays open. Above it you need a valid reason and a fair process: written warnings, a chance to respond, a support person at the meeting. Serious misconduct allows summary dismissal, but the evidentiary bar is high.
| Continuous service | Statutory notice (NES s.117) |
|---|---|
| 1 year or less | 1 week |
| More than 1 year to 3 years | 2 weeks |
| More than 3 years to 5 years | 3 weeks |
| More than 5 years | 4 weeks |
| Aged 45+ with 2 or more years of service | Add 1 week to the above |
- Redundancy pay is separate from notice. The NES scale runs from 4 weeks at one year of service to 16 weeks at nine years. Businesses with fewer than 15 employees across the group are exempt.
- Genuine redundancy has a test. The job must no longer be required by anyone, award consultation obligations met, and redeployment considered. Fail a limb and the dismissal is unfair.
- Unfair dismissal. Heard by the Fair Work Commission. Remedies are reinstatement or compensation capped at 26 weeks of pay, maximum AU$87,500. Employees above the high income threshold who are not award covered are excluded.
- General protections are the real risk. Adverse action taken because someone exercised a workplace right, took sick leave or falls within a protected attribute attracts uncapped damages, compensation for hurt and humiliation, and civil penalties. The reverse onus means you must prove the reason was lawful.
- Fixed-term contracts are capped. Two years including extensions, renewable once, and no consecutive contracts for the same role. Breach converts the arrangement to permanent employment.
Can I use independent contractors?
Only where the relationship is genuinely commercial, and the ground has moved. Since the Closing Loopholes reforms, section 15AA of the Fair Work Act decides classification on the real substance and practical reality of the relationship rather than the words in the contract, reversing the contract-first approach the High Court had settled on. Control over hours and method, integration into your business, the right to delegate, equipment and commercial risk all count. Individuals above the contractor high income threshold can opt out and be assessed under the older contractual test. Sham contracting carries civil penalties of up to AU$18,780 per contravention for individuals and AU$93,900 for small businesses, rising to AU$469,500 and beyond for larger companies. Add back-paid leave, award underpayments and a superannuation guarantee charge with nominal interest and the arithmetic gets ugly fast. Watch section 12(3) of the superannuation legislation too: if a contract is wholly or principally for the person's labour, you owe superannuation even when they hold an ABN.
The legal framework in brief
Employment law is mostly federal, layered over state statutes for safety, workers' compensation and long service leave. The instruments you will hear referenced most:
- Fair Work Act 2009. The national system: unfair dismissal, general protections, bargaining and sham contracting.
- National Employment Standards. 11 minimum entitlements applying to every national system employee, whatever their salary or award coverage.
- Modern Awards. Over 120 instruments setting wage grids, penalty rates and allowances. An enterprise agreement can replace an award only if it passes the better off overall test.
- Superannuation Guarantee (Administration) Act 1992. Mandatory contributions, the maximum contribution base of AU$65,070 a quarter and the charge that applies when you underpay.
- Closing Loopholes Acts 2023 to 2024. The statutory employee definition, casual changes, the right to disconnect and tougher sham contracting rules.
- Corporations Act 2001. Incorporation, the resident director requirement and whistleblower protections.
- Model Work Health and Safety laws. A non-delegable duty of care that extends to the home office, plus a duty to control psychosocial hazards.
- Sex Discrimination Act 1984. A positive duty to take reasonable measures to eliminate sexual harassment, not merely to respond to complaints.
- Privacy Act 1988 and the Australian Privacy Principles. Plus state surveillance laws: New South Wales requires 14 days of written notice before monitoring email, cameras or location.
- State payroll tax and long service leave Acts. Separate thresholds and regulators in each state.
Where the talent is
Australia is the world's 13th largest economy and an English-speaking anchor for Asia Pacific operations. The Group of Eight research universities feed a deep pipeline of software engineers, data scientists and commercial managers, and the time zones give a full working day of overlap with Tokyo, Singapore and Seoul. Salaries are high and the industrial relations framework is detailed, so classification and record keeping matter as much as the offer.
| Region | Talent and industry concentration |
|---|---|
| Sydney (NSW) | Financial services, fintech, enterprise SaaS, cross-border legal and tax, APAC headquarters |
| Melbourne (VIC) | Deep tech, life sciences, biotech, e-commerce, creative and digital media, advanced manufacturing R&D |
| Brisbane (QLD) | Agritech, cleantech, mining technology, healthcare, defence and aerospace engineering |
| Perth (WA) | Natural resources, energy transition, mining operations, marine engineering, automation and robotics |
| Adelaide (SA) | Space tech, defence systems, cyber security, agricultural science, renewable energy systems |
| Canberra (ACT) | Federal government, defence intelligence, govtech, public policy consulting, cyber intelligence |
Australia Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step. Built from Dryft's own onboarding checklist for Australia.
- Step-by-step implementation checklist, from hiring route selection to first payroll
- Modern Award classification: how to test a role and set the level
- Contract templates with NES provisions and a defensible set-off clause
- Fair Work Information Statement and the casual and fixed-term statements, and when each is due
- Tax file number, super choice and stapled fund lookups
- Single Touch Payroll setup and payslip delivery inside one business day
- State workers' compensation and payroll tax threshold tracker
- Right to disconnect protocol and remote work safety checks
- Every official Australian authority with links
This guide is general information, not legal, tax or immigration advice. Australian wage rates, award terms, superannuation percentages and tribunal thresholds change frequently, and state rules differ. Confirm current figures with a qualified adviser or with Dryft before acting. Last reviewed September 2026.
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