Australia

Employer Of Record In Australia

Australia provides a highly attractive destination for foreign investors or businesses seeking to expand globally. 

With its R&D Tax Incentive Program and strong economic fundamentals, Australia offers a promising environment for businesses of all sizes. 

Take this as an example. FTAs, or Free Trade Agreements, help reduce and eliminate barriers to the trade of goods and services between participating countries. 

Australia currently has 18 FTAs, followed by five more in the works. Furthermore, bilateral agreements are in place with countries such as the USA, the UK, Japan, Korea, and China.

In addition, the government of Australia has launched various incentives and programs to support the growth of startups in this country. 

One notable example is the CSIRO Kick-Start program, which grants startups and small-to-medium-sized businesses access to the Commonwealth, Scientific, and Industrial Research Organization’s research expertise. 

However, despite these advantages, setting up a business in Australia can be complicated. 

Be it the legal business structure or the intricate payroll requirements, companies will likely face innumerable challenges when hiring in this country without the proper expertise. 

This is why so many businesses nowadays are keen on seeking employer of record services in Australia to help with the hiring process. 

Skuad’s Australia EOR (Employer Of Record) solution makes it easier for your business to expand in Australia without an institutional setup. 

We handle all the legal formalities and other processes, such as hiring, onboarding, employee contracts, payroll and benefits, tax, and local laws, leaving you to dedicate your time to business expansion. 

Additionally, we offer various solutions, such as benefits administration and a built-in IP protection system, which further facilitate this international hiring journey. 

Try out Skuad’s employee cost calculator to get an overview of hiring expenses in Australia.

Skuad’s invaluable presence in Australia can help you speed up growth despite the complexities of launching a business remotely.

How to Hire Employees in Australia

There are two main ways of hiring employees in Australia, 

• Direct hiring: setting up a subsidiary
• Hiring with an employer of record in Australia

Direct Hiring: Setting up a Subsidiary

The process of establishing incorporation in Australia usually involves various steps.‍

The first step is to identify the type of incorporation to be set up. This dictates what documents the Australian Securities and Investment Commission (ASIC) requires. 

The second step is to have a proper internal governance structure in place. This minimizes risks and helps standardize the decision-making process. All companies must adhere to the rules outlined in the Corporations Act, although there are exceptions for proprietary companies with a single director and shareholder.

The third step requires written consent from all the directors or company secretaries (if applicable) involved in registering the company.

The fourth step involves registering a domain name with the Australian Securities and Investment Commission (ASIC). 

In addition, a formal shareholders agreement must be in place in the case of multiple stakeholders.

As the fifth step, an auditor must be appointed within one month of incorporation, which must be formally recorded. 

Public companies must appoint a public offer within three months of incorporation to ensure the company is tax-compliant. 

Additionally, the minute books must be maintained to record the member meeting notes. They must be officially signed and must legally verify the proceedings.

In the sixth step, incorporations are mandated to maintain up-to-date registers (either in digital or physical form) of Option holders, Debtor holders, and shareholders.

As a final step, the incorporation must complete all tax-relevant registrations, such as an Australian Bank Number (ABN) and a Tax File Number (TFN). 

Critical responsibilities like compliance and reporting are integral parts of the process and vary depending on the type of company. 

Once you have set up a legal business entity in Australia, you can begin the hiring process.

The hiring process in Australia is quite similar to that in most other countries. Organizations identify the full-time opportunities or positions that need to be filled and advertise the job descriptions on several job platforms, such as Adzuna, CareerOne, CareerJet, Indeed Australia, etc. 

Organizations can use in-house recruitment teams or outsourcing agencies to help find suitable candidates for the job. Professional networking platforms like LinkedIn help hiring teams find the best talents in the market. 

In addition, businesses use job boards like SEEK, Jora, Gumtree, etc., that host people with zero or specific experience in specialized industries that aren’t well-represented on LinkedIn.

Applications that meet the required criteria are shortlisted for interviews after a quick background check. 

The shortlisted individuals then undergo a series of interviews with a panel of technical experts, hiring managers, and others to determine whether they are a good fit for the role and the organization’s culture. 

Once the individuals are finalized, the hiring team is responsible for ensuring they are legally eligible to work if they belong to a foreign country. All internationals have the same workplace rights and entitlements as Australian citizens. 

Upon successful negotiation and an officially signed offer letter, they are considered to be the company's rightful employees.

Social platforms and popular job boards like SEEK offer many advantages, including access to a wide range of talent. 

However, finding the right talent suitable for the opportunity can be quite a challenge. In addition, complying with the law regarding foreign nationals and contractors can be tedious and time-consuming for hiring managers.

Hiring with Skuad’s Australian Employer of Record Solutions

In summary, a tech-enabled HR platform like Skuad provides numerous benefits for businesses managing remote employees worldwide. These include discovering and onboarding exceptional talent irrespective of geography, eliminating the hassles of managing payroll, taxes, local compliance, etc., while hiring talent and creating legally sound labor contracts seamlessly. 

Customized contracts based on needs, smooth approval workflows, and convenient e-signage of documents are some of Skuad's other features.

This leads to a cost-saving and streamlined approach to an organization’s expansion across boundaries without establishing a separate entity, which is highly risky and can lead to legal challenges.

‍Book a demo here.

Onboarding and Agreements

Employee onboarding is a commonly used term in the hiring journey. It refers to the process of integrating a newly hired employee into an organization. 

Also known as organizational socialization, employee onboarding helps new joiners understand their job requirements and their new positions. 

Employee onboarding can last anywhere from a few weeks to several months. 

The ultimate goal is to make the new employee feel confident and competent with their new responsibilities and make them efficient and productive for the company. 

The first step of this employee onboarding process is to draft a formal agreement, also known as an employment contract, highlighting all the essential details of the working relationship. 

Under Australian labor laws, an employment agreement can be categorized into the following types:

• Full-time agreement: This refers to a type of contract in which the employee agrees to work full-time, or generally 38 hours per week, for the employer. In return, the employee is entitled to paid leave and a written notice of termination.

• Part-time agreement: This type of agreement is used for employees who work less than 38 hours per week and are provided with the same minimum entitlements as full-time employees but on a pro-rata basis.

• Casual employment agreements: A casual employment agreement refers to a working relationship in which there is no firm advance commitment to ongoing work. Individuals are compensated for the hours they work and are not entitled to benefits such as paid sick leave or annual leave.

• Fixed-term agreement: Last but not least, fixed-term agreements refer to contracts that outline a specific duration (the start and end date) to complete a particular project or task. Under a recent update to Australia's labor legislation, all employers must provide a copy of the Fixed Term Contract Information Statement (FTCIS) to every worker hired under this agreement.

Once you have drafted an employment contract following these guidelines, you can move on to the other steps of the onboarding process, which can be divided into two phases.

Taxes

Mentioned below is a detailed overview of the various taxes in Australia. 

Employer Taxation Rates in Australia

Employee Tax Levels in Australia

Compliance

The employment process in Australia seems complicated from the outside. This is due to a highly regulated employment system and a complex requirements model varying across states and territories. 

The Fair Work Act is the key policy regulating employment and workplace relations in Australia. 

It applies to most Australian employers. As per the Fair Work Act of 2009, 10 minimum entitlements apply to all employees in Australia, with some state public sector exceptions. These entitlements also apply to foreign employees and citizens.

Some of the provisions of employment laws to note before hiring in Australia are as follows: 

Although all the employment laws are unified under the Fair Work Act, there are exceptions with some state legislation that govern public sector employees. Examples include Queensland, South Australia, and Tasmania. 

A thorough knowledge of all the labor laws and relevant exceptions can save significant time and effort in the expansion process. Therefore, partnering with an EOR like Skuad would be an ideal action plan.

Independent Contractors vs. Full-Time Employees

The law protects all categories of workers. However, they are eligible for different entitlements based on the type of employment. 

Under the common law regulation, all employees have a contract of employment with their employer. Independent contractors (freelancers, consultants, portfolios, etc.) are distinguished by the nature of the relationship and based on their exercising their discretion only to produce an outcome. 

Therefore, they are not eligible for protection from breach of law (like full-time employees) or legal entitlements like minimum salary in Australia, Australia basic wage rate, etc. 

Contractors can use the Independent Contractors Act 2006 in case of issues related to unfair or harsh contracts.

It is recommended that you enter into a contractual relationship with the employer to ensure protection and enjoy the associated benefits under the defined contract terms. 

Skuad helps organizations balance hiring full-time and contractual employees based on the organization’s current needs. Learn more about when you should opt for contractors vs. full-time employees for your growing business.

Fines/Penalties for Worker Misclassification

In the event of worker misclassification in Australia, businesses can face severe penalties, including the following,

• PAYG withholding penalty - for failing to deduct tax from worker payments and send it to the Australian Taxation Office.
• Super guarantee charge, which comprises interest charges, an administration fee, and super guarantee shortfall amounts.
• Additional super guarantee charge of up to 200%.

IP Protection 

When hiring employees in Australia, it is advisable to be mindful of the various IP regulations of this country. 

When it comes to employment relationships, employers automatically own the IP their employees create regarding the business. 

Exceptions to this rule are permissible; however, for them to be legally binding, those terms and conditions must be explicitly highlighted in the employment contract.

All employers, employees, and contractors must sign a written contract before starting any working relationship. The said contract must highlight the following parameters,

• Who owns the IP created by the employee/contractor?
• Who has the right to use the IP commercially?
• If and when will the transfer of IP ownership take place?
• Does any party have the right to improve or modify the IP, and how will this impact ownership?
• Confidentiality agreements.
• Non-competition agreements, and
• Obligations to return IP if and when the work ends. 

In addition, Australian labor laws are comprised of various regulations related to IP rights. They include,

• Trade Marks Act 1995
• Patents Act 1990
• Designs Act 2003
• Designs Regulations 2004, and
• Plant Breeder’s Rights Act 1994, among others.

Types Of Visas In Australia

To know more about the visa application process in Australia, talk to Skuad experts today.

Work Permits

An EOR like Skuad has a local partner in Australia who can help process work permits for foreign nationals. Skuad’s platform enables smooth management of all the employees' requirements and responsibilities while you get an overview of the individual’s activities and progress.

Skuad can help with the processing of work permits through the Skill Select program offered by the Australian government. Employers can initiate this program to allow foreign nationals to serve their business needs.

Payroll

Setting up payroll and taxes in Australia requires knowledge about local policies and regulations that bring risks and liabilities. While employing foreign nationals, the company must understand payroll tax, income tax, withholding tax, medicare costs, superannuation fund tax, etc. 

This can be achieved either with the help of an in-house finance team or through Australia employer of record companies like Skuad, who can save time and costs while you focus on business expansion.‍

Australia Payroll Details

Benefits and Compensation

Medicare is the primary insurance scheme that gives all Australian residents, employees, and other eligible candidates access to healthcare. 

It comprises a wide range of health and hospital services at minimal or no cost. These include,

• Hospital treatment
• Prescription medicines
• Mental health care
• Tests, scans, and other preventative programs.

All taxpayers of Australia fund Medicare at a rate of 2%.

Furthermore, Australia provides a retirement plan for all workers, titled the superannuation system. 

Under this scheme, employees can select a super fund according to their preferences, and employers pay for their super contributions. 

Additionally, employees can make voluntary contributions up to a cap.

Worker Rights

Apart from these statutory entitlements, there are certain other employee benefits in Australia. These include,

Standard Working Hours in Australia

An employee can work for a maximum of 38 hours a week.

Minimum Wage

The current minimum wage in Australia is $915.90 per week, or $24.10 per hour (before tax).

Overtime Pay

There is currently no general guideline related to Australian overtime pay. It differs depending on the employee’s industry, nature of work, occupation, and night shift that they may work.

Probation Period

The Fair Work Act 2009 does not directly use the term ‘Probation’ but refers to the Minimum Employment Period, which is the amount of time the employee has worked in the business about its size. This usually ranges from 3 to 6 months, starting from the date of employment.

Employee Protection and Anti-discrimination Rights

The Australian Human Rights Commission 1986 protects people from workplace discrimination based on gender, race, religion, political opinion, national extraction, nationality, social origin, and other factors. In addition, the Fair Work Act 2009 covers some of the provisions mentioned earlier.

Disclosure and Confidentiality of Personal Information

The Privacy Act 1988 aims to protect individuals' privacy and regulate the handling of personal information by government agencies and all other private sector organizations (with an annual turnover of over $3 million).

Work Health and Safety Act 2011

This Act provides a balanced framework to protect employees’ health, safety, and welfare by minimizing risks through issue resolution, appropriate compliance, and enforcement measures.

Disability Discrimination Act 1992

The provisions of this Act aim to eliminate discrimination against disabled persons in areas such as work, education, sports, existing laws, provisions of goods and services, etc. It promotes the right to equality and advocates acceptance and recognition of disabled people within the community so that they can have the same fundamental rights as other citizens.

Remote & Hybrid Work

International hiring has long been deemed an effective way to expand your business globally. Unfortunately, very few organizations have been able to achieve success in this journey. 

One of the main reasons for this is an organization's lack of remote & hybrid readiness. 

By remote readiness, we mean how well your employees and employers can engage in remote work. 

When hiring employees in Australia, there are a few factors that determine the effectiveness of this remote readiness model at a company. 

They include:

• Flexible work arrangements

Ensure your company has work policies that facilitate remote & hybrid work and ensure clarity, relevance, and effectiveness. 

These said guidelines must target some of the key areas of remote readiness, which include performance evaluation, time management, and communication expectations, among others. 

• Technology and infrastructure

Invest in technology and infrastructure that will ensure business operations are not affected, whether they are carried out remotely or in a traditional office environment. 

These include a reliable internet connection, effective collaboration and communication software, and suitable hardware, such as laptops and mobile devices. 

• Data security and privacy

Last but not least, ensure that data security and privacy are properly maintained in a remote work setting. 

One way to achieve this is by investing in robust security measures that will safeguard your sensitive business data and ensure compliance with all data protection regulations in place.

Salary

The salary of employees in Australia can vary greatly depending on factors such as the nature of the job, location of work, the organization they are working in, their experience level, or even the industry in which the business operates. 

Take this as an example. The average salary of an Information Technology Specialist in Australia is estimated to be $75000 to $95000 annually. 

In contrast, the average salary of someone specializing in the healthcare domain is $53062 per annum.

To learn more about such salary trends, calculate wages in Australia and comparisons, check out this salary insights tool offered by Skuad.

However, one key thing to remember is that, if you are hiring employees without the help of employer of record payroll services in Australia, be mindful of the legal requirements related to this. 

These include the official currency that needs to be followed, the pay date, and the current minimum pay in Australia.

Leave Policy

Moving on, here is a detailed outline of the statutory leave entitlements of employees in Australia.

Annual Paid Leave

Both full-time and part-time Australia employees are entitled to 4 weeks of annual leave, while shift workers get up to 5 weeks based on their work hours.

Medical Leave

All employees except casual ones can take up to ten paid leaves during personal illness and care for immediate family members in an emergency. In addition, employees get two days of unpaid carer’s leave in the case of a zero leave balance.

Time Off Work

All employees can take community service leave for voluntary activities such as jury duty and voluntary emergency management services. The individual is entitled to ‘make-up’ pay during the first 10 days of jury duty. There is no limit on the number of community service leaves to be taken.

Parental Leave

The primary carer of the newborn child is eligible to take up to 18 weeks of parental paid leave at the national minimum wage.

An employee can take parental leave when she has given birth or adopted a child under 16 years of age.

All employees in Australia are eligible to take 12 months of unpaid parental leave. They can also request to extend the leave for up to 12 additional months. As per the guidelines, the employee must inform the employer of the parental leave ten weeks in advance through a written notice.

Eligibility:

Employees should have completed at least 12 months of service with the organization.

Public Holidays in Australia

Employees are entitled to 14 paid Australian holidays per year. They include,

• 1 January - New Year's Day (Public holiday is on 2nd Jan)
• 26 January - Australia Day
• 8 March - Canberra Day
• April - Good Friday
• April - Easter Monday
• 25 April - Anzac Day
• 26 April - Additional public holiday for Anzac Day
• 31 May - Reconciliation Day
• 14 June - Queen's Birthday
• 4 October - Labour Day
• 25 December - Christmas Day
• 26 December - Boxing Day
• 27 December - Additional public holiday for Christmas Day
• 28 December - Additional public holiday for Boxing Day

Background Checks

Running background checks is extremely important when hiring employees in Australia. 

It not only helps to weed out potential hires who might threaten the workplace environment and other employees but also safeguards your company from potential legal lawsuits and penalties. 

You can conduct various types of background checks in Australia. They include:

• Criminal Record Check

It is common for employers in Australia to request a police check before hiring for any particular job role. There are two main ways to do this. 

First, the individual or the employee can directly run a Nationally Coordinated Criminal History Check online via the Australian National Character Check (ANCC) form. 

Secondly, the employer can directly sign up for the ANCC business portal to track and view individuals' criminal history. 

• Credit History Check

A credit history check is typically done to assess an individual's creditworthiness. 

It reveals crucial information related to the number and type of credit accounts, amounts owed, or the amount of available credit used. 

Such checks are quite common in Australia and are extremely important, especially for roles that involve handling finance, such as banking, accountants, or loan processing job positions.

• Employment History Check

An employment history check helps to confirm a job candidate’s employment with all of their previous employers. 

This includes their start and end dates, reasons for leaving, and sometimes even their compensation package. 

The ultimate goal of an employment history check is to confirm whether the individual has the qualifications and work experience required to excel at their new role.

Termination and Offboarding

If the employee does not meet the expectations set during the probation period, the employer has complete authority to terminate the employment by issuing a written notice as per the guidelines of the National Employment Standard. 

The statutory notice period for employees during the probation period is one week. 

Upon completing the probation period, if an employee has been offboarded, they need to be provided with a notice period, ranging from one week to five weeks, depending on the tenure of service.

However, an employee can raise a general protection claim if the basis of termination breaches workplace rights, such as discrimination on the grounds of gender, race, religion, etc. 

Therefore, it is recommended that you get the help of an employer of record like Skuad, who can help you comply.

Cultural Consideration

One of the main characteristics of business etiquette in Australia is a very good and healthy work-life balance. 

Australian professionals are very serious about their careers, but at the same time, they prioritize their loved ones and make it a point to spend enough quality time with their near and dear ones. 

Therefore, it is not uncommon for employees of this country to have office timings or work policies that facilitate this balance between personal and professional life.

Additionally, employees typically have a more relaxed approach to the work environment, meaning most professionals in this country commonly use casual vocabulary or a relaxed tone of voice. 

Australian slang is highly predominant in the workplace, and learning the basics can be a great way for international employers to adapt to the culture and become a more integrated part of the workspace.

Conclusion: What gives Skuad’s Australia EOR an edge?

Expansion of business and the establishment of new entities in other countries involve significant risks and challenges. It requires a solid understanding of local laws and how they impact current business processes. 

Companies potentially spend hours comprehending the laws governing various employee types, state/territorial laws, and tax rates and finding a hold on payroll setup.

Over time, organizations realize that it’s not worth the effort since it consumes a lot of business time. Skuad’s expertise and globally distributed teams make it relatively easier to manage all the HR-related functions across geographies within no time while being compliant with all legal guidelines. 

Skuad has built expertise in quickly growing remote team infrastructure and continues to improve its services multifold.‍

‍Join Skuad today to seamlessly expand without capacity restrictions and boost your business to the next level.

FAQs

1) What is the EOR service in Australia?

In Australia, an Employer of Record (EOR) is a service that legally employs individuals on behalf of another company, managing all HR functions such as payroll, Australia taxes, employment benefits, and compliance with local labor laws. An EOR, like Skuad, allows businesses to operate in Australia without establishing a local entity, facilitating easier global workforce management.

2) What is the difference between outsourcing and EOR?

Outsourcing involves contracting an external organization to perform certain business functions or services. In contrast, an EOR becomes the legal employer of a company’s employees, handling all employment-related responsibilities. While outsourcing can include any business function, EOR specifically relates to employment and HR services.

3) How does Australian Immigration verify work experience?

Australian Immigration verifies work experience by requiring applicants to submit detailed documentation, including employer reference letters, pay slips, and employment contracts. These documents must outline the applicant's role, responsibilities, and duration of employment. Immigration authorities may also conduct background checks or contact employers directly to confirm the validity of the information provided.

4) Do visa officers call employers in Australia?

Yes, visa officers may call Australian employers to verify information included in visa applications, such as the applicant’s employment history and job duties. This is part of the due diligence process to ensure that all provided information is accurate and to prevent fraud.

5) What are the risks of employee misclassification in Australia?

Employee misclassification in Australia can lead to significant legal and financial risks, including penalties for non-compliance with labor laws, such as incorrect wages, superannuation, and taxes. Misclassification can also result in back payment of entitlements to misclassified workers and potential reputational damage.

6) How much does it cost to use an EOR in Australia?

The cost of using an EOR in Australia varies depending on the service provider and the scope of services required. Typically, EOR fees are a percentage of the employee's salary, generally ranging from 10% to 20%. These fees cover payroll management, benefits, taxes, and compliance with employment laws. For more insights, try Skuad’s cost calculator now.

7) What is the difference between employer of record and co-employment?

One of the main differences between an employer of record in Australia and co-employment or a PEO is that a PEO can take over the entire HR functions, but it shares responsibilities with the employer, whereas an EOR acts as the legal employer, holding all the employees' responsibilities and liabilities.

8) How do I choose an employer of record in Australia?

With so many options at our fingertips, selecting the best employer of record services in Australia can be confusing. Nonetheless, to help you with this process, here are a few factors you must consider.

• Always check the reviews, testimonials, and customer feedback of your shortlisted EOR solutions in Australia.
• Make sure that the Australia EOR service provider provides the best-in-class employee experience, such as paying salaries on time, resolving employee queries quickly, and so on.
• Ensure that your chosen employer of record in Australia has strong protections for your business data and intellectual property.

9) What are the benefits of an EOR?

Partnering with an EOR in Australia offers many benefits, including on-time payment processing, flexibility to scale quickly, reduced cost of operation, onboarding efficiency, and global accessibility.

10) Is employer of record legal in Australia?

Yes, employer of record services in Australia are legal. Leveraging the solutions of such service providers is a widely followed and effective way to hire employees while ensuring compliance with local labor laws without setting up a separate business entity.