Australia has the 13th largest economy in the world, with an overall GDP of $1.5 trillion and a GDP per capita of $50,334. The economy experienced relatively sluggish growth in 2017, with a 0.3% increase in GDP. Having rolled out in early 2017, Australia’s new foreign policy (a type of white paper agenda) has created a roadmap for the country's economic, security, and foreign policy relations. The nation is ranked as the 12th best country in the world to set up a business based on the low entry costs and streamlined procedures.
Currency: Australian dollar (A$)
Principal Language: English
Government: Democratic, federal-state system recognizing the British monarch as sovereign
Capital City: Canberra
Major Provinces: New South Wales, Victoria, Tasmania, Western Australia, South Australia, and Queensland
In Australia, a civil contract governs the employment relations between an employer and an employee. In this context, an employee agrees to provide services to the employer in exchange for a specific amount of compensation. Both parties may mutually agree on certain employment terms, which are subject to legislative minimum rights and collective bargaining agreements (CBAs).
Though it is not mandatory to have a written contract, it is more convenient to establish and implement the employment terms of a contract in writing.
There are several implied requirements in an employment contract that are often not specified. Those requirements are:
- The employer should give reasonable notice period of termination
- The employer and employee are expected to act in good faith during the tenure of employment
- The employee cannot disclose confidential or sensitive information and may have to sign a non-disclosure agreement or NDA
- The employee should carry out work responsibilities with diligence
- The employee's duty to follow all lawful instructions.
Employers must provide a copy of the Fair Work Information Statement to all the new joinees at the beginning of their employment.
The total standard work hours in Australia are 38 hours per week with 7.6 hours work a day. Employees may work additional hours if employer’s requirement is “reasonable,” which involves the following factors:
- Employees’ eligibility for overtime
- Employees’ family responsibilities
- Standard job description and level of responsibility that employees have
- The business requirements
Employees have the right to refuse working additional hours if they find them unreasonable. Both employers and employees may mutually agree to determine an averaging arrangement to average out their daily work hours. The maximum averaging period allowed is 26 weeks.
Agreements between employers and employees set the standard work hours in which designated job responsibilities are to be completed. Awards and agreements also typically specify a minimum resting period. The rest period is usually 10 hours between the end of a day’s work and the start of the next day’s work. Agreements and awards may restrict the total number of overtime hours that employees can work.
Amendments to the Fair Labor Act require employers to consult employees regarding changes in working hours regardless of whether the change results in a “major workplace change.” The employer is required to provide information to employees regarding the proposed change and consider employees’ opinion before incorporating the change.
Full-time employees are entitled to 4 weeks of paid annual leave. Employees don’t have to fulfil any condition to be eligible for annual leave benefits. Leaves for part-time employees are accrued on a pro rata basis. Casual employees, who work on a short-term basis are not entitled to annual leave.
Leave for Sickness or Work-related Injury
In Australia, the term “Personal leave” is used for sick leave. “Carer's leave” is allowed so that employees can provide care and support to an immediate family member. Employees are entitled to 10 days of paid personal or carer's leave every year.
Paid Parental Leave
Eligible female employees are entitled to 18 weeks of maternity leave paid at the national minimum wage.
Though there is no statutory provision for paternity leave, the father is also eligible to take 18 weeks of parental leave paid at the national minimum wage under the Paid Parental Leave (PPL) program. The government funds the program, though employers pay the benefits.
The weekly PPL benefit amounts to AUD $672.60. It is employees’ responsibility to submit a claim for PPL. A female employee may commence her leave up to 6 weeks before childbirth.
To qualify for maternity or paid parental leave (PPL), an employee must:
- be a primary caregiver to a newborn or recently adopted child
- fulfill Australian residency criteria
- be employed and working continuously for a minimum of 10 of the 13 months before the birth or adoption of the child, and must have worked for a minimum of 330 hours during those 10 months
- not have worked between the birth or adoption of a child and the PPL commencement date and
- Have an adjusted taxable income not exceeding AUD $150,000 in the previous year.
The Fair Work Act 2009 provides a maximum of 52 weeks' unpaid parental leave for each parent or “de facto” partner, for the birth or adoption of a child below 16.
Many Australian employers provide paid parental leave as part of their employment contract or workplace policy. Employees can take paid parental leave in conjunction with or in addition to paid or unpaid leave.
A pregnant employee may commence her pre-natal leave up to 6 weeks before the expected childbirth.
Some of the special situations under the Fair Work Act include:
Special Maternity Leave
Female employees can take special maternity leave for a pregnancy-related illness, to recover from a miscarriage that happens up to 28 weeks before the expected date of childbirth or in the event of a stillbirth. The employer can ask for proof, like a medical certificate for approving such leaves.
Employees who intend to adopt a child may take up to 2 days' unpaid leave to attend any interviews or inspections required to obtain approval for the adoption. If the employees have other leaves available, they may have to use that leave instead.
A parent can request an extension of unpaid leave to a maximum period of 24 months. An employer can refuse such requests based on reasonable business grounds. If a married parent or has a de facto partner is granted additional unpaid leave, the extra time is subtracted from the other parent's leave entitlement.
The Fair Work Act has specified eight public holidays. However, states or territories can add or replace more holidays.
The 8 public holidays are:
- Jan. 1: New Year's Day
- Jan. 26: Australia Day
- Good Friday
- Easter Monday
- April 25: Anzac Day
- Queen's Birthday: Dates are different in various parts of the country
- Dec. 25: Christmas Day
- Dec. 26: Boxing Day
The Fair Work Act does not mandate for employers to pay overtime to employees who work on public holidays.
Employees can refuse to work on public holidays. Employees are usually not required to work on public holidays, however, an employer may ask an employee to work on reasonable grounds.
The pension system in Australia comprises old-age pension, person pension, public pension, and others.
The legal retirement age in Australia is 65 years but will increase to 65.5 years on July 1, 2017. Subsequently, the age will increase by 6 months, once every 2 years, until it reaches 67 on July 1, 2023.
- Maternity Leave
- Annual Leave
- Special Maternity Leave
- Personal Pensions
- Public Pensions
- Social Security Contributions
- Leave for Marriage
- Paternity Leave
- Parental Leave
- Business Expenses
- Commutation Expense
- Health Benefits
- Voluntary Retirement Benefit
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Australia and hire their employees without having to establish a branch office or subsidiary in Australia.
- Your candidate is hired via our Australia PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Austalia laws.
- Global PEO Services experts manage all day-to-day operational issues, such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
24/7 Support in 100+ Countries
- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication to information and advice.
- We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.
Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.
Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.