How to Hire in Australia

Expanding to other countries usually requires an organization to develop its workforce in that region first. This brings up the question; how to hire employees in Australia? International hiring isn’t always straightforward and there are a host of complexities with local laws and regulations. This creates a unique set of challenges in each new jurisdiction.

When hiring employees in Australia, it’s crucial to understand employment laws and compliance requirements. This sets realistic expectations for the process.

How can businesses hire in Australia?

Australia boasts a diverse and highly skilled workforce. In most countries, organizations doing business there must decide whether to hire independent contractors versus part-time or full-time employees. Regardless of the classification you choose, your Australian workers must comply with the guidelines of the designated classification.

Businesses preparing to hire in Australia will need to decide between handling everything in-house or outsourcing to an expert. Before deciding, it’s important to understand the pros and cons of each before making the final decision.

There are three options for employers planning to hire in Australia:

• Independent contractors
• Direct employees
• Professional Employer Organization (PEO)

Related: Australia employer of record

Hiring Contractors

If you opt to hire independent contractors in Australia, it’s important to know that this course of action has the most potential for errors. If left uncorrected, this can lead to expensive fines and penalties. Independent contractors must qualify under a specific set of employment laws. Most often these guidelines include the following:

• Contractors are allowed to work for multiple companies simultaneously – they cannot be restricted to only working for your business.
• Contractors are responsible for their working status and schedule – the business cannot dictate specific hours of operation.
• Contractors must be project-based, or they must work for shorter periods. If a contractor extends their time with a company, they run the risk of being classified as an employee.

The danger of misclassification is the fact that countries tend to side with employees during legal disputes. So, if a contractor works for an extended period, they can then legally argue for benefits and other compensation.

U.S. companies hiring and paying in Australia need international contractors to fill out IRS Form W-8BEN. This certifies their foreign worker status in the eyes of the U.S. government. Although this step will resolve tax compliance for the employer in the U.S., the business will still need to abide by Australian employment law.

If a worker is classified as an independent contractor but fails to adhere to the guidelines listed above, the worker can file suit for benefits, overtime, and more. This is a problem because the government historically sides with employees if there are any disputes without proper documentation from the employer. If the above guidelines are met, hiring an independent contractor in Australia can be an efficient method of employment.

For companies that are managing multiple contractors in different countries, contractor management might be the best solution. This allows you to pay all your contractors with a single invoice in their preferred currencies.

Hiring Employees Directly

If you are planning to hire in Australia for full- or part-time employees, you will need to establish a legal entity there. Setting up a legal entity is typically a costly and time-consuming endeavor, which can take anywhere from three to six months to complete.

Legal entities are the foundation of all operations within a country, meaning they can impact every aspect of a business, including finance, accounting, IT, and other supply chain functions. If this is the route your business decides to pursue, it’s highly recommended that you work with an expert during this process so you can ensure that the structure isn’t inefficient or costly to maintain.

In general, there are three primary components to incorporating a business in Australia:

1. Incorporation and Registration
   • Prepare entity registration documents
   • Prepare local entity articles of incorporation
   • Advise on corporate governance structure – local director/shareholders requirements
   • Apply for and obtain a business license and entity registration approval
   • Apply for and obtain a tax ID
   • Register the newly incorporated entity to be a local employer
2. Post Incorporation
   • Payroll setup
   • Statutory benefits and social security registration
   • Data protection registration
   • Accounting setup, including bookkeeping and reporting
   • Local bank account setup
   • Local indirect tax – VAT | GST | HST
3. Corporate Annual Compliance
   • Preparation of group consolidated accounts and financial statements under IFRS, US GAAP, or other local GAAP and statutory audit support
   • Tax, payroll, and statutory returns
   • Handling of correspondence and other administrative duties

Related: Hiring International Contractors or Employees

Outsource Hiring to a PEO Provider

You can hire and pay employees in Australia without the hassle of DIY processes by using a global Professional Employer Organization (PEO). PEOs, sometimes called an Employer of Record (EOR), act as partners to your business. Many businesses choose this route because the PEO reduces international risks and liabilities, while also enabling the business to continue managing the day-to-day responsibilities of their international workforce.

Put differently, the PEO handles the administrative burden related to hiring and paying international employees, which in turn allows the business to focus on other important growth initiatives. Because PEOs use their existing legal entity network for hiring and taxes, companies can hire much faster without sacrificing compliance. Here are a few of the administrative services a PEO provides:

• Fast international hiring
• Global payroll management
• In-country compliance
• Reduced risks with international contractors
• Global talent acquisition
• Best-in-class HR technology for international workforces
• Australian employment contracts

Related: Market expansion strategies that work

Australian Employment Law

Australian Employment Contracts

Although a written employment contract is not a statutory requirement for businesses that hire and pay in Australia, it’s good practice to have one in place, as it helps reduce the risks involved with managing the employment relationship and can be referred to if there are any disputes.

Employers need to be aware of a few terms and conditions as they enter an employment relationship with Australian employees. For example, the Australian Fair Work Act requires all employers to provide new employees with a copy of the Federal Government’s Fair Work Information Statement. New casual employees must also be provided with a copy of the Casual Employment Information Statement.

Collective Agreements

In Australia, Collective Agreements are referred to as Enterprise Agreements, and they fall under the Fair Work Act 2009.

If this applies to your hiring situation, your business may be subject to certain procedural steps to enter into a collective agreement, such as:

• Provide employees with a notice of their right to be represented during bargaining for the agreement.
• Provide a copy of the proposed agreement to employees and explain the terms of the agreement and the effect of those terms to employees, considering the circumstances and needs of the relevant employees.
• Notify employees of the date and place at which voting occurs and the voting method to be used.

The Fair Work Commission must approve these agreements. They will ultimately be the organization that determines if all the statutory requirements were met during the bargaining process.

Minimum Wage

The national minimum wage for hourly employees is $23.23 per hour or $882.80 per week. This applies to any employees who aren’t covered by an enterprise agreement or modern awards, which are legal documents that outline the minimum pay rates and conditions of employment. Minimum wages are generally lower for junior employees, apprentices, and those receiving a disability support pension.

Bonuses

Discretionary bonus schemes, as well as long-term incentive structures for executives, are common in Australian businesses. Australia has no statutory restrictions on bonus arrangements, so employers are free to decide how to implement bonuses. However, bonus schemes must be created with clarity to avoid any confusion or uncertainty.

This is crucial, as a lack of clarity around a specific bonus structure could cause unnecessary risk to the employer if there are any disputes. Employers should make it clear that they have the right to alter or withdraw a bonus scheme at their discretion.

Working Hours

According to the National Employment Standards (NES) in Australia, individuals have a maximum working week of 38 hours. Employers can ask employees to work additional hours if conditions are “reasonable”. Working hours can be established and defined by modern awards or enterprise agreements, which typically contain details regarding working hours, such as:

• The span of ordinary hours of work
• Maximum number of ordinary hours that can be worked in a day or shift
• Minimum number of rest breaks between finishing and starting work
• Additional pay rates for overtime, shift work, weekend, or public holiday work

Businesses can rarely opt out of these provisions on an individual basis. It almost always must be done through an enterprise agreement.

Holiday Entitlement

The NES requires that full-time employees receive four weeks of paid annual leave per year. This is pro-rated for part-time employees and increased for shift workers (which is defined in modern awards).

Casual employees do not have any annual leave requirements. Additionally, annual leave accrues each year and must be paid out upon termination. In some instances, companies can require employees to use their annual leave, instead of having it accrue each year.

In addition to annual leave, Australia has eight national paid public holidays and other state and territory paid public holidays. As you prepare to hire employees  in Australia, it’s important to take note of these dates:

• New Year’s Day
• Australia Day
• Good Friday
• Easter Monday
• Anzac Day
• Christmas
• Boxing Day

Australian employees are also entitled to:

• Maternity leave
• Paternal leave
• Sick leave
• Compassionate leave
• Community service leave
• Reserve leave
• Family and domestic violence leave

Work with Global PEO Services

Growing globally can be an exciting time for an organization. While there are always risks and challenges during global expansion, Global PEO Services (GPS), a Safeguard Global company, can help mitigate these risks, while still giving you control over your day-to-day operations.

With laws and regulations frequently changing, hiring and paying in Australia can be challenging when keeping track of compliance, legal and tax requirements. We manage all the legal requirements and payroll, while the business manages the international team on their daily tasks. For companies hoping to hire and pay in Australia, GPS can help you grow and remain compliant.