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World Wide Work Permit provides employer of record services for customers that want to hire employees in Australia. Your candidate is hired via World Wide Work Permit Australia Professional Employer Organization (PEO) in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
Our solution enables customers to run payroll in Australia while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Australia.
Your new employee is productive sooner, has a better hiring experience, and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. World Wide Work Permit allows you to harness the talent of the brightest people in more than 185 countries around the world, quickly and painlessly.
When negotiating terms of an employment contract and offer letter with an employee in Australia, it may be useful to keep the following standard benefits in Australia in mind:
When hiring in Australia, employers must follow the minimum statutory standards and conditions as listed in the Fair Work Act 2009. These National Employment Standards include a list of 10 entitlements that must be in all employee contracts. Australia also has a Pay as You Go tax system, whereby employers withhold employee taxes and pay them to the government. Australians are also entitled to receive a payslip within one working day of being paid.
Australian workers can be covered by a contract, an agreement, or an award. This draws from the National Employment Standards and state and federal laws.
Becoming less popular, awards generally include the minimum employment standards and set conditions for all employees in the same occupation. The award standards may vary between the state, employer, and industry, but include:
An Enterprise Agreement sets out the work conditions for a group of employees at one or more places of work, usually of one organization. An enterprise agreement will supersede an award that would otherwise cover employees in a workplace but only where it, at least matches the pay set out in the award. Enterprise Agreements are the most common way of defining wages and workplace conditions in Australia and generally cover more issues than awards.
Written employment contracts, which include wages and conditions, are used for employees who are not covered by an award or an enterprise agreement and include:
Where applicable, other conditions such as job duties, allowances, bonuses, performance standards, and so on should also be listed.
The National Employment Standards stipulate a 38-hour workweek but allow for extra hours if necessary.
There are 7 national public holidays:
There are also additional public holidays declared by each state and territory such as Queen’s Birthday and Labour Day. Holidays that fall on weekends are observed on Monday after.
Parents may be eligible for up to 18 weeks of paid parental leave provided by the federal government which is paid in addition to any leave provided by their employer. The federal government has foreshadowed changes to curtail this benefit such that any leave provided by the employer reduces the leave payment provided by the government. To date, the government has not been able to obtain sufficient cross-party support in the Senate to pass this legislation and the existing law remains in place.
Eligibility requirements are:
The employee cannot receive Parental Leave Pay Newborn Upfront Payment and Newborn Supplement for the same child.
Fathers and partners are eligible for up to two weeks of paid governmental leave if they are not receiving paid leave from their employer and meet work and income level tests.
Australia has a public/private health care system. Australians with taxable incomes over a particular indexed level pay 2% of their taxable income into the national healthcare scheme, Medicare.
Individuals can also obtain private health care insurance for items not covered by the compulsory Medicare scheme such as ancillary health services (e.g., dental, optical etc.) and private hospital accommodation.
Individuals who choose not to buy private insurance and have an annual taxable income over a specified threshold are charged an additional Medicare surcharge of 1%.
Many employers in Australia provide an allowance to employees in Australia rather than purchasing health insurance plans on the employees’ behalf, due to the relatively high fringe benefits tax.
In general, we recommend that employers budget 18% on top of the total cost of employment for the minimum cost of statutory benefits in Australia.
Annual bonuses are not required, but nearly one-third of Australian workers receive them. The average bonus is between 6% and 10% of annual pay. High-level executives may receive up to one-half of their salary as an incentive bonus.
An employer must provide employees with the minimum statutory notice, which is based on the employee’s service as follows:
The notice period is increased by one week if the employee is over 45 years of age and has completed at least two years of service with the employer. The law allows the statutory notice to be paid in lieu of notice.
Employment contracts often provide for longer notice. As a contractual matter, an employee may be entitled to reasonable notice of termination (which can be as much as 12 months) in particular circumstances.
Unfair Dismissal in Australia:
An employee is eligible to make an unfair dismissal application if they are covered by the national workplace relations systems and they have completed the minimum employment period of:
Additionally, one of the following must also apply:
Employees have 21 days from the day they were dismissed to file a claim with the Fair Work Commission. The primary unfair dismissal remedy is reinstatement. If that is not appropriate, compensation of up to six months’ pay can be awarded.
Redundancy occurs if the employer decides that they no longer want a job that an employee is performing done by anyone and terminates their employment. The job itself, not the employee, becomes redundant. Redundancy can occur due to the following:
The amount of severance/redundancy pay owed to the employee is determined by the base rate of pay that applies to the severance pay periods outlined in the table below:
| Employee’s Period of Continuous Service with the Employer | Severance Pay Period |
|---|---|
| At least 1 year but less than 2 years | 4 weeks |
| At least 2 years but less than 3 years | 6 weeks |
| At least 3 years but less than 4 years | 7 weeks |
| At least 4 years but less than 5 years | 8 weeks |
| At least 5 years but less than 6 years | 10 weeks |
| At least 6 years but less than 7 years | 11 weeks |
| At least 7 years but less than 8 years | 13 weeks |
| At least 8 years but less than 9 years | 14 weeks |
| At least 9 years but less than 10 years | 16 weeks |
| At least 10 years* | 12 weeks* |
* There is a reduction in severance pay from 16 weeks to 12 weeks for employees with at least 10 years of continuous service.
Redundancy pay is not payable if any of the following apply:
Employers in Australia potentially pay payroll tax on wages, benefits, and superannuation paid to, or on behalf of, their employees.
Payroll tax is a tax levied by individual states in Australia. It is not a federal tax and as such the rates at which the tax is applied and the gross annual payroll threshold at which the tax commences to apply to vary from state to state. The following table sets out the current thresholds and rates of payroll tax for each state and territory in Australia:
| State/Territory | Threshold | Rate |
|---|---|---|
| New South Wales | $1,200,000 | 4.85% |
| Victoria | $650,000 | 4.85% |
| Queensland | $1,300,000 | 4.75% to 4.95% |
| South Australia | $1,500,000 | 0% to 4.95% |
| Western Australia | $1,000,000 | 5.5% |
| Tasmania | $1,250,000 | 4% to 6.1% |
| Australian Capital Territory | $2,000,000 | 6.85% |
| Northern Territory | $1,500,000 | 5.5% |
Employers in Australia are also required to contribute to a Superannuation or retirement fund for all employees. The contribution rate is 10% of an employee’s Ordinary Time Earnings (OTE). OTE generally includes the employee’s regular wage plus any shift loadings, commissions, bonuses, paid leave, and allowances.
Fringe Benefits Tax: Australian employers are required to pay a tax on the value of the fringe benefits they provide to their employees. Reporting requirements vary depending on the number of fringe benefits and the type of benefits. Examples of fringe benefits include:
Laptops and mobile phones for business use are exempt from the fringe benefits tax.
Establishing a branch office or subsidiary in Australia to engage a small team is time-consuming, expensive, and complex. Australian labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. World Wide Work Permit makes it painless and easy to expand into Australia. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Australia PEO and Employer of Record solution provides you peace of mind so that you can focus on running your company.
If you would like to discuss how World Wide Work Permit can provide a seamless employee leasing or PEO solution for hiring employees in Australia, please contact us.