• Written by: James Carey, CA CTA
• 08/02/2026

How to Hire Employees Australia Guide for Foreign Companies

When you hire employees Australia becomes your operational base. Hiring your first employee is the moment a foreign company’s market entry becomes real. Up to that point, you have been dealing with registrations, paperwork, and advisers. From the moment you make your first hire, you take on obligations under Australian employment law that carry serious penalties for non-compliance — including personal liability for directors.

Australia has one of the most regulated employment environments in the developed world. The Fair Work Act 2009, the National Employment Standards, Modern Awards, superannuation legislation, anti-discrimination laws, work health and safety requirements, and state-based workers compensation schemes all apply the moment you become an employer. None of them care whether your head office is in Singapore, London, or San Francisco.

This guide walks foreign companies through the entire process of hiring employees in Australia, from the entity and registration prerequisites to drafting compliant employment contracts, navigating the visa system, and meeting your ongoing obligations as an employer. Whether you are hiring one person or building a team, this is the roadmap.

Do You Need an Entity to Hire Employees Australia?

The short answer is: in almost every practical scenario, yes. While there is no single law that says “a foreign company must have an Australian entity to employ someone in Australia,” the web of employer obligations — PAYG withholding, superannuation, workers compensation, and Modern Award compliance — requires you to have an ABN, be registered with the ATO, and hold a workers compensation policy in the relevant state. These registrations are only available to entities with an Australian legal presence.

There are three ways foreign companies hire employees in Australia:

If you are committed to the Australian market and expect to hire more than a handful of employees, establishing your own entity is almost always more cost-effective in the medium term. An EOR charges $400-$800 per employee per month in management fees on top of the employee’s salary, which adds up quickly with a larger team.

For a detailed comparison of these approaches, see our guide to EOR vs direct hiring in Australia.

Entity Setup: Branch vs Subsidiary vs EOR

The entity structure you choose affects your employer obligations, tax position, and liability exposure.

Most foreign companies hire through an Australian subsidiary (Pty Ltd) because it provides limited liability separation from the parent company. Branch offices are common in industries like banking, insurance, and professional services where the parent company’s reputation and balance sheet are assets.

Our company formation services cover both branch registration and subsidiary incorporation.

Essential Registrations Before Hiring

Before you can legally employ anyone in Australia, your entity must complete the following registrations. Missing any of these creates compliance exposure from day one.

1. ABN (Australian Business Number)

Required for all employer obligations including PAYG withholding, superannuation, and invoicing. Apply through the Australian Business Register after ASIC registration.

For assistance, see our ABN and GST registration services.

2. TFN (Tax File Number)

Your entity needs its own Tax File Number for income tax reporting. Applied for separately from the ABN.

3. PAYG Withholding Registration

You must register for Pay As You Go withholding before making your first salary payment. This authorises you to withhold income tax from employees’ wages and remit it to the ATO.

4. Superannuation

You do not “register” for superannuation per se, but you must set up a default superannuation fund before your first pay run. Employees can choose their own fund; if they do not, you must pay into their “stapled” fund (their existing fund from previous employment) or a default fund that meets ASIC and ATO requirements.

5. Workers Compensation Insurance

This is mandatory in every Australian state and territory. You must obtain a workers compensation policy from an approved insurer in each state where you have employees, before those employees start work. Premiums are based on your industry classification and annual wages.

6. GST Registration (If Applicable)

If your Australian turnover exceeds $75,000 per year (or you expect it to), GST registration is mandatory. Even if your entity’s main purpose is to employ staff, the wages are not subject to GST, but any other income-generating activities may trigger the threshold.

7. State Payroll Tax Registration (If Applicable)

If your total Australian wages exceed the payroll tax threshold in the relevant state, you must register for payroll tax. Thresholds range from $1,000,000 (Victoria) to $2,000,000 (ACT).

Understanding Australian Employment Law

Australian employment law is primarily governed at the federal level through the Fair Work Act 2009, administered by the Fair Work Commission (FWC) and enforced by the Fair Work Ombudsman (FWO). Foreign employers are subject to the same rules as domestic employers — there are no concessions for being new to the market.

The National Employment Standards (NES)

The NES are 11 minimum entitlements that apply to all employees covered by the national workplace relations system. They cannot be reduced or excluded by contract. The key entitlements are:

These are minimums. Employment contracts and Modern Awards may provide for more generous entitlements, but they cannot provide less.

Unfair Dismissal Protections

Employees who have completed the minimum employment period (6 months, or 12 months for employers with fewer than 15 employees) are protected against unfair dismissal under the Fair Work Act. Dismissals must be for a valid reason (such as poor performance, misconduct, or genuine redundancy) and must follow a fair process. The penalties for unfair dismissal claims can include reinstatement or compensation of up to 26 weeks’ pay.

Foreign companies are often surprised by the strength of Australian unfair dismissal protections, which are significantly more employee-friendly than many other jurisdictions, particularly the United States.

Employment Contracts: What Must Be Included

While there is no prescribed format for employment contracts in Australia, a compliant contract must address certain matters and cannot fall below the minimums set by the NES and any applicable Modern Award. Common law employment contracts in Australia typically include:

Mandatory Elements

• Position title and description of duties
• Employment type: full-time, part-time, or casual (each has different entitlements)
• Remuneration: base salary or hourly rate, payment frequency, and method
• Hours of work: ordinary hours and any expectations around reasonable additional hours
• Leave entitlements: at minimum, the NES entitlements
• Superannuation: confirmation that the employer will contribute the Superannuation Guarantee rate (12% in 2025-26) to the employee’s nominated fund
• Notice of termination: consistent with NES minimum notice periods
• Applicable Modern Award (if any) — the contract must identify which award applies and confirm that the employee will receive at least the award’s minimum conditions

Recommended Inclusions

• Probationary period: typically 3-6 months, though unfair dismissal protections apply after the statutory minimum employment period regardless of the stated probation
• Confidentiality and intellectual property provisions
• Restraint of trade clauses (enforceable only if reasonable)
• Workplace policies and codes of conduct (referenced by inclusion)
• Dispute resolution procedures

Common Trap: Annualised Salary Arrangements

Many foreign companies offer a fixed annual salary intended to cover all entitlements including overtime, allowances, and penalty rates. Under Australian law, this is permitted but the annualised salary must be demonstrably sufficient to cover what the employee would have received under the applicable Modern Award, including overtime and penalty rates. If the salary falls short in any pay period, the employer must make up the difference. Annual salary reconciliations are mandatory under many Modern Awards.

Modern Awards: Minimum Conditions by Industry

Modern Awards are legally binding instruments that set minimum employment conditions for specific industries and occupations. There are 122 Modern Awards covering the vast majority of the Australian workforce. If your employee’s role falls within the coverage of a Modern Award, that award sets the floor for their pay and conditions — even if your employment contract offers different terms.

How to Identify the Applicable Award

The relevant award depends on the industry your business operates in and the type of work the employee performs. Common awards affecting foreign companies include:

The Fair Work Commission maintains an Award Finder tool on its website. Foreign companies should check award coverage before making an offer of employment, as the applicable award may impose minimum pay rates, penalty rates, allowances, and overtime entitlements that exceed what the company had planned.

For a deeper look at Modern Awards, see our guide to Modern Awards compliance for foreign employers.

Sponsoring Employees: Work Visas for Australia

If you are hiring foreign nationals to work in Australia — whether relocating employees from your parent company or recruiting overseas talent — you will need to navigate Australia’s skilled migration visa system.

Standard Business Sponsorship

To sponsor a worker, your entity must first become an approved sponsor with the Department of Home Affairs. This requires demonstrating that your business:

• Is lawfully operating in Australia
• Has a genuine need for the position
• Has no adverse information (such as unpaid wages or prior sponsorship breaches)

Common Visa Subclasses

Key Requirements for Sponsorship

• Labour market testing: For most visa subclasses, you must demonstrate that you advertised the position in Australia first and could not find a suitable local candidate.
• Market salary rate: You must pay at least the market salary rate (annual market salary rate or TSMIT — Temporary Skilled Migration Income Threshold — whichever is higher). As of 2025-26, the TSMIT is $76,515 per year.
• Skilling Australians Fund levy: Sponsors must pay a contribution to the Skilling Australians Fund. For smaller businesses (turnover under $10 million), this is $1,200 per year per sponsored employee. For larger businesses, it is $1,800 per year.
• Training requirements: You must demonstrate a commitment to training Australian workers, either through the SAF levy or through actual training expenditure.

Intra-Company Transfers

Foreign companies transferring existing employees to their Australian operations commonly use the Subclass 482 visa. The process involves becoming an approved sponsor, nominating the position, and the employee lodging their visa application. While labour market testing exemptions may apply for genuine intra-company transfers under certain international trade agreements, the standard process still requires meeting the TSMIT and demonstrating the position is genuine.

Superannuation, Tax, and Payroll Obligations

Once you have an entity, the required registrations, and an employee ready to start, your ongoing payroll obligations begin immediately.

Superannuation (Retirement Contributions)

You must contribute 12% of each eligible employee’s ordinary time earnings into their nominated superannuation fund. Contributions are due quarterly, by the 28th day after the end of each quarter.

Late super payments trigger the Superannuation Guarantee Charge (SGC), which includes the unpaid super, an interest component (currently 10% per annum), and a $20 administration fee per employee per quarter. The SGC is not tax deductible.

For more detail, see our payroll services.

PAYG Withholding

You must withhold income tax from each employee’s wages based on ATO tax tables and the employee’s TFN Declaration. The withheld amounts are remitted to the ATO — monthly for most employers, quarterly for small withholders (withholding less than $25,000 per year).

Single Touch Payroll (STP)

Every time you run payroll, you must report wages, PAYG withholding, and superannuation information to the ATO through STP-compliant software. STP reporting is due at the time of each pay event. This is mandatory for all Australian employers with no exceptions.

Pay Slips

You must provide each employee with a pay slip within one working day of payment. Pay slips must include specific information: gross and net pay, PAYG withholding, superannuation contributions, leave balances, overtime, penalty rates, and any deductions. Non-compliant pay slips attract penalties of up to $16,500 per contravention.

Workers Compensation Insurance

Workers compensation insurance is compulsory in every Australian state and territory. You must obtain a policy before your first employee starts work. The system is state-based, meaning you need a policy in each state where you have employees.

Premiums are calculated as a percentage of your total wages, with the rate determined by your industry classification and claims history. As a new employer, you will initially be assigned the industry average rate.

Failure to hold a current workers compensation policy is a criminal offence in most jurisdictions and can result in significant fines (up to $55,000 in NSW) plus liability for the full cost of any workplace injury claims.

Step-by-Step Checklist to Hire Employees Australia

This checklist covers the sequential steps to hire your first employee in Australia as a foreign company.

Phase 1: Entity and Registrations (Weeks 1-5)

• [ ] Decide on entity structure: branch (ARBN) or subsidiary (Pty Ltd)
• [ ] Register with ASIC and obtain ARBN or ACN
• [ ] Apply for ABN and TFN with the ATO
• [ ] Register for PAYG withholding
• [ ] Register for GST (if applicable)
• [ ] Appoint a local agent (branch) or resident director (subsidiary)

Phase 2: Employer Setup (Weeks 4-6)

• [ ] Obtain workers compensation insurance in the relevant state(s)
• [ ] Set up a default superannuation fund (or register with a clearing house)
• [ ] Select STP-compliant payroll software (Xero, MYOB, or outsourced provider)
• [ ] Open an Australian business bank account
• [ ] Register for state payroll tax (if wages will exceed the threshold)

Phase 3: Recruitment and Contracting (Weeks 5-8)

• [ ] Identify the applicable Modern Award (if any) for the role
• [ ] Check minimum pay rates, penalty rates, and allowances under the award
• [ ] Draft employment contract compliant with NES and the applicable award
• [ ] If sponsoring a visa holder: apply for Standard Business Sponsorship, nominate the position, and assist with visa application
• [ ] Conduct labour market testing (if required for visa sponsorship)

Phase 4: Onboarding (Week of Start)

• [ ] Provide the Fair Work Information Statement to the new employee
• [ ] Collect TFN Declaration (Form NAT 3092) from the employee
• [ ] Collect Superannuation Standard Choice form from the employee
• [ ] Set up the employee in payroll software
• [ ] Conduct workplace health and safety induction
• [ ] Register the employee for workers compensation coverage

Phase 5: First Pay Run and Ongoing

• [ ] Process first payroll through STP-compliant software
• [ ] Issue compliant pay slip within one working day of payment
• [ ] Remit PAYG withholding to ATO by the due date
• [ ] Pay superannuation by the quarterly due date
• [ ] Lodge payroll tax returns monthly (if registered)

Common Mistakes When You Hire Employees Australia

1. Treating Australian Employees Like At-Will Employees

Foreign companies from jurisdictions with at-will employment (particularly the US) often underestimate the strength of Australian termination protections. You cannot dismiss an employee without a valid reason and a fair process once they pass the minimum employment period. Unfair dismissal claims are common and frequently result in compensation orders.

2. Ignoring Modern Award Coverage

Assuming that a “good salary” automatically covers all entitlements is a costly mistake. If a Modern Award applies, the employee is entitled to the award’s minimum conditions — including overtime rates, penalty rates for weekend and public holiday work, and specific allowances — regardless of their base salary. Annual salary reconciliations may be required to ensure no underpayment.

3. Classifying Employees as Contractors

Australia has strict rules around the employee/contractor distinction. If a person works under your direction, uses your tools, and cannot delegate their work, they are likely an employee regardless of what the contract says. Misclassification exposes you to back-payment of super, leave entitlements, PAYG withholding, and penalties from both the ATO and the Fair Work Ombudsman.

4. Missing Superannuation Deadlines

Super must be received by the employee’s fund by the quarterly due date — not just sent on that day. Allow at least 5-7 business days for processing. Late super triggers the non-deductible Superannuation Guarantee Charge.

5. Not Obtaining Workers Compensation Insurance

This is a legal requirement, not optional insurance. Operating without a workers compensation policy is a criminal offence and exposes the company to unlimited liability for workplace injury costs.

6. Overlooking State-Based Obligations

Workers compensation, payroll tax, and long service leave are all state-based. A foreign company with employees in NSW and Victoria must hold separate workers compensation policies in each state, potentially register for payroll tax in each state, and track long service leave accrual under each state’s legislation.

Frequently Asked Questions

Can a foreign company hire an employee in Australia without registering an entity?

Not directly. To meet your obligations as an employer — including PAYG withholding, superannuation, workers compensation, and Single Touch Payroll reporting — you need an Australian entity (branch or subsidiary) with an ABN and relevant registrations. The alternative is to use an Employer of Record (EOR), which holds the entity and acts as the legal employer while you manage the employee’s day-to-day work. An EOR is suitable for small teams or market testing but becomes expensive for larger headcounts.

How long does it take to hire the first employee in Australia?

From a standing start with no Australian entity, allow 6-8 weeks: 3-5 weeks for entity registration and ABN, 1-2 weeks for employer setup (workers compensation, super fund, payroll software, bank account), and 1-2 weeks for contracting and onboarding. If you are sponsoring a visa holder, add 2-5 months for visa processing. Using an EOR can compress the timeline to as little as 3-7 days for the first hire.

What is the minimum salary for an employee in Australia?

The national minimum wage as of 1 July 2025 is $24.95 per hour or $948.10 per week for a full-time employee (38 hours). However, most employees are covered by a Modern Award that sets higher minimum rates based on classification levels. For example, a Level 3 clerk under the Clerks Award earns a minimum of approximately $28-$30 per hour. Sponsored visa holders must be paid at least the Temporary Skilled Migration Income Threshold (TSMIT) of $76,515 per year or the market salary rate, whichever is higher.

Do I need to offer benefits like health insurance to Australian employees?

No. Unlike some countries (notably the US), Australian employers are not required to provide private health insurance. Australia has a public healthcare system (Medicare) funded through income tax. However, many employers offer salary packaging, additional superannuation contributions, or private health insurance as part of a competitive remuneration package to attract talent. Fringe benefits provided to employees may be subject to Fringe Benefits Tax (FBT) at 47%.

What are the penalties for non-compliance with Australian employment law?

Penalties vary by the nature of the contravention. The Fair Work Ombudsman can pursue civil penalties of up to $18,780 per contravention for an individual and up to $990,000 per contravention for a company for breaches such as underpayment of wages, failure to provide pay slips, or record-keeping failures. For serious contraventions (deliberate or systematic), penalties increase tenfold. Directors and officers can be held personally liable for their involvement in contraventions. The ATO can impose separate penalties for failures related to PAYG withholding and superannuation.

This guide provides general information about hiring employees in Australia as of February 2026. Employment law, visa requirements, and tax obligations are subject to change. Foreign companies should seek specific legal and tax advice before making their first hire. For end-to-end assistance with establishing an Australian employer presence, contact Australian Business Register.

Last updated: February 2026

For official information, see Fair Work Australia employment requirements.