Australia Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in Australia and employment contracts.

Global Expansion Made Easy for You

Expanding into Australia generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Visas, Work Permits and Migration

Australia is an exciting and desirable nation for global expansion. It has been ‘recession free’ for the past 30 years and has a high level of disposable income which means money in peoples’ pockets – a great environment for businesses. Companies or individuals planning to move to this thriving economy need the correct documentation to enter, work and live within its borders which are stringently guarded. International companies targeting Australia for international expansion face unraveling the complexities of work permit, visa, and immigration laws if they intend to move existing staff into the country.

Few companies have these resources, or the time. At Bradford Jacobs, we want to eliminate this complicated part. By using our PEO service we can arrange all needed visas and permits including the entire application process without your physical presence. Our team is trained to research the latest information on Australian visas and work permits and therefore, we created a guide to introduce you to the rules and requirements. This guide highlights the complexities of obtaining the necessary documentation.

What types of Visas and Work Permits for Australia are there?

Visiting, working, or expanding your business in a foreign country means exploring all the visa options and there are many for Australia. Everyone needs a visa before entering the country, unless Australian, or New Zealand citizens who can apply for a visa on entry. Plus, there is a Special Category Visa (SCV) which allows them to visit, study, stay and work – also applied for on arrival. All other nationalities require visas which need to be applied for from outside Australia. For visitors or businesspeople, there are online e-Visas / Electronic visa services (for some nationalities free of charge) However, these do not cover paid work. First it is important to know which visa is required as they can prove expensive, ranging from a few hundred to a few thousand dollars. Individuals and companies must also be aware of eligibility; employers are expected to familiarize themselves with immigration laws and workers’ rights. Another area that Bradford Jacobs specializes in.

Categories of Visa

This government site provides a tool to check on the right category for each individual’s needs. Visitors and Tourists: For holidays (working or for pleasure) and unpaid business activities. Travelers must apply for:

  • An Electronic Travel Authority, which has 12-months’ validity when people can visit Australia for three months at a time as a tourist, visiting family or as a business visitor, at a cost of AU$20 (€12.80, US$14.40). Applicants must check eligibility and apply online.
  • Tourist Stream Visa for three, six or 12 month stays to visit friends, cruise passengers or for a holiday. It comes with a fee of AU$145 (€93.13, US$104.30), and must be applied for from outside Australia.

Other types of visas (besides work) that can be applied for include:

  • Study: For studying or training
  • Permanent residence: To live in Australia
  • Family Visas: To join visa holders who are partners or family
  • Humanitarian: For example, refugees
  • Work Visas: There are several routes which depend on age, experience, skill set, qualifications and English language skills. Some visas can limit the type of work allowed or the hours permitted:
  • Regional Migration Visas: are designed to attract workers/migrants to improve regional areas
  • Temporary/Provisional Visas: for limited projects or contracts, usually attached to specific employers which can lead to a permanent visa. Some may need sponsorship.
  • Short Stay Visas: Young persons on a working holiday, seasonal workers, or those on the Pacific Labor Scheme.
  • Permanent Work Visas: Regional, skilled, business investment, sponsored, exceptionally talented people.
  • Skilled Occupation Visas: People to train or work in a skilled eligible occupation.
  • SkillSelect: This route can be used when seeking sponsorship from a potential employer and so increase the possibilities of obtaining a visa. Submit an Expression of Interest (EOI). There is no fee for this service.

Main Work Permit and Employment-Based Visas

The following allow skilled and professional foreign workers, who have been either invited, nominated, or sponsored, to live and work in the country on a permanent or temporary basis:

  • Employer Nomination Scheme (ENS) Visa (subclass 186) permanent residency
  • Regional Sponsored Migration Scheme (RSMS) Visa (subclass 187)
  • Skilled Nominated Visa
  • Temporary Skill Shortage Visa (subclass 482)
  • Temporary Work (Short Stay Specialist) Visa
  • Skilled Regional (Provisional) Visa (subclass 489) sponsored via government or a relative.
  • Also, through the General Skilled Migration (GSM) program and SkillSelect.

Employers will need to understand the minimum salary that is required to be paid to foreign workers in particular subclasses e.g., 482, 186 187, with regards to the Annual Market Salary Rate (AMSR). This is necessary so as not to undermine the Australian labor market. For instance, the Temporary Skilled Migration Income Threshold (TSMIT) at the end of 2020 was AU$53,900 (€34,620, US$38,780). Also, employers may need to advertise the position in order to test the labor market by offering the position to an Australian citizen.

How to obtain an Australian Work Visa?

There are many different categories of Work Visa. Suitability and eligibility depends on a number of factors, including length of stay, occupation and whether it is on the skill shortage list, age, experience, skill set, qualifications and command of English. Some visas may limit the type of work allowed or the hours permitted. Those of interest to companies to obtain the main work and employment visa for employees:

Employer Nomination Scheme (ENS) Visa (subclass 186)

  • Will require a skills assessment although there are exceptions
  • Job on the list for eligible skilled occupations
  • Except in certain circumstances, be under 45 years old
  • Read and understand the ‘Life in Australia’ booklet, then sign the ‘Australian Values Statement’
  • Need to be proposed by employer
  • Meet requisite character and health requirements
  • Be competent in the English language

Regional Sponsored Migration Scheme (RSMS) Visa (Subclass 187

  • An approved employer nomination regarding employment in regional Australia
  • For this visa, the employer is based in a selected region
  • Will require a skills assessment although there are exceptions
  • Job on the list for Regional occupations list (ROL)
  • Except in certain circumstances, be under 45 years old
  • Meet requisite character and health requirements
  • Be competent in the English language
  • Read and understand the ‘Life in Australia’ booklet, then sign the ‘Australian Values Statement’
  • Relevant work history of at least three years
  • Commitment of 2 years employment with nominating employer

Temporary Skill Shortage Visa (subclass 482)

  • To provide skilled workers not found in the Australian population.
  • Applicant requires a job that is listed on the Consolidated Skilled Occupations list
  • Nominated by an Australian employer who has made a job offer
  • Possess relevant qualifications and skill set for the job offered
  • Two years of relevant work experience
  • Be competent in English
  • Provide proof of good character and good health

General Skilled Migration (GSM) program through SkillSelect

This is a points-based route for skilled foreign workers to obtain a Work Visa to live and work in Australia. It can use SkillSelect as a tool which facilitates matching employers to potential employees. Requirements:

  • Minimum 60 points
  • Under 45 years old
  • Proficient in English
  • Job on Occupation Skills List
  • A positive Skills Assessment
  • Proof of health and good character
  • Not previously refused a visa or had one cancelled
  • Have submitted an Expression of Interest (EOI) – not required if the applicant has a job offer from an Australian company

All of the above need to be met, otherwise the application will be refused.

NOTE: Employers will need to understand the minimum salary that is required to be paid to foreign workers in particular subclasses e.g., 482, 186 187, regarding the annual market salary rate (AMSR). This is necessary so as not to undermine the Australian labor market. For instance, the Temporary Skilled Migration Income Threshold (TSMIT) end of 2020 was AU$53,900 (€34,620, US$38,780). A labor market test may be required for some visas.

Australian Tax Laws

Dealing with tax, payroll, and employment regulations for your staff from overseas is always tricky and poses complications that demand expert guidance. Australia is no exception – for example, different personal tax rates apply to foreigners compared with Australian citizens. And there are plans for more changes from July 2022. With over 20 years’ experience in the front rank of international payroll providers, Bradford Jacobs ensures our clients comply with every level of tax and employment law across the globe. By using our PEO service, we will take care of the complicated legwork so that you can focus on your business goals.

Bradford Jacobs’ dedicated specialists remove the burdens of worrying about these complications while you focus on building your business in a new territory. We have made it our goal to keep track of the latest changes in the tax policies to always ensure complete compliance. To keep you informed and updated too, we created this guide which includes the basic facts regarding tax regulations in Australia.

Overview of Taxes in Australia

The Australian Tax Office (ATO) collects taxes from employees in Australia, where the tax year runs from July 1 till June 30. The tax rates for 2021 – 2022 are:

  • Personal Income Tax (PIT):
  • Tax free up to AU$18,200 (€11,691, US$13,256)
  • Rates range from AU$18,201 at 19.0%, and four more to rates to up to AU$$180,001 (€115,641, US$131,124) at 45.0%
  • (Additional Medicare Levy of 2%)
  • Non-residents PIT
  • There is no tax-free amount for non-residents, who do not pay the Medicare Levy of 2%
  • Three rates up to AU$120,000 (€77,085, US$87,415) 32.5% to AU$180,000 (€115,641, US$131,124) 45.0%
  • There are no local taxes on personal income.
  • Social Insurance Taxes: Neither employers nor employees contribute to social insurance taxes, with employees paying 2% on income towards the Medicare Levy.
  • Corporate Income Tax (CIT): Resident companies are taxed on their worldwide income at a standard rate of 30%, with Small and Medium Enterprises (SMEs) attracting a rate of 25% for the 2021/22 tax year, subject to integrity checks on their income.
  • Withholding Tax (WHT): WHT applies at various rates to different categories depending on any treaties that may be in force.
  • Goods and Services Tax (GST): The federal government levies 10% value added tax and distributes the revenue to individual states. GST-free (zero rated) categories include some foodstuffs, exports, health, medical and educational supplies, residential rents, and some financial services.

Australia Individual Tax – Single, Married

Tax liability depends on residency rules, not on citizenship or nationality. However, there were plans to amend regulations in the 2021-22 Budget, with ‘primary’ and ‘secondary’ levels of tests on residency qualifications and when an individual becomes a tax resident. These changes will apply from July 2022. Generally, residents pay tax on both Australian and worldwide income. A non-resident individual is liable only for Australian-sourced income, other than income from interest, dividends or royalties which may be liable for Withholding Tax (WHT). Individuals working in Australia on contract may be considered residents if they reside there for more than six months. Currently, Australian residents for tax purposes are those who are domiciled in Australia and those who are in Australia at least 183 days in the tax year. But in view of the potential realignment of residency qualifications, advice and extra care is advised. At Bradford Jacobs we are ready with that advice.

Personal Income Tax Rates

  • 0 – AU$18,200 (€11,661, US$13,173): 0%
  • AU$18,201 – AUS45,000 (€28,832, US$32,570): 19.0%
  • AU$45,001 AU$120,000 (€76,886, US$86,857): 32.5%
  • AUS$120,001 AUS180,000 (€115,339, US$130,285): 37.0%
  • AUS$ 180,001 and above: 45.0%

Note: Foreign employees have no tax-free allowance.

Employee Social Insurance Taxes

There is no contribution to the social security system as it is funded entirely by government. There is a 2% levy on income for Medicare.

Australia Individual Tax Rules

  • There are no joint returns for married couples, but each must include information about their partner on their own return
  • Foreign workers do not receive any tax-free allowance and are taxed on their entire income
  • Categories of taxable income include salaries, professional fees, income from rentals and the sale or acquisition of assets, interest, and dividends
  • Employers withhold employees’ tax and remit to the Australian Tax Office (ATO)
  • The tax year is from July 1 – June 30 of the following year and individual returns must be filed by October 31 with the ATO, via a myGov link on their website
  • Australian citizens are taxed on their worldwide income and may be taxed both in Australia and other countries where they have income

Indirect Taxes:

The standard rate for Goods and Services Tax (GST) is 10%. ‘GST-free’ (zero-rated or exempt) categories include most foods, health, medical and educational supplies, most financial services, and health insurance, although life.

Australian Entity Set Up

Expanding overseas is a major step. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into a new territory, maybe thousands of miles overseas. Global expansion into Australia generally means that you need to set up an in-country entity. However, the sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Australia – speedily and risk free. Your company will be up-and-running in days rather than weeks or even months.

Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of frustrating and time-consuming. Therefore, we have been supporting companies in over a hundred countries with their expansion plans. In this guide, we will share which documents you need to establish an entity in Australia, but also where you will need to register your business address and company’s name. We will also break down the advantages and disadvantages of setting up an entity in Australia.

How to set up an Australia Subsidiary

To incorporate a subsidiary in Australia, typically as a ‘proprietary’ limited liability Private Company (Pty), the parent company must comply with the Corporations Act (2001).

Necessary steps include:

  • Decide on location and select a company name unique to Australia, with the suffix ‘Pty’ for a proprietary limited liability private company
  • File ‘Application for registering an Australian company’ with the Australian Securities and Investments Commission (ASIC)
  • Register office and principal place of business addresses. The registered office must be in Australia and cannot be a postbox
  • Register a local representative to receive legal and official documents
  • Obtain Australian Business Number (ABN) and Tax File Number (TFN)
  • Liaise with Business Registration Services (BRS) to obtain an Australian Company Number (ACN) and incorporation certificate
  • Register for Pay As You Go (PAYG) for withholding employees due income tax, and for Goods and Services Tax (GST) if turnover is expected to exceed AU$75,000 (€48,042, US$58,200)
  • Register with the relevant State Insurance Regulatory Authority (SIRA) to insure employees against illness or injury at work

What you need to set up an Australian Subsidiary

Incoming foreign companies need to have settled certain questions before they can set up a subsidiary, usually as a proprietary private company (Pty) with liability limited by shares. The subsidiary operates under the Corporations Act but can also draw up its own constitution.

Requirements include:

  • An approved company name registered with the Australian Securities and Investments Commission (ASIC)
  • Registered office and principal place of business addresses. The registered office must be in Australia and cannot be a postbox
  • A local representative, authorized to receive legal and official documents
  • Memorandum of Association including company name and registered office, share capital structure, relationship between company and shareholders and their liability
  • Articles of Association regarding responsibilities of directors and company secretary and information on board and general meetings
  • Statement giving full details of shareholders and directors. Directors must fulfill obligations under the Director ID requirement to receive the unique director identifier
  • Australian Business Number (ABN) and Tax File Number (TFN)
  • An Australian Company Number (ACN) and incorporation certificate, obtained from the Business Registration Services (BRS)

Benefits of setting up an Australian Subsidiary

Specific advantages for an international company setting up a proprietary subsidiary in Australia include not being responsible for the subsidiary’s debts or liabilities. The liability of the subsidiary’s shareholders is limited to their investment in shares. The subsidiary can function entirely independently of the parent company, under a separate name, and pursue its own business opportunities. The subsidiary operates under Australia’s Corporations Act (2001) in the same way as local companies and businesses. It is taxed on is worldwide income. Through its subsidiary, the parent company has the advantage of exploring further afield among other economies in Pacific Rim, where Australia is already a major force.

Other benefits for a subsidiary:

  • Easier to obtain regulatory approvals, loans and finance and enter into contracts with other Australian companies
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches
  • Employees feel there is more stability and job security than from working in a branch

In the wider commercial sense opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by the Pacific Rim and Asian economies. However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Australia. Using a global Professional Employer Organization (PEO) such as Bradford Jacobs means staff can be sourced, placed in their roles, and be up-and-running within days, rather than months, with all the difficulties of payroll, taxation, and compliance under control thanks to our Employer of Record (EOR) services. You have day-to-day operational control of your employees, while we take the hassle off your hands.

The Australian Market

The combination of a strong economy, low unemployment, well-educated workforce, and high salaries make Australia attractive to foreign investors, although planned changes to Foreign Direct Investment laws unveiled in January 2021 introduce some issues for international companies. Also, companies establishing a presence in Australia face challenges complying with employment, tax, and company registration laws as they can vary between states and territories. Plus, hiring staff from abroad poses more complications – and risks.

There are speedier and more cost-effective alternatives to launching a subsidiary, with Bradford Jacobs opening the door to a hassle-free route into Australia. Work alongside our Professional Employer Organisation (PEO) recruitment specialists, then utilise our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of Australia and how to navigate challenging legislative issues revolving around federal and state laws and regulations. Here we have set out some basic summaries of what you need to make the transition into the Australian market, whichever sector you operate in.

Starting a Business in Australia

Australia lies outside the world’s top 10 economies – ranked 12th with a GDP of 2 trillion Australia dollars (€1.28 trillion euros, 1.44 trillion US dollars) – but is a major player among the ‘Pacific Rim’ and Asia-Pacific (APAC) nations. Australia ranks fourth among Pacific Rim economies while the economic heavyweights of China, US, Japan, South Korea, Thailand, and India also figure among their major trading partners. The World Bank ranked Australia 14th out of 190 countries in their latest ‘Ease of Doing Business’ report and fourth among member nations of the Organization for Economic Cooperation and Development (OECD). Australian authorities employ a structured framework for establishing a legal entity in the country, complying with the Corporations Act (2001). Foreign companies establishing a subsidiary typically choose a proprietary Private Company (Pty) with liability limited by share capital. After selecting a unique name, the company must file an ‘Application for registering an Australian company’ with the Australian Securities and Investments Commission (ASIC). Other steps include:

  • Register office and principal place of business addresses. The registered office must be in Australia and cannot be a postbox
  • Register a local representative to receive legal and official documents
  • Obtain Australian Business Number (ABN) and Tax File Number (TFN)
  • Liaise with Business Registration Services (BRS) to obtain an Australian Company Number (ACN) and incorporation certificate
  • Register for Pay As You Go (PAYG) for withholding employees’ income tax, and for Goods and Services Tax (GST) if turnover is expected to exceed AU$75,000 (€48,042, US$58,200)
  • Register with the relevant State Insurance Regulatory Authority (SIRA) to insure employees against illness or injury at work

Expanding Business into Australia

Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? International companies expanding into Australia quickly realize they need to base decisions on extensive research before drawing up a business plan for their new territory. A detailed blueprint will have to answer many critical questions.

Will staff be migrated across the world or recruited in-country? Who will handle payroll? How will your company deal with regulations surrounding taxation, entitlements and benefits, severance, and termination? In Australia, these questions are complicated by the sheer size of the country. Australia spans 2,500 miles from east to west and almost as far from north to south. Where will you locate offices, find distributors or manufacturers? The list grows, in addition to dealing with federal, state, and territorial regulations applying to employment and taxes. There is a simple alternative. By partnering a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in Australia.

Australia Business Facts

  • Capital city – Canberra
  • Population – 26 million
  • States and Territories – Australian Capital Territory, Queensland, New South Wales, Northern Territory, Western Australia, Tasmania, Victoria, South Australia plus various external territories
  • Official language – English
  • Economy and world ranking – 12th largest economy, GDP AU$2 trillion; €1.29 trillion, US$ 1.44 trillion
  • Leading sectors in economy – Energy and resources; finance; clean agriculture; education; tourism; health services and consumer goods
  • Main exports – Metal ores and scrap metal; coal, coke, and briquettes; natural gas; education travel services; foodstuffs and live animals
  • Main Imports – Travel and educational services; refined and crude petroleum; machinery and transport equipment including vehicles; industrial and electrical machinery; telecommunication and sound equipment; chemicals
  • Main trading partners – China, US, Japan, S. Korea, UK, India, Germany
  • Government – Parliamentary, constitutional, and federal monarchy, representative democracy
  • Currency – Australian Dollar AU$

Advantages of expanding into the Australian Market:

  • Economy: Recession-free since 1991, Australia paints a positive picture for international expansion
  • Consumers: Disposable income per household is higher than the average for members of the Organization for Economic Cooperation and Development (OECD), fueling a services sector that accounts for well over 60% of the GDP
  • Global reach: Proximity to Asian markets such as Japan and South Korea, and closer alignment with their time zones, make Australia an appealing steppingstone for further international expansion
  • Logistics: Despite its size, Australian markets are easier to access due to the vast majority of the population being concentrated in major cities such as Sydney, Canberra, Perth, Melbourne, Adelaide, and Brisbane
  • Employment Market: Access to a well-educated and multi-cultural workforce, with close to 30% having been born overseas and two million conversant in an Asian language
  • Business Focus: Emphasis on research and innovation

Challenges of expanding into the Australian market:

  • International contact: Time zones affect conference calls. An early 8am meeting call from Sydney works out at 4pm in New York (the previous day) and nine o’clock the previous evening in London
  • Red Tape: Tax filing, superannuation payments and exporting and importing, despite many Free Trade agreements, require dense bureaucratic processes stretching over days
  • Business Environment: Adjusting to a work culture that confusingly combines a laid-back attitude with focused business practices
  • Staff Transfer: If migrating workers into Australia, plan well ahead for obtaining visas and work permits
  • Infrastructure: Applying for construction permits involves 11 layers of documentation

Australian Contracts

A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over a hundred countries with creating compliant and balanced labor contracts. Our team keeps track of Australian laws and regulations daily to be duly aware of updates that can be implemented in working contracts. By using our PEO and EOR service we can provide compliant labor contracts for employees in Australia, including local benefits.

To support your plans, we made this guide including the basics of employment contracts in Australia. After reading this guide you will know everything about the conditions, laws, and benefits to include in an Australian employment contract..

How Do You Hire Australia Employees?

Foreign companies hiring employees in Australia must operate within an employment framework based on federal and state legislation. The Fair Work Act (2009) and National Employment Standards (NES) are the main legal factors governing employment law in Australia. ‘Modern Award’ and Enterprise Agreements can apply to individual workplaces and companies and are industry- and legislation-based agreements that set minimum pay and conditions. Australia’s Human Rights Act also enforces other regulations in association with several specific acts prohibiting discrimination at all stages of employment.

These considerations come into play during the first stages of hiring and onboarding – drawing up a contract with your new employee. Once Bradford Jacobs’ Professional Employer Organization (PEO) recruitment networks have located the best talent for your company, we step in to give advice on this crucial element of recruitment.

General requirements apply to all contracts. These include:

  • New employees must receive a Fair Work Information Statement setting out the essential terms of their role, as soon as possible after beginning work
  • Oral agreements are permitted under common law, although written contracts are strongly recommended and should detail essential terms and conditions of employment
  • Where work comes under Modern Awards or Enterprise (collective) Agreements, employees should have written confirmation in their contract or job offer specifying the award or enterprise agreement that covers their role
  • Workplace agreements, which should exceed minimum limits under National Employment Standards
  • Providing copies of company policies on conduct, confidentiality, social media, role and responsibilities, health, and safety, for example
  • Contracts are subject to government laws and, in some cases, state legislation

Outsourcing the recruitment and hiring process through Bradford Jacobs’ Professional Employer Organization (PEO) network will give you the security that our in-depth know-how can deal with all these potential problems. Guarantee a trouble-free move into your new territory by trusting our Employer of Record (EOR) services to handle every aspect of payroll compliance.

Types of Employment Contracts in Australia

Under common law, all employees in Australia should have a contract, whether verbal or in writing (which is preferable). Contracts come under Australian Government laws but can also be subject to state and territory legislation.

Workplace (or Enterprise) Agreements set out the rights and obligations between an employer and group of workers. Terms and conditions supplant basic minimums in the National Employment Standards (NES).

Similarly, Awards apply terms and conditions to a particular industry or occupation, and they are also in addition to NES provisions.

Employers and employees also enter into individual contracts. These include:

  • Indefinite, Open-ended Employment Contracts: Typically for full-time, permanent employees usually working between 38 and 40 hours each week, on average. They are entitled to written notice or payment in lieu. Terms and conditions can be set by the contract, or by an award or registered agreement. Entitlements include annual, illness and carers’ leave among others.
  • Fixed-term Employment Contracts: These apply to a definite time period, say three or six months, or a specific task. Employees can be full- or part-time and are entitled to the same wages and benefits as full-time employees, which may be improved by awards or agreements.
  • Part-time Employment Contracts: Generally, for fewer than 38 hours a week but on a regular work schedule, with the same minimum entitlements as full-time employees but adjusted on a pro rata basis.
  • Casual Employment Contracts: Tend to work as required without the employer’s commitment to offering future work. To compensate for not having minimum benefits, such as paid illness leave and vacations, their hourly rate is ‘casual loaded’ to a higher hourly rate.

Note: If a full- or part-time contract is mutually changed to casual the same regulations apply as to ending employment. Employees must be given notice of the change and any leave, pay or entitlements must be fulfilled.

Probation Periods: Trial periods typically last between three and six months, during which the individual has the same rights as other employees. If probation is towards full- or part-time work, they accrue rights to paid leave and sickness benefit. If the trial period is unsuccessful, the individual must be given notice and paid for any unused leave.

Apprentice and Trainee Agreements: Individuals enrolled with a Registered Training Organization (RTO) can enter a training agreement with an employer, under guidance of a trained person on a fixed-term basis. Under National Employment Standards (NES) requirements, every employee must receive a copy of the Fair Work Information Statement or a copy of the Casual Employment Information Statement. A contract of employment should cover:

  • Full names and addresses of employer and employee
  • Start date
  • Contract type – indefinite or fixed term for example
  • Remuneration and payment schedule
  • Place of work
  • Outline of employees’ duties
  • Maximum hours per week
  • Paid vacation entitlement
  • Termination, severance, and notice period information
  • Which Modern Award or Enterprise Agreements to apply for (if any)
  • Company’s policies and procedures

Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Australia might not all be familiar to you yet. By using our PEO and Employer of Record (EOR) service we can provide compliant labor contracts for employees in Australia including local benefits. When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Australia, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.

Our guide will explain what benefits and employee compensation are guaranteed, and what can be modified, for any employer who wishes to expand their business into Australia.

What are Employee Benefits in Australia?

Foreign companies’ responsibilities when hiring in Australia stretch beyond complying with tax and payroll regulations. Workers’ rights and benefits are also strictly applied by a number of specific laws covering minimum wage, working hours, vacations, sick leave, and severance. These are covered by the Fair Work Act and National Employment Standards (NES) legislation.

Additionally, employers must also be aware of Modern Awards and Enterprise Agreements, which have a similar effect to Collective Bargaining Agreements (CBAs). Award and enterprise agreements apply to individual workplaces and companies and are industry- and legislation-based arrangements that set minimum pay and conditions above those laid down by statutory laws.

Minimum guaranteed benefits, either from legislation or collective agreements, include:

  • Minimum wages
  • Paid vacations
  • Working hours
  • Termination, notice periods and severance
  • Sick leave
  • Maternity allowances and benefits

Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.

What Compensation Laws exist in Australia?

The employer-employee relationship in Australia is largely based on federal and state legislation, with the Fair Work Act (2009) and National Employment Standards (NES) the main factors governing employment law. However, extra considerations arise through Modern Award and Enterprise Agreements. These apply to individual workplaces and companies and are industry- and legislation-based agreements that set terms and conditions above statutory minimums. The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Legislation applies to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours, for example.

Drawing up contracts is tricky enough, but in Australia it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Do not take the risk of paying penalties for ignoring these responsibilities.

Compensation, entitlements, and benefits include:

  • National Minimum Wage: In July 2021, Australia’s Fair Work Commission raised the basic minimum for full-time workers over 21 years old to AU$772.60 (€497, US$567) per week / AU$20.33 (€13, US$15) per hour. Rates apply till June 2022. Most employees’ minimum wages are set by Enterprise Agreements for their industry or sector, which cannot undercut the statutory national minimum.
  • The national minimum applies to most private companies that are regulated by the Fair Work Act, (2009) and whose employees are covered by the National Workplace Relations System. Part-time employees’ pay is adjusted pro rata for their working hours. Casual workers’ pay is ‘casual loaded’ above the standard salary as they are not entitled to benefits such as sick leave or paid vacations.
  • Sick Leave: National Employment Standards regulations entitle all full-time employees to paid sick leave. Employees can also take paid leave to support an immediate family member who is sick, injured or faces an emergency situation. The annual entitlement is 10 days (pro rata for part-timers) with unused days carried forward to the next year. Casual workers do not qualify for sick leave but are paid ‘casual loading’ above their basic pay to compensate. Medical certificates may be required by the employer.
  • Working Hours and Breaks: The Fair Work Act (2009) states an employee’s maximum working week is 38 hours, or 7.6 hours each day. Their employer can request they work reasonable extra hours. The conditions as to whether the extra hours are ‘reasonable’ include such as if there is provision to pay overtime, or whether they would pose a risk to the employee’s health.

Maximum working hours come under National Employment Standards and apply to all employees covered by the National Workplace Relations System regardless of any awards, agreements, or contracts. Working hours can be ‘averaged out’ over a maximum 26 weeks, although there is no requirement for employer or employee to conclude an averaging out agreement. Working time fits into a ‘span of hours’.

This includes:

  • Between 4 and 5 hours – 10-min break
  • Between 5 and 7 hours – 10-min break; 30-60 min meal break
  • Between 7 and 10 hours – 2 x 10-min breaks; 30-60 min meal break
  • More than 10 hours – 2 x 10-min breaks; 2 x 30-60 min meal breaks
  • Overtime: Employers can ask employees to perform reasonable amounts of overtime, above their normal working hours of 38 a week or 7.6 hours daily. If employees are not covered by a Modern Award or Enterprise (collective) Agreement regarding overtime entitlement, any overtime pay depends on their individual contract.
  • Some award or enterprise agreements allow employees time off in lieu of working overtime, instead of extra pay. Typically, overtime pay may be 1.5 times normal salary for the first two or three hours and twice the normal hourly rate after this.
  • Paid Vacations: Under National Employment Standards (NES), full-time employees are entitled to four weeks’ annual leave each year of service with their employer. Registered shift workers receive five weeks annual leave. Casual workers are not entitled to annual leave, but their salary is ‘casual loaded’ above their standard salary as compensation.
  • Employees covered by award or enterprise agreements may receive additional leave; employees not covered by such agreements may ‘buy’ extra vacation by giving up equivalent pay.
  • Maternity Benefit: Parental Leave Pay (PLP) is AU$772.55 (€498.68, US$567.75) each week, AU$154.51 (€99.75, US$113.55) daily, before tax. The benefit is 90 ‘payable days’ over 18 weeks, comprising 60 payable days of PLP and 30 Flexible Paid Parental Leave days. Fathers and partners may also be eligible for 10 payable days over two weeks, so families can qualify for a total of 100 payable days over 20 weeks. Calculations are based on the weekly rate of the national minimum wage.
  • Maternity / Paternity / Parental Leave: Paid maternity leave totals 18 weeks; fathers and partners may receive 10 days’ paid leave. Following the birth or adoption of a child, parents are entitled to parental leave. Leave applies when an employee, their spouse or de facto partner gives birth, or when they adopt a child under 16 years old.
  • Employees are eligible if they have worked for their employer at least 12 months before the expected date of the birth or before the adoption date. Employees need not work another 12 months to take another period of parental leave with the same employer but will have to work for one year before taking parental leave with a new employer.
  • Termination and Severance: These are covered by National Employment Standards (NES). Employers cannot terminate employment of individuals who have a ‘workplace right’ or take part in lawful ‘industrial activity’. Termination is prohibited on grounds such as race, gender, age, or disability or if the employee is absent due to illness or injury for less than three months in a 12-month period. In the case of 15 or more collective redundancies the relevant government agencies and trade unions must be informed.

On termination, employees’ severance pay should include:

  • Outstanding salary or other remuneration
  • pay in lieu of notice of termination
  • accrued annual leave or long service entitlements
  • balance of any time off taken instead of overtime pay
  • redundancy pay, if eligible
  • Termination due to redundancy entitles employees to severance pay based on years of service. Entitlement begins after 12 months with four weeks’ pay for service up to two years. With each yearly increment of service from three years to nine years, the corresponding entitlement increase from six weeks’ pay to 16 weeks salary. Service of more than 10 years attracts 12 weeks’ pay on the assumption the employee will also be eligible for long service benefits.
  • Notice Periods: These begin the day after the employer tells the employee they want to terminate employment and end on the final day of work. Minimum notice periods apply: One year or less – one week; up to three years – two weeks; up to five years – three weeks; more than five years – four weeks.

Employees over 45 years old receive an extra week’s notice if they have been with the employer for at least two years. Awards, contracts, enterprise (collective) agreements may stipulate longer periods of notice, such as one month rather than one week.

Top Australian Talent

Hiring the right talent in Australia to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process can be complicated when you have no physical presence in China yet. Our PEO and Employer of Record(EOR) service can be the solution for your company. Our comprehensive knowledge of all Australian employment sectors and understanding of the culture and customs guarantee an untroubled transition. Look through our guide to familiarize yourself with everything an employer needs to know about the recruitment process in Australia.

The Recruitment Process in Australia

Unsurprisingly for the world’s sixth largest landmass, with major cities spread hundreds and even thousands of miles apart, recruitment in Australia for employers and jobseekers largely depends on online resources. These include corporate, sector and careers’ websites, ‘job boards’ and social media. Referrals and internal promotions are also factors. Apart from the significant tourism and services sectors, incoming foreigners will need to be highly qualified for industries such as science and technology, engineering, energy, mining, and healthcare.

Recruitment is the first stage of making your company operational and competitive in Australia. It is vital to know where to locate the finest talent to be a perfect fit for your company’s global expansion plans. Foreign companies who decide to ‘go it alone’ on the recruitment road, must follow strict procedures after recruiting staff and launching operations.

These include:

  • Remitting payments for income tax via Pay As You Go (PAYG) and Fringe Benefits Tax (FBT) to the Australian Tax Office (ATO). Thresholds and rates may vary between states
  • Registering with Centrelink for social security support, which is generally restricted to Australian citizens and long-term residents and funded from general revenue rather than by employer and employee contributions
  • Filing tax returns within four months of the end of the tax year, which runs from July 1 to June 30
  • Creating employment contracts

However, the simple answer to avoiding these time-consuming and unproductive demands is to engage Bradford Jacobs as your recruiter through our Professional Employer Organization (PEO) networks. Then, as your Employer of Record (EOR), we will convert your Australian expansion blueprint into an action plan with additional payroll support, including:

  • Calculating employees’ monthly salary and sending their pay slips
  • Submitting employees’ and employers’ wage tax returns
  • Creating and submitting your company’s annual accounts and year-end statements
  • Creating payment schedules for salaries and any insurance contributions (if applicable)
  • Ensuring accurate personal income tax returns are filed for you and your employees, where required

Legal Checks You Can Make on Employees in Australia

Scope: The Fair Work Act, Privacy Act and the Australian Human Rights Act govern most legal checks that employers can make on employees during the pre-hire screening process. Generally, the applicant’s permission is required to verify suitability for employment, and they should be interviewed solely as their experience relates to the position in question.

  • Criminal record checks: May be required to determine suitability for a particular role.
  • Health Checks: Medical checks and examinations may be necessary to confirm fitness for certain jobs.
  • Discrimination: Protection against discrimination both before and during employment comes through a combination of the Age Discrimination Act, Disability Discrimination Act, Racial Discrimination Act, and the Sex Discrimination Act. It is unlawful to discriminate for reasons including age, race, sex or inter-sex status, gender identity and sexual orientation.
  • Qualifications and references: Employers can check relevant references with previous employers but must not request information of a personal nature. It is permissible to check educational qualifications.
  • Credit checks: Can be made only with the applicant’s written permission.
  • Required: Checking that the prospective employee has cleared all immigration and legal requirements to live and work in Australia.

Work Culture

To succeed in business in Australia, it is vital for both employers and employees to have a strong understanding of the business culture. As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Australian work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Australia to start your expansion well-informed.

Work Culture in Australia

Australian professionals seem able to blend a relaxed workplace environment with a strong focus on hard work that produces results. Early starts often go with a willingness to work extra hours, fitting in brief breaks away from their desks or screens for their favorite coffee! A confident and resilient outlook is reflected in an economy ranked 12th in the world with a GDP of two trillion Australia dollars (€1.28 trillion, US$ 1.44 trillion) and a major player among the ‘Pacific Rim’ nations. Australia ranks fourth among Pacific Rim economies while the economic heavyweights of China, US, Japan, South Korea, Thailand, and India also figure as their major trading partners.

The Organisation for Economic Cooperation and Development expects to see growth in Australia GDP in 2022, driven by domestic demand. Apart from the significant tourism and services sectors, incoming foreigners will need to be highly qualified for industries such as science and technology, engineering, energy, mining, and healthcare. This combination of a strong economy, low unemployment and high salaries makes Australia massively attractive – but now it is time to ‘get down to business’ so here are a few tips on taking the right steps … and avoiding the pitfalls!

  • Communication: Interaction tends to be direct but friendly; opinions are freely given with potentially difficult developments frequently defused with a joke or mild profanity
  • Business Meetings: Scheduled meetings start promptly and stick to the allotted time. Arriving late means you are wasting someone else’s time
  • Business Environment: The emphasis is on ‘team’’ rather than hierarchy
  • Negotiations: These tend to be direct, with all levels encouraged to have an input
  • Attitude: Laws on discrimination and guidelines on behavior are expected to be applied in the workplace
  • Punctuality: A largely relaxed work environment does not sacrifice punctuality – Australians start work on time to get the job done
  • Greetings: Handshakes, a friendly open demeanor and using first names are the best ‘ins’ when initially greeting counterparts for a business meeting
  • Dress Code: Suits and dresses are still the norm in the corporate world, with ‘smart casual’ acceptable among creatives. Negotiations also tend to be direct, with everyone encouraged to give an opinion
  • Business Meals: In much the same way that Australians like to separate work from family and leisure time, entertaining business clients to lunch or dinner is not typical

Australia Minimum Wage

Australia’s Fair Work Commission’s annual review raised the basic minimum for full-time workers over 21 years old to AU$772.60 (€497, US$567) per week or AU$20.33 (€13, US$15) per hour, from July 2021 until June 2022. Most employees’ minimum wages are set for the industry or sector where they work, by either Modern Awards or Enterprise Agreements; these cannot undercut the statutory national minimum. The national minimum applies to most private companies in Australia that are regulated by the Fair Work Act (2009) and whose employees are covered by the National Employment Relations System.

Part-time employees are paid the same rate, adjusted pro rata for the hours they work. Casual workers are paid ‘casual loading’ above the minimum rate as they are not entitled to benefits such as sick leave or paid vacations.

Probation Periods in Australia

Probation periods generally last between three and six months, during which the individual has the same rights and statutory benefits as full employees. If the trial is for full- or part-time positions the probationer accrues rights to paid leave and sickness benefit. If the trial period is unsuccessful, the individual must be given notice and be paid for any unused leave.

Working Hours in Australia

The Fair Work Act (2009) decrees an employee’s maximum working week is 38 hours, or 7.6 hours each day. The employer can ask an employee to work reasonable extra hours. This depends on whether, for example, there is provision to pay overtime, or whether the extra hours pose a risk to the employee’s health or personal circumstances. Maximum working hours come under the National Employment Standards and apply to all employees covered by the National Workplace Relations System. The maximum period over which working hours can be ‘averaged out’ is 26 weeks, although employers or employees do not have to conclude an averaging out agreement. Working time fits into a ‘span of hours’ typically between 7am and 6pm.

Legislation allows for the following work breaks:

  • Between 4 and 5 hours – 10-min break
  • Between 5 and 7 hours – 10-min break; 30-60 min meal break
  • Between 7 and 10 hours – 2 x 10-min breaks; 30-60 min meal break
  • More than 10 hours – 2 x 10-min breaks; 2 x 30-60 min meal breaks

Overtime in Australia

Employers can ask employees to perform reasonable amounts of overtime, above their normal working hours of 38 a week or 7.6 hours per day. If employees are not covered by a Modern Award or Enterprise (collective) Agreement setting out their overtime entitlement, overtime pay will depend on their individual contract. Some award or enterprise agreements allow employees time off in lieu of working overtime, instead of extra pay. Typically, overtime pay may be 1.5 times normal salary for the first two or three hours and twice the normal hourly rate after this.

Notice Periods in Australia

These begin the day after the employer tells the employee they want to terminate employment and end on the final day of work.

Minimum notice periods apply:

  • 1 year or less – 1 week
  • More than 1 year to 3 years – 2 weeks
  • More than 3 years to 5 years – 3 weeks
  • More than 5 years – 4 weeks

Employees over 45 years old receive an extra week’s notice if they have been with the employer for at least two years. Awards, contracts, enterprise (collective) agreements may stipulate longer periods of notice, such as one month rather than one week.

Redundancy, Termination /Severance in Australia

These are covered by National Employment Standards (NES). Grounds for termination include mutual agreement, end of a fixed-term contract, termination with or without notice by the employer and resignation by the employee. Employers cannot terminate employment of individuals who have a ‘workplace right’ or take part in lawful ‘industrial activity’. Termination is prohibited on grounds such as race, gender, age, or disability or if the employee is absent due to illness or injury for less than three months in a 12-month period. In the case of 15 or more collective redundancies the relevant government agencies and trade unions must be informed.

On termination, employees’ severance pay should include:

  • Outstanding salary or other remuneration
  • Pay in lieu of notice of termination
  • Accrued annual leave or long service entitlements
  • Balance of any time off taken instead of overtime pay
  • Redundancy pay, if eligible

Termination due to redundancy entitles employees to severance pay based on years of service:

  • Less than 12 months – Zero
  • 12 months to less than 2 years – 4 weeks’ pay
  • 2 years to less than 3 years – 6 weeks’ pay
  • 3 years to less than 4 years – 7 weeks’ pay
  • 4 years to less than 5 years – 8 weeks’ pay
  • 5 years to less than 6 years – 10 weeks’ pay
  • 6 years to less than 7 years – 11 weeks’ pay
  • 7 years to less than 8 years – 13 weeks’ pay
  • 8 years to less than 9 years – 14 weeks’ pay
  • 9 years to less than 10 years – 16 weeks’ pay
  • 10 years and over – 12 weeks’ pay*

The reduction in entitlement assumes employee will be eligible for long service benefits after 10 years’ service.

Employees who have six months service with an employer (or 12 months if the employer has fewer than 15 employees) are usually eligible to claim unfair dismissal, if:

  • They earn less than the high threshold of AU$153,600 (€98,595, US$110,860)
  • They are covered by an awards or enterprise agreement

Employers risk penalties of AU$13,000 (€8,392, US$9,525) per breach for an employee and AU$66,000 (€42,611, US$48,358) per breach for a company if they ignore obligations under workplace legislation.

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