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Everything You Need to Know About Employing in Australia

In a time where people are encouraged to stay home and practice social distancing, remote work and distributed teams have never been more prevalent. Physical offices and physical presence have proven to be not as essential as many people thought, leaving many employers seeking top talent without physical boundaries and restrictions. One of the countries people also look at for hiring a remote employee is Australia.

In this article we’ll be covering everything you need to know about employing talent from Australia, including the hiring process in Australia, local labor hire licensing requirements, and more. Check out the FAQs below:

1. Why do people hire remote talent from Australia?

Australia has one of the world’s largest mixed-market economies with strong links to both Southeast Asia and the West, making it a gem for employers looking for connections in both markets. Australia has one of the largest economies in the world, ranking 13th overall with its GDP at 1.39 trillion USD in 2019.

Another reason employers look for talent in Australia is their English proficiency. Being a native English speaking country, this puts Australian employees at an advantage compared to other non-native English speaking countries.

It should be noted that hiring talent from Australia is not as cost effective as hiring talents from Southeast Asia. However, the high quality of life, well-educated workforce, and welcome approach to incoming businesses are all advantages to hiring Australian remote talent that can outweigh the higher costs.

2. Where do I look for remote talent in Australia?

When looking for the best places in Australia to hire remote talent, you typically want to hire talent from the following regions:

  • ~Canberra
  • ~Melbourne
  • ~Perth
  • ~Sydney

These regions have a higher economic activity compared to the rest of Australia, and have larger business hubs. Getting graduates from the following top universities in the country is also a plus:

  • ~University of Melbourne
  • ~University of Sydney
  • ~University of Queensland
  • ~Australian National University
  • ~Monash University
  • ~The University of Western Australia

Another way to hire talent is to post listings on popular job sites and portals or hire through a trusted recruitment agency. In Australia, the most popular job portals and recruitment agencies are:

3. What is the average salary of an Australian remote employee?

While the average daily minimum wage in Australia is at AUD 753.80 (USD 584.55) per month or AUD 19.84 (USD 15.39) per hour. Here’s an approximation of the average monthly salary for seven different positions:

Job Title Average Salary Range (AUD) Average Salary Range (USD)
Financial Accountant 7,500 – 9,583 5,700 – 7,283
Engineer (Tech & Transformation) 11,667 – 15,833 8,867 – 12,033
Software Developer 9,583 – 12,917 7,283 – 9,817
Data Analyst 5,417 – 11,667 4,117 – 8,867
UX Designer 6,667 – 12,500 5,067 – 9,500
Product Manager 10,833 – 14,167 8,233 – 10,767
Sales Executive 4,583 – 6,667 3,483 – 5,067

4. What are the computations for income tax in Australia?

Annual Net Taxable Income (AUD) Tax Rate (%)
0 – 18,200 0%
18,201 – 37,000 19%
37,001 – 90,000 32.5%
90,001 – 180,000 37%
180,001 and above 45%

For more information about income tax, you can visit this website here.

According to a 2015 study done by global communications marketing firm, Edelman, approximately 4.1 million Australians did some freelance work that year. Fast forward more than 5 years with the rise of social distancing and pandemic measures, this number is sure to have inflated.

While freelancing has quickly become a growing career trend in Australia, one risk of hiring freelancers or independent contractors is their compliance with local tax laws. Without a local registered company withholding income tax for them, freelancers may fail or forget to pay their income tax. (See the other risks of hiring an independent contractor here.)

You can help your Australian employee comply with local taxation laws by using Professional Employer Organizations (PEOs) like Multiplier who will take care of payroll and taxes for you.

5. What are the working hours in Australia?

The statutory number of working hours per week in Australia is 38 hours. However, an employer can make requests to employees to work hours in excess of this, or to allow the 38-hour weekly limit to be applied as a rolling average across a longer period, so long as their requests are deemed reasonable. Take note that there is no formal definition of what is deemed ‘reasonable’, and that employees generally work overtime hours to complete a certain task or project related to their job as stated in their employment contract.

Employment hours and conditions are outlined in the 2009 Fair Work Act as well as the Industrial Awards. Awards are either industry-based or occupation-based. If employees are covered by the Industrial Awards, they have a right to overtime pay. As a general rule of thumb, overtime is paid to those who work more than 38 hours a week, more than 10 hours per day, and those who work on a weekend or public holiday.

There is no set rule for the calculation of overtime pay in Australia. This is usually created with reference to the Industry Awards, and agreed upon in an employment contract. Another standard for the calculation for overtime pay is as follows:

Period of Overtime Hourly Salary Paid (%)
Normal days 150%
Normal working hours on a holiday 200%
Overtime on a holiday 300%

Industry Awards also indicate the maximum period of time employees can work without a break and the minimum break to occur between periods of duty or shifts.

6. What benefits am I required by law to provide an Australian employee?

13th month pay: Unlike countries such as the Philippines or Indonesia, a 13th month pay cycle is not mandatory in Australia.

Annual Leaves: According to the National Employment Standards (NES) in Australia, every Australian full-time employee is entitled to 4 weeks of paid leave per year, while employees who work in shifts should receive 5 weeks of paid leave per year. Annual leave accrues over a year according to the employee’s ordinary hours of work.

Sick Leaves: All full-time Australian employees (not including casual employees) are entitled to a minimum of 10 days paid personal leave each year. These days can be used for time off for sickness or can be taken as a personal leave should they need to care for an immediate family member who is sick, injured, or has had an unexpected emergency. 

Family Leaves: 

Maternity Leave: Female employees are granted 12 months of unpaid maternity leave after working for 1 year with their employer. However, there are also companies that provide paid maternity leave upon their own discretion. Female employees can start their maternity leave up to six weeks before the expected date of birth. If the employee is not giving birth to the child, leave starts on the date of birth or placement of the child. Employees may also apply to the Federal Government Scheme which provides 18 weeks of paid maternity leave.

Paternity Leave: Male employees are granted 5 days of unpaid paternity leave at the time of birth or adoption of the child. Fathers may also apply to the Federal Government for additional paid leaves.

Parental Leave: Includes maternity and paternity leave, as well as leave for when a child is adopted.  To be eligible, an employee must have completed at least 12 months of employment. Parental leave is an unpaid leave that lasts for 12 months, and it is possible to request an additional 12 months from the employer.

Bereavement Leave: Australian employees may take up to 2 days of unpaid leave under ‘compassionate’ grounds due to the death of a family member.

Family and Domestic Violence Leave: All employees (including part-time and casual employees) are entitled to 5 days unpaid family and domestic violence leave each year. 

Other Leaves: Australian employees are also entitled to other leaves at the discretion of the employee and employer, which include the following:

Long Service Leave: An Australian employee is entitled to a long service leave after a long period of working for the same employer. If the employee has been working for the same employer for 10 years, they are entitled to 2 months (8.67 weeks) paid leave, to be paid at your ordinary gross weekly wage under the NSW Long Service Leave Act 1955 (the Act).

Community Service Leave: Employees (including casual employees) can take community service leave for jury duty (including attendance for jury selection) and voluntary emergency management activities. Apart from jury duty, community service leave is unpaid. An employee is entitled to take community service leave while they are engaged in the activity and for reasonable travel and rest time. There is no limit on the amount of community service leave an employee can take. An employee who takes community service leave must give their employer notice of the absence as soon as possible (this may be after the leave starts), the period or expected period of absence. An employer may request an employee who has given notice, to provide evidence that they’re entitled to community service leave.

Insurance and social security: There is no social security in Australia. However, employers are required to contribute 9.5% of an employee’s base earnings to a registered superannuation fund or retirement savings account on the employee’s behalf. The minimum rate will increase to 10% from July 2021, and possibly up to 12% by 2025.

Employer Payroll Tax:

Type of Tax Contribution (%)
Payroll Tax 4.85%
Medicare 1%
Superannuation 9.5% (capped at AUD 21,002.06 per year)

Employee Payroll Tax:

Type of Tax Contribution (%)
Medicare levy 2%

Australian employees are required to pay a 2% Medicare levy on their taxable income to help provide Australian residents access to public health care.

7. What other benefits or allowances can Australian remote employees be given?

While not mandated by law, it is quite common to provide non-taxable allowances for your remote employees, and it's expected by the employees. These can include stipends for business and equipment expenses, internet and telecom allowances, and even transportation allowance – if your remote employee works from a co-working space. If you work with a PEO platform like Multiplier, they can arrange for other benefits and allowances for your Australian employees for you.

8. What are the regulations on working during the holidays in Australia?

Australia has a total of 7 public national paid holidays for 2021. However, there are additional holidays depending on the region from where the employee works or is based. If you require your Australian employee to work on a weekend, rest day, or holiday, refer to the table under FAQ #5 to calculate overtime payment. For an updated list of Australian holidays, click here.

9. How do I hire a remote employee in Australia?

If your business is registered in another country, the easiest way to hire an Australian remote talent would be through a Professional Employer Organization. PEO platforms like Multiplier make it easy for you to hire remote talent, comply with local labor laws, and pay your employees in time. Instead of having to jump through the legal and financial hoops of setting up a business entity in another country, Multiplier will act as your representative and abide by all the necessary laws for you.

If you want more details on how to hire a remote team legally, you can check out our article here.

10. Are probation periods necessary?

The 2009 Fair Work Act 2009 does not explicitly refer to probation periods. This means that probation periods are not mandatory in Australia. However, an employee must have worked for their employer for at least 6 months before he or she is entitled to make a claim for unfair dismissal, and 12 months if the employer is a small business (company with less than15 employees).

The probation period is also known as the “minimum employment period”, with employees typically receiving the same entitlements as someone who isn’t on probation. This includes receiving notice when employment ends and having their unused accumulated annual leave hours paid out even if they fail the probation.

11. How do I pay an Australian remote employee?

Australia does not follow a strict payment cycle as employees can get paid bi-weekly (every second week), bi-monthly (15th and 30th), or monthly (28th to 30th). The easiest way to pay your Australian remote talent would be through PEO platforms like Multiplier. With a PEO platform, you won’t have to worry about payroll or compliance with local taxes and labor laws as they will be taking care of everything for you. Take note that the payment cycle should be agreed upon by both the employer and the employee beforehand.

12. Can Australian remote employees be paid in foreign currencies?

Generally speaking it is preferred to pay your Australian remote employees in their local currency. This helps make tax calculations and contributions to benefits such as healthcare, pension, and more easier.

Agreeing on a flat rate in Australian dollars is also beneficial in that it helps to avoid fluctuations in conversion rates. If you use a PEO platform like Multiplier, they will provide your Australian employee with a fixed rate, make sure your employee is paid in their local currency, and take care of the employee’s taxes as well.

13. How do I terminate an Australian remote employee?

The reason for termination in Australia depends on the years of employment, company size, and type of employment.

Years of Employment Company Size Employment Type Reasons for Termination
Less than or equal to 6 months Less than or equal to 15 employees Permanent No specific reason is needed
More than 6 months More than 15 employees Permanent A valid reason is needed
Up to 12 months Less than or equal to 15 employees Permanent No specific reason is needed
More than 12 months More than or equal to 15 employees Permanent A valid reason is needed
Less than 12 months N/A Temporary/Casual No specific reason is needed
More than 12 months N/A Temporary/Casual A valid reason is needed

Employees dismissed in the first 6 months of employment (or 12 months of employment if employed by a small business) cannot make a claim of “unfair dismissal” to the Fair Work Commission.

Notice periods are also determined by the duration the employee has been employed:

Years of Employment Notice Period
Less than 1 year 1 week
1-3 years 2 weeks
3-5 years 3 weeks
More than 5 years 4 weeks

If the employee is over the age of 45 and has been employed for at least 2 years, they are entitled to an additional week of notice.

Severance pay is given based on a continuous period of service, and the pay rate is given for ordinary hours worked:

Years of Employment Amount of Severance Pay
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

The 2009 Fair Work Act 2009 provides that the grounds for dismissal can include capacity, performance, misconduct (including serious misconduct) and redundancy. In addition to a valid reason for dismissal, the dismissal must be fair, in that it is not “harsh, unjust or unreasonable”. The Fair Work Act also states that employees must not be dismissed on the basis of a protected attribute or as retaliation for exercising a workplace right. Employer obligations in relation to termination of employment may also be contained in awards, enterprise agreements and contracts of employment. 
Learn more about how you can easily hire remote talent from Australia with the help of Multiplier. You can visit our website or contact us today.

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