A Practical Guide to Using EOR Services in Australia
If you’re considering hiring in Australia, you’re eyeing a market known for its skilled workforce, stable economy, and robust legal framework. However, diving into the complexities of Australian employment laws can be daunting. This is where an Employer of Record (EOR) becomes invaluable.
An EOR acts as your legal employer in Australia, managing all the administrative tasks such as payroll, taxes, benefits, and compliance with local labor laws. This allows you to focus on what matters most, growing your business and managing your team.
In this guide, we’ll walk you through the key aspects of hiring in Australia using an EOR, including employment laws, payroll, benefits, and more.
Employment Law in Australia: What You Need to Know
Australia’s employment laws are designed to protect employees while ensuring fair and equitable treatment in the workplace. Understanding these laws is crucial to ensure compliance and avoid potential legal issues.
Employment Contracts
In Australia, all employees must receive a written employment contract that outlines the terms and conditions of their employment. This includes details such as job title, duties, salary, working hours, and leave entitlements. The contract should also specify the probationary period, if applicable.
Minimum Wage
As of July 2023, the national minimum wage in Australia is AUD 23.23 per hour. This rate applies to full-time, part-time, and casual employees. Some employees may be entitled to a higher minimum wage based on their industry or occupation.
Working Hours and Overtime
The standard full-time workweek in Australia is 38 hours. Employees can work additional hours, but these may attract overtime pay, depending on their award or enterprise agreement. It’s important to note that employees cannot be forced to work more than 48 hours per week on average over a 12-month period unless they agree to it.
Leave Entitlements
Employees in Australia are entitled to various types of leave, including:
- Annual Leave: 4 weeks of paid leave per year for full-time employees.
- Sick Leave: 10 days of paid personal/carer’s leave per year.
- Parental Leave: Up to 12 months of unpaid leave, with the option to request an additional 12 months.
- Public Holidays: Employees are entitled to a day off on public holidays, with pay, if the holiday falls on a day they would normally work.
Termination and Redundancy
Employers must follow fair procedures when terminating an employee’s employment. This includes providing appropriate notice and, in some cases, redundancy pay. Employees who have been with the company for at least one year are entitled to redundancy pay if their position is made redundant.
Payroll and Taxation in Australia
Managing payroll and taxes in Australia can be complex due to the country’s progressive tax system and various mandatory contributions.
Income Tax
Australia operates a progressive income tax system, with rates ranging from 0% to 45%, depending on income levels. Employers are required to withhold the appropriate amount of tax from employees’ wages and remit it to the Australian Taxation Office (ATO).
Superannuation
Employers must contribute to their employees’ superannuation (retirement) funds. The minimum contribution rate is currently 10.5% of an employee’s ordinary time earnings. Employees can choose their own superannuation fund or use the default fund provided by their employer.
Payroll Tax
Payroll tax is a state-based tax levied on employers with a total Australian taxable wages bill above a certain threshold. The rate and threshold vary between states and territories.
Other Deductions
Employers must also make deductions for other items, such as the Medicare Levy, which helps fund Australia’s public healthcare system.
Benefits and Compliance
An EOR in Australia ensures that your business complies with all local labor laws and regulations. This includes:
- Employment Contracts: Providing legally compliant contracts to employees.
- Payroll and Tax Filing: Managing payroll and ensuring timely tax filings with the ATO.
- Leave Management: Administering leave entitlements and ensuring compliance with statutory requirements.
- Termination Procedures: Handling terminations in accordance with Australian employment laws.
- Employee Benefits: Offering mandatory benefits, such as superannuation contributions and public holiday entitlements.
By partnering with an EOR, you can mitigate the risks associated with non-compliance and focus on growing your business.
Cost of EOR Services in Australia
The cost of using an EOR in Australia varies depending on the provider and the services included. On average, businesses can expect to pay between AUD 199 and AUD 650 per employee per month. Premium services may charge upwards of AUD 1,000 per employee per month, depending on additional features and support levels.
It’s important to consider the value that an EOR provides in terms of compliance, risk mitigation, and administrative efficiency when evaluating costs.
Onboarding Time
Onboarding through an EOR in Australia is typically fast. If your employee has all their documents ready (passport, proof of address, TFN), onboarding can be completed in as little as 1 to 5 business days. Delays can occur if your hire needs to register for a Tax File Number (TFN) or doesn’t yet have the right to work in Australia. Most EORs can guide them through the process if that’s the case.
EOR vs. Setting Up a Legal Entity in Australia
If you’re hiring just one or two people in Australia, setting up a local entity is probably overkill. Using an EOR is quicker, cheaper, and a lot less risky, especially since Australian labor law favors the employee in disputes.
But if you’re building out a full Australian office, or you plan to stay here long-term and hire 10+ people, it might be worth incorporating.
Here’s how they compare:
| Feature | EOR (Employer of Record) | Legal Entity |
|---|---|---|
| Setup Time | 1–5 business days | 2–3 months |
| Initial Cost | Low (monthly per hire) | High (legal, accounting, setup) |
| Payroll & Tax Filing | Done by EOR | You need a payroll team/provider |
| Legal Compliance | EOR takes care of it | You’re fully responsible |
| Contracts & Documentation | Handled by EOR | Must be drafted and maintained |
| Flexibility & Scale | Very flexible | More fixed structure |
| Best For | Fast hiring, small teams | Long-term investment, larger ops |
What We’ve Seen in Practice
From what we’ve seen, most startups and mid-sized companies use an EOR when entering the Australian market. It lets them hire fast without opening a local entity or dealing with the ATO directly.
Some later switch to a legal entity once they grow, but many stick with an EOR long-term, especially if they’re only hiring a few Australian-based employees.
If you need to get boots on the ground quickly, or just want to test the market before fully committing, an EOR is hands-down the easiest way to do it.
By understanding the key aspects of hiring in Australia and partnering with a reliable EOR, you can ensure compliance, reduce administrative burdens, and focus on growing your business in this dynamic market.
