Employee benefits in Australia: All you need to know

Today, hiring abroad is easier than ever. Tapping into talent worldwide has proven critical for many companies' business growth. Australia has a wealth of skilled professionals with depth and expertise across financial services, mining, biotech, and medical research in particular.

The unique timezones down under can be an attractive point of difference for companies looking to offer around-the-clock customer service. Aussie workers become an attractive choice for employers in this instance as they cover the difficult APAC zone.

Forward-thinking and globally-minded employers are looking to break into this previously under-valued marketplace for talent as remote work makes collaboration across continents easier than ever.

However, Australian employment regulations are strong and unique. Before making an offer to an Australian candidate, employers must become fluent in local labor laws, particularly in relation to developing a compliant and attractive benefits package.

In this guide, we will cover everything you need to know about the mandatory benefits you must provide under Australian legislation, as well as the additional benefits employees are seeking in the local market. We'll address:

• How to classify Australian workers correctly to determine who is entitled to what benefits

• The statutory benefits you’re obligated to provide

• Additional perks that’ll help you get attract top-shelf candidates

• Why you need to start using an employer of record (EOR) to simplify hiring, onboarding, and paying Australian team members

Who is entitled to benefits in Australia?

Employment laws apply to Australian nationals who work primarily in the country. Full-time and part-time employees are entitled to statutory benefits, while casual workers may have reduced benefits.

In some cases, an Aussie worker who resides outside the country but has an employment contract created in Australia with an Australian company may also be entitled to benefits.

Foreign nationals employed in Australia are protected by the country's labor laws, too, even if their employer is based elsewhere.

Employee vs. independent contractor classification

Like many other countries, Australia legally distinguishes between different types of workers. These distinctions include:

• employees

• independent contractors

• sole traders

• directors

• officers of a corporation.

The main thing to be aware of here is that while employees are entitled to benefits and tax contributions, independent contractors are not. However, independent contractors have more flexibility around how, when, and where they work.

Employers must understand the nuances of this delineation.

Regardless of whether you view a worker as an employee or a contractor, legislators will make the only determination that matters.

If you’re found to have an employee relationship and you’ve failed to provide the required statutory benefits – you’ll open your company up to the serious risks of misclassification and subsequent fines or penalties.

For more detailed information about understanding this concept, be sure to read our dedicated guide to misclassification.

Offering benefits for Australian contractors

Classification legislation shouldn’t deter you from offering a benefits package to Australian contractors just because these entitlements aren’t mandated.

If you value your contractors, benefits can build strong trust and connection with your business, especially in a remote context. You do still need to be careful of triggering permanent establishment or misclassification dangers with the type of benefits you provide.

Value-based benefits like paid time off, flexible working hours, and parental leave provisions can often keep you on the safe side of this legislation (more on this in our guide to offering benefits to international contractors).

An employer of record (EOR) like Remote should be able to give you more specific advice to minimize associated risks according to local employment laws.

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What are Australia's statutory and common employee benefits?

Statutory benefits, also known as mandatory benefits, are entitlements that employers are obligated by law to provide to their employees. Common examples include benefits like paid annual leave, parental leave, worker's compensation insurance, and paid sick leave.

Hiring down under means adhering to Australia's labor laws, chiefly the federal Fair Work Act 2009 and the National Employment Standards (NES). This legislation lays out Australian employee benefits and rights, as well as employer requirements.

Employer tax contributions

Employers must pay specific tax contributions on behalf of employees, including:

• State payroll tax ranging from 4.85% to 5.5%

• Relevant regional contributions

Tax rates range between regions. Discover what specific rates for each state and territory on Remote's Australia country employment guide.

Superannuation – Australia’s retirement pension plan

Superannuation is a mandatory pension scheme that employers must pay for their Australian employees.

There are different suppliers for these plans, and employees have the right to select the one they prefer. Alternatively, they can enroll in an approved Group Superannuation plan.

Minimum requirements for employer superannuation payments are 10.5%. Employers must pay this minimum contribution, known as the Australian Super Guarantee, on salaries up to $57,090 Australian dollars (AUD) per quarter, and it will increase to 12% by 2027.

Many employers pay more than the minimum superannuation requirements, following standard contributions in their industry.

This is a common additional benefit in the Australian workplace. Although it isn’t expected, this type of extra contribution signals genuine care for the future of the employee and their family. You’ll find success in incentivizing candidates to favor your offer over that of a competitor with this kind of offer.

Leave entitlements

All employees should receive at least 20 holiday days per calendar year. This is true for both full-time and part-time workers, although not casual workers.

Employees are also entitled to take the eight national public holidays and additional territory ones. Public holidays include the following, although each Australian state may recognize extra local holidays:

• New Year's Day

• Australia Day

• Good Friday

• Easter Monday

• Anzac Day

• Christmas Day

• Boxing Day

Long service leave

Employees who complete 10 years of service with an employer can legally claim 13 weeks of long service leave. They are also entitled to 1.3 weeks of long service leave for each additional year they work with the employer. They can only take this after another five years of service.

Long service leave can apply to full-time, part-time, or casual workers. Regulations can differ between territories.

Maternity and paternity leave

The Parental Leave Pay (PLP) scheme in Australia governs parental leave in Australia. It is paid by the government, although employers should distribute the funds to eligible parents in their pay cycle. No business is exempt from the scheme.

The PLP scheme offers:

• 18 weeks pay at the national minimum wage to the primary carer

• Up to two weeks pay at the national minimum wage to eligible fathers

What are the eligibility requirements?

• Employees with 12 months of service for an employer

• Available to part-time and casual employees, too

This is a middling provision, and significantly lower in relation to more progressive Scandinavian and European parental leave programs.

Foreign employers should take notice here and consider offering additional parental leave provisions as part of a customized benefits plan to attract Australian workers looking for more security and work-life balance in this area.

An employer of record like Remote can facilitate this benefit and simplify the execution with tailored employment contracts for Australian employees.

Sick and carer's leave

According to the NES, employees are entitled to paid sick leave when they cannot work due to illness or injury. A worker can also take paid carer's leave to care for an immediate family member or a household member who is sick.

These two allowances fall under the same entitlement. This entitlement has a maximum of 10 days for full-time employees. It is pro-rata for part-time workers and does not apply to casual employees.

Minimum wage

Australia has a high minimum wage, contributing to the high quality of life. Employers should adhere to minimum wage requirements, which are as follows:

• Employees under 21: $9.13 (AUD) per hour

• Employees over 21: $19.49 (AUD) per hour

Overtime

According to NES, working hours in Australia should not exceed a maximum of 38 hours per week. Overtime pay can vary depending on the industry and what is in the contract. But usually, employers pay overtime at a higher rate than the standard salary.

In general, it is calculated like this:

• First two or three hours of overtime: 150% pay

• Additional hours of overtime: 200% pay

Overtime rates may vary in the following cases:

• On Saturdays and Sundays

• For shift workers

• On public holidays

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Additional employee benefits attractive to Australian workers

Statutory benefits represent a legal obligation. However, Australian talent is in high demand, and the bare minimum is unlikely to yield success if you intend to lure top talent to your team.

A tailored and tactical approach to the local market will help you attract and retain top talent without wasted expense on standardized global benefits that might not be so highly valued in Australia.

Remote’s team of APAC employment specialists have pulled together a shortlist of perks you could consider adding to your benefits package for workers in Australia.

(The prospect of customizing a benefits package for each local market might sound daunting, but an EOR like Remote can simplify, manage, and automate this process so you don’t have to worry.)

Health Insurance

Businesses that offer health insurance plans can be attractive to Australian workers, especially after tax increases in recent years. The Australian government has instituted a Medicare Levy Surcharge (MLS).

The levy is designed to encourage people earning higher wages to set up their own private health cover to ease the burden on the public health system. This also presents an opportunity for employers looking to gain an edge with a strong benefits offering.

Remote urges global employers to offer health insurance provisions to give more premium options to employees and although this benefit is not expected in Australia, leading local companies offer health insurance to attract and retain skilled professionals.

Offering a comprehensive medical insurance package can be a big draw for workers in Australia. You might also consider including bulking up this offer with other services that further demonstrate your care and commitment as an employer:

• Dental insurance

• Optical insurance

• Mental healthcare benefits (like meditation, yoga, or therapy allowances)

• Gym or health club memberships

Life insurance

While obligatory superannuation plans will offer at least minimal life insurance and disability coverage, it is typical to offer higher levels of protection. This is why offering a personal insurance plan with more in-depth coverage can be a big draw.

The employer can also pay for group life insurance plans with significant discounts. This option can have cheaper premiums and make it more affordable for the employer.

Personal development programs

Offering further education or personal advancement is a very common benefit that is increasingly popular with Australian employees.

As priorities shift away from explicit monetary benefits like bonus payments and salary increases, learning and development schemes send a strong message that you are prepared to invest in the growth of you team.

To stand out amongst other employers, you might want to consider offering benefits that help employees advance in either their career or personal life. Some options include:

• Study leave or financial support for course costs

• An individual learning and development budget

• Structured mentorship programs

• Business or leadership coaching

Offering support for personal growth and learning new skills can help you retain talent into the future.

Company car

In specific highly paid industries such as finance and IT, offering a company car and a fuel allowance is common in Australia. Depending on your industry, you may consider offering this supplemental benefit to stay competitive with leading local employers in your sector.

Child care

Childcare is extremely pricey in Australia. Traditionally employers do not support employees with benefits in this area. But for workers with children or grandchildren – financial assistance (or even provision for more flexibility in this area) will be welcomed with delight.

Foreign employers have a significant advantage in Australia with the ability to provide flexible working hours and a stronger focus on work-life balance. If you can demonstrate your ability to help Australian parents manage their workload and home responsibilities more easily, you’ll likely find loyalty and motivation in return.

Additional time off

Workers appreciate flexibility and lifestyle-related benefits, particularly in Australia where there is a strong culture of appreciation for travel. Offering additional paid holiday will be attractive to many workers, and with statutory annual leave at just 20 days, some extra time off will not impact productivity significantly.

If you don't have the budget to offer more paid leave, offering the option for employees to essentially 'buy' extra holiday days in return for a day's salary is becoming a more popular benefit in Australia.

Additionally, the Southern Hemisphere nation slows down almost to a halt over late December and early January with many workplaces closing for one to two weeks. Offering this time as additional leave will be highly prized for local employees. This period can often be offset for global employees where Northern Hemisphere team members can commonly work and pick up the slack.

The reverse is true too. Australian employees seldom take vacation time during the popular European and US summer holiday months of July and August.

Value-based benefits to attract local employees

Don't fret if you are a small company without a huge budget to throw at potential candidates. It is possible for you to offer a range of less expensive benefits that are both locally attractive and low cost. Some benefits that will sweeten the deal for Aussie candidates may include things like:

• Volunteering time

• Birthday leave

• Home office allowance

• Meal and travel expenses

• Gym memberships

Offering perks that improve candidates' wellbeing, mental health, or happiness will be beneficial in the long run. This is especially true down under, where the weather is consistently warm. Australians love the outdoors and are conditioned to exercise. Smart benefits like pool memberships, or social sport sponsorship are common but unique to the island nation. These perks will ultimately boost employee satisfaction, improve performance, and increase loyalty.

For more information, check out Remote's small business benefits guide for offering benefits on a budget.

Flexible work schedule

A recent survey about families and the Australian workforce revealed that 67% of Australians regularly work from home — that number was roughly 42% before the Covid-19 pandemic.

As workers continue to look for and value freedom in where and how they work, offering flexibility as an employee benefit is such a simple provision that can set you above the rest in a competitive sea of employers.

How can you set up and manage benefits for international employees?

Managing and setting up remote benefits for employees can be daunting, especially for HR managers who are unfamiliar with global hiring.

You must stay compliant with statutory benefits as failing to do so can lead to financial penalties and legal problems. You also need to stay competitive with other local employers by designing an attractive employee benefits package for your workers in Australia (while still maintaining equity with your packages for employees in other countries.

These challenges call for the support of an employer of record.

Working with a global employment partner, like Remote offers you the ideal solution to minimize risk and ensure compliance. Remote’s purpose-built software is intuitive and easy-to-use, and comes with the support of a huge team of global HR, legal, and finance experts to take responsibility for your international employment needs.

Remote can help you simplify your whole HR process while allowing you to make the most of international talent to grow your business.

The smart global HR solution to grow your team with ease

There are many layers and intricacies to Australian labor law and legislation that make staying compliant risky and time-consuming for employers.

Through its Employer of Record (EOR) service, Remote can take care of this for you by:

• Compliantly managing all statutory legislation and benefits

• Creating attractive, country-specific benefits packages to attract top global talent

Working with a global EOR will not only help you manage benefits. This type of partnership will also allow you to:

• Quickly onboard remote talent all over the world

• Hire compliantly without an established legal entity in the country

• Comply with local labor laws

• Make international payments

• Manage time off

• Reduce liability and avoid penalties and fines

• Manage global HR all from one place

(If you are unsure if this is the right solution for you, and you’d like some more background information about EORs, you can read Remote's guide on when you should use an employer of record.)

With fully-owned legal entities and local experts in each country of operation, Remote is the safest option to guide your global hiring.

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