How to use an Employer of Record in Australia

Australia’s robust economy, high standards of living, and thriving tech and services sector, all make the country a favorable location to find highly skilled talent. But to hire employees in Australia, you’ll have to set up a local entity, create a bank account, deal with a mountain of paperwork, and do all the regulatory legwork required to hire in the country.

International hiring doesn’t have to be complicated, though. You can use an employer of record (EOR) to hire, pay, and manage workers on your behalf, without having to open an entity in Australia. But there’s a lot to learn about how EORs work, and how they can help you build your international team quickly.

This article will explain how to use an EOR in Australia to expand globally. Our guide will take you through how an EOR works, costs, benefits, and how to choose an EOR that offers the best value for money.

Six steps to hiring employees in Australia using an employer of record

An employer of record is a company that officially hires your remote employees (on paper) while they work for you. The right EOR will help you grow your team in Australia quickly while remaining compliant with employment laws. 

Follow these six steps to choose the right EOR for your business needs. 

Step 1: Weigh up the pros and cons of each potential partner

Start by making a checklist of features you will need to start hiring internationally, such as:

• A local entity that qualifies you to hire in Australia

• A team of local experts that understand Australian laws and regulations around taxes, compensation, and benefits

• Fast onboarding for new hires

• A modern payroll stack that ensures employees are paid on time

• Managing compensation and benefits like health coverage, vacation, and pensions

• Intellectual property protections

• Adequate provisions for terminating employees if required

You can then create a shortlist of EOR providers and grade them individually against the above features to figure out which best suits your international hiring needs.

Step 2: Take the time to select the most appropriate EOR service provider 

The ideal employer of record partner should own their own local entity that’s authorized to hire in Australia, rather than depend on external providers for some or most of their services. Relying on third-party providers might be favorable for the EOR in terms of costs and convenience, but it might not be ideal for you. That’s because costs could fluctuate depending on partner agencies that may change prices arbitrarily. Moreover, since your employee information is shared externally with other partners, there’s a chance that your data may not be adequately protected.

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

It’s always worth checking out reviews and online press coverage of your shortlisted providers to glean insights into their operations. A quick look at third-party review sites like Trustpilot, GR2, or Capterra, can reveal useful information about an EOR’s quality of service.

Step 4: Ensure that the EOR solution for Australia will provide a best-in-class employee experience

Your employer of record will serve as your employee-facing brand and will typically handle payroll, benefits, and all the paperwork that goes into running an international team. That’s why it’s important to ensure the EOR can provide the best employee experience possible, including:

• Paying salaries on time

• Resolving employee queries quickly, and

• Providing explanations if required while making payroll deductions or withholding taxes

Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package 

To find and keep the best talent, make sure that you offer a modern benefits and compensation package that considers local employment laws, as well as the individual’s experience, role, and skill level. Keep in mind that salaries for remote roles are often dynamic and can vary depending on location, skill, and experience. An EOR can assist you with benchmarking salaries and help you work out a competitive global benefits package to help you attract great candidates without breaking the bank.

Step 6: Make sure your partner has strong protections for your data and intellectual property

Your EOR needs to have solid protections in place for your company and employee data and intellectual property, or you could put yourself at risk of security attacks. Choose an EOR that will guard your IP and maintain data security for your business by offering the highest security compliance standards.

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What are the benefits of using an employer of record in Australia?

Hiring from Australia is a labor-intensive process that can be expensive and time-consuming. Moreover, there are dozens of labor regulations you’ll have to follow and remain compliant with or risk getting into legal trouble.

An EOR can reduce the work required to hire in Australia by taking on the legal responsibilities of hiring and managing workers. Some benefits of using an EOR in Australia to scale your team include: 

• Handling employment paperwork and drafting employment agreements

• Onboarding new hires quickly

• Managing your benefits administration

• Making sure your employees are classified accurately to avoid fines and penalties

• Managing payroll to ensure your employees are paid on time

• Filing taxes and levies with the appropriate authorities, and

• Assisting with terminating employees

• Securing your intellectual property and invention rights

Using an EOR in Australia can help you grow your international team quickly and efficiently, without spending exorbitantly or having to jump through regulatory hoops. If you’re thinking about whether an EOR is right for your business, read our article on when to use an EOR.

How much does it cost to use an EOR in Australia?

The cost of an EOR service depends on the kind of services required, the number of workers you want to hire, and where you wish to hire them.

Typically, the older, legacy providers charge enterprise rates that could be from $1,600 per employee per month or based on the percentage of the employee’s salary. If you’re working with a provider that charges a percentage of the employee’s salary, costs can quickly get out of hand. You might find that these older EORs often offer limited services. You might end up paying for several services in addition to theirs just to maintain your remote team.

While smaller EORs may charge less, they usually don’t support enough countries to scale your international team. You also have to check whether they offer robust security and compliance standards, which is essential for international hiring.

An EOR like Remote offers the best of both worlds. For a flat fee, Remote offers everything you need to scale your remote team: payroll, benefits, compliance, and an unrivaled onboarding experience.

Learn how Remote compares with the competition and how we can help you get set up to hire in Australia quickly and efficiently.

Hiring in Australia

Much of Australia’s employment rules are contained in the Fair Work Act, which covers provisions for workers’ compensation, benefits, termination, and acceptable labor standards. Our guide to hiring in Australia further elaborates on how you can navigate labor laws as you expand your remote team.

Employment contracts and agreements in Australia

Written (physical and electronic) and verbal contracts are equally valid under Australian law and typically contain the terms of engagement, such as:

• The name of the employer

• Job title

• Date of commencement

• Employment type, i.e., ongoing, fixed-term, or casual

• Effective working hours

• Leave entitlements such as personal leave and annual vacation

• Effective compensation, i.e., salary, bonuses, etc.

• Notice periods

• Termination benefits

• Non-compete clauses, intellectual property provisions, privacy policies, etc.

Labor compliance in Australia

Employers are required to provide a safe and healthy working environment (physical and virtual alike) where their workers' rights are protected to ensure they can carry out their duties effectively without any undue physical, mental, or financial stress.

From protecting employees against discrimination to adhering to collective bargaining agreements your employees may be covered by, employers have a wide range of responsibilities. 

Key Australian labor standards include:

• Protecting employees from any form of discrimination or harassment due to race, religion, nationality, ideology, political affiliation, sex, financial, social, or physical condition

• Limiting working hours to eight hours daily

• Providing dignified and safe working conditions in line with Australia’s Work Health and Safety Act 2011

• Paying employees a premium (50% – 100% extra) if they’re required to work overtime

• Giving employees the necessary training, resources, and mentoring they need to work safely and efficiently

• Reporting any workplace incidents and injuries to Safe Work Australia, and

• Meeting first aid requirements

Payroll and payroll taxes in Australia

Australian income taxes are capped at 45% and are to be withheld by the employer, while employee payroll taxes range from 4% – 6.1% depending on the state and income tax bracket.

Employment benefits and compensation in Australia

Australian law requires companies to provide a wide range of benefits to their employees. With remote work going mainstream, you’ll need more than just a generous salary to attract top talent to your company.

Maternity and paternity leave

Expectant mothers or primary caregivers for newborns or newly adopted children are entitled to 18 weeks of paid parental leave and up to two years of unpaid leave.

Fathers are entitled to two weeks of paid paternity leave with benefits paid by the Australian Government.

Vacation and holidays

Salaried employees are entitled to four weeks of paid annual leave, while shift workers receive five weeks off per year.

Severance pay and employee terminations in Australia

Employers generally can’t terminate employees without prior notice, although they can provide payment in lieu of notice. Notice periods range from one week for employees with less than a year of service to four weeks for workers with five or more years of tenure.

Severance pay ranges from four weeks' pay for employees who’ve been employed for up to two years, to 16 weeks’ pay for employees who’ve been working for up to ten years.

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What are the risks of employee misclassification in Australia?

Australia enforces several penalties for misclassifying employees as independent contractors and if found guilty, you’ll be liable for several sanctions such as:

• Paying an employee’s total PAYG withholding taxes for the period they were misclassified

• Paying (with immediate liability) all unpaid Superannuation pension contributions, equal to 9.5% of all wages paid until that point, a 10% interest, and an additional guarantee of up to 100%

• Fines of up to $66,000 per violation, and

• Paying any back taxes, statutory benefits, and social contributions

Misclassifying your employees can lead to severe repercussions. To mitigate misclassification risks, you can partner with an EOR that’s well-versed in Australian employment law, to help you classify and compensate employees accordingly.

Get started with an employer of record in Australia

There are solid benefits to hiring beyond borders — cost savings, employee productivity, and diverse teams — to name a few. But, international hiring is not an easy process. From dealing with the logistics of opening a local entity to managing employment contracts, taxes, compliance, security, benefits, and payroll — you’ll have to spend a significant amount of time and resources to stay on top of it.

A reliable employer of record like Remote can help you expand globally by handling every aspect of hiring, onboarding, and paying employees in Australia. Remote simplifies global hiring by offering the full suite of services needed to hire and pay workers abroad. These include:

• Fast onboarding — get your employees set up to start working in 14 days

• Global payroll to pay anyone anywhere in the world

• Modern benefits administration for healthcare, dental, paid time-off, etc.

• Guidance from a team of legal experts that'll help you stay compliant with Australian labor laws and tax legislation

• Iron-clad data security and IP protections

Get started with Remote and onboard employees in Australia today! Or learn more about how Remote’s employer of record services can grow your remote team quickly and efficiently.

Read Remote's expert guide to hiring in Australia

Use our expert hiring guide for information on local benefits, taxation, and compliance requirements to help you employ in Australia with ease.

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