How to hire employees in Australia

Hiring an employee in Australia means either setting up an Australian entity and registering with the Australian Taxation Office (ATO) to run payroll, or engaging an employer of record (EOR) that employs the person for you. The first is the right foundation once you plan to build an Australian team; the second gets a first hire working without a local company. Capstan does not offer EOR services, so if that is the route you need, engage a provider directly.

Australia has a single national employment framework, which sounds simpler than it is: the framework sits on top of a large set of industry awards, and superannuation is a compulsory employer cost that surprises first-time employers from other markets. This guide is a conceptual map, not a rate card. Rates, thresholds and rules change, so confirm current figures with Australian counsel or an Australian payroll provider before you rely on them.

Entity or employer of record

If you set up an Australian entity, you register for PAYG withholding (and typically obtain an Australian Business Number), remit tax to the ATO, and carry the employment yourself. That is worth doing once you intend to hire more than one or two people or stay for the long term.

If you are not ready for that, an EOR employs the person under its own Australian entity, runs their payroll, superannuation and statutory obligations, and invoices you. You direct the work; they hold the employment relationship. It costs more per head and gives you less control, and it is a reasonable bridge for a first hire. In both cases the person is an employee with rights under the Fair Work system, not a contractor.

PAYG withholding and superannuation

Every Australian payroll run withholds income tax and reports it, and pays superannuation separately. You do not need to run the maths, but you should recognise the pieces, because they shape what your payroll provider needs each cycle.

PAYG withholding. Income tax is withheld from each pay based on the employee’s circumstances and tax file number declaration, and remitted to the ATO, with reporting through Single Touch Payroll.

Superannuation guarantee. On top of wages, the employer must contribute a legislated percentage of ordinary earnings into the employee’s super fund. This is not deducted from pay; it is an additional cost, and the rate has been increasing on a set schedule, so budget for it separately and confirm the current figure.

The pattern is a national framework with figures that change, plus a compulsory retirement contribution paid over and above salary. That is why the calculation belongs with a provider who tracks it, and why this guide gives you none of the numbers.

The Fair Work system: NES and awards

Australian employment sits on the Fair Work Act, which establishes the National Employment Standards (NES): minimum entitlements such as maximum weekly hours, annual leave, personal and carer’s leave, parental leave, public holidays, notice of termination and redundancy pay. Nobody can be contracted below the NES.

Above the NES, most employees are covered by a modern award, an industry or occupation instrument setting minimum pay rates, classifications, penalty rates for weekends or overtime, and allowances. Some workplaces instead operate under a registered enterprise agreement. Identifying the correct award and classifying the employee within it is genuinely fiddly, and underpayment against an award is a well-publicised risk even for large employers. Confirm the applicable award with Australian advice rather than guessing.

Leave, notice and termination

Annual leave and personal leave accrue under the NES, and long service leave is an additional entitlement set by the states and territories that accrues over extended service. Notice of termination and redundancy pay follow the NES and any applicable award or agreement, and unfair dismissal protections apply once the relevant qualifying period is met, subject to a high-income threshold. Casual employment is a distinct category with its own rules, including a pathway to permanent employment in some cases. Treat the specifics as something to confirm with Australian counsel before you rely on them.

Data protection and privacy

Employee data in Australia falls under the Privacy Act and the Australian Privacy Principles, with an employee-records exemption that has been the subject of ongoing reform discussion. Regardless of exactly where the line sits at any moment, the sensible practice is to hold employee data in one controlled place with proper access limits, clear retention, and appropriate security, rather than scattered across drives and inboxes. Our note on HR data security and compliance covers the practices worth insisting on.

The contractor line: sham contracting

Australia treats the contractor-versus-employee distinction seriously, and sham contracting, dressing up an employment relationship as a contract, carries penalties under the Fair Work Act. Both the courts and the ATO look at the real substance of the relationship, and superannuation obligations can extend to some contractors who are, in effect, employed. A genuine contractor runs their own business with real independence; someone integrated into your team, under your direction, on your schedule, looks like an employee whatever the invoice says. If you are unsure, read contractor versus employee and take Australian advice before you commit.

Where Capstan fits

Capstan does not run Australian payroll and is not an employer of record. It operates no PAYG withholding, holds no tax scales or super rates, and files nothing with the ATO. What it does is be the system of inputs around the calculation: employee records, pay structures, joiners and leavers, leave, attendance, and adjustments, compiled into a documented export for your Australian payroll provider. Their computed results come back onto the employee record, so your record and their filings agree. Contractors live in the same workspace as your team, and the contractor module adds their portal, invoices and payout register on top; like every module it needs a paid plan under it.

Public holidays. There is no bundled Australian holiday set, so you create the calendar, set its working week, add the dates, and assign it to the locations it covers. Public holidays differ by state and territory, so a company hiring in two states already keeps two calendars. Bundled sets exist today for a short list of countries and Australia is not on it, which is worth knowing before you plan a first-day setup rather than after. The calendar itself works the same way everywhere: holidays typed as public or restricted, a cap on how many restricted days an employee may pick, and an employment inheriting its calendar through its location.

Jurisdiction rules are data, not code. Nothing in Capstan hardcodes a country. Contractor tax content is a country pack your workspace configures per jurisdiction. You fill in each country’s contractor withholding, tax lines and document requirements yourself: a draft pack appears the moment you add a contractor in that jurisdiction, and you activate it once the values are ready. It covers contractor invoicing, not employee payroll. For Australia, the tax and superannuation treatment comes from you and your provider.

Where to go next

If your Australian hire is one part of a cross-border team, the guide to hiring global contractors covers the wider structures, and the UK and Singapore country notes follow the same shape. If you are weighing an EOR against your own entity, employer of record explained sets out the trade. For the current tax scales, super rate and award figures this guide has left out on purpose, speak to an Australian payroll provider or employment lawyer. The structure is the durable part; the numbers you confirm each year.