How to Hire Remote Employees In 

Australia

The Basics

Currency
Australian Dollar (AUD)
Employer Taxes
15.85%
Payroll Frequency
Bi-Monthly/Monthly
Official Language
English

Employment in 

Australia

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Australia

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Australia can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Australia, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Australia.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Australia is not the same as paying workers in your own country. Employees have to be paid using Australia’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Australia

 Specific Information

Working Hours

The standard workweek is 38 hours.

Overtime

Minimum employment conditions are outlined in the Fair Work Act, 2009 and Industrial Awards. Awards are either industry-based or occupation-based.

Employees covered by Awards are generally paid overtime. Most Awards provide for overtime to be paid for time worked in excess of 38 hours per week, or in excess of 10 hours per day. Overtime or a penalty is generally paid to Award based employees for work performed on a weekend or a public holiday.

If an employee is not an Award employee, they are considered to be “Award Free.” Award Free employees do not have a statutory right to be paid overtime.

However, such employees do have the right to work only 38 plus reasonable additional hours per week. There is no formal definition of what is “reasonable additional hours,” however, such employees are generally expected to work overtime hours that are necessary to complete the job they are employed to do. 

Payroll Tax

Employer

Employer

  • Payroll Tax
  • Medicare
  • Superannuation (capped at 21,002.06 AUD per year)

Minimum Wage

As of July 1, 2020, the minimum wage changed to 19.84 AUD per hour (753.80 AUD per week).

Payroll

Pay Cycle

Employees are paid weekly, bi-monthly, or monthly.  

There are no legal requirements to when an employee needs to be paid by, however, it is common to pay employees by the following schedule:

  • Monthly – By the 28th to the 30th of the month
  • Bi-weekly – Every second week on any agreed day (usually Wednesday or Thursday)
  • Bi-monthly – Every 15th and 30th

13th Salary

There are no provisions in the law regarding 13th salaries.

Leave

Paid Time Off (PTO)

Full-time employees are entitled to 4 weeks of paid leave per year, while employees who work in shifts receive 5 weeks.

Public Holidays

Public holidays vary by state.

Sick Days

Employees are entitled to 10 days paid leave per year which can be used if the employee is sick or if they need to care for a family member.

Maternity Leave

Pregnant employees receive 4 months of paid maternity leave; 1 month of prenatal leave and 3 months of postpartum leave. 50% of the payments are paid by the employer and the other 50% is paid by the CCSS (Costa Rican Social Security Fund).

Paternity Leave

Fathers are entitled to 5 days unpaid leave at the time of the birth or adoption of a child.

Parental Leave

Parental leave is an unpaid leave that lasts for 12 months, and it is possible to request an additional 12 months from the employer.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

In Australis, employees are entitled to have 2 days paid leave.

Termination

Termination Process

Reason for termination varies based on the number of employees an employee has and the length and type of service:

  • 15 employees
    Length of Employment: Up to 6 months
    Type of employees: Permanent
    Reasons for terminations: No specific reason is needed
  • Over 15 employees:
    Length of Employment: 6 months+
    Type of employees: Permanent
    Reasons for terminations: A valid reason is needed
  • 15 employees or less:
    Length of Employment: Up to 12 months
    Type of employees: Permanent
    Reasons for terminations: No specific reason is needed
  • 15 employees or less or less
    Length of Employment: 12 months +
    Type of employees: Permanent
    Reasons for terminations: A valid reason is needed
  • Casual employees:
    Length of Employment: N/A
    Type of employees: Casual
    Reasons for terminations: Once employed for 12+ months, there must be a valid reason

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. However, there are some exceptions to this known as General Protections matters where there is no minimum engagement period applying.

Unfair dismissal applications are heard in the Fair Work Commission – a specialist employment tribunal.

Notice Period

The notice period is determined by the amount of time the employee has been employed:

  • Less than 1 year of employment: 1 weeks’ notice
  • 1-3 years of employment: 2 weeks’ notice
  • 3-5 years of employment: 3 weeks’ notice
  • 5+ years of employment: 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

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

  • At least 1 year but less than 2 years: 4 weeks’ severance pay
  • At least 2 years but less than 3 years: 6 weeks’ severance pay
  • At least 3 years but less than 4 years: 7 weeks’ severance pay
  • At least 4 years but less than 5 years: 8 weeks’ severance pay
  • At least 5 years but less than 6 years: 10 weeks’ severance pay
  • At least 6 years but less than 7 years: 11 weeks’ severance pay
  • At least 7 years but less than 8 years: 13 weeks’ severance pay
  • At least 8 years but less than 9 years: 14 weeks’ severance pay
  • At least 9 years but less than 10 years: 16 weeks’ severance pay
  • At least 10 years: 12 weeks’ severance pay

Probation Period

The probation period is 6 months, however, if an employer has 15 employees, it is extended to 12 months. In addition, employers are able to shorten the minimum probation period. In doing so, however, the employer forgoes the benefits of a probation period.