7 Steps To Using An Employer of Record In Australia

If you’re reading this, you’re probably looking to hire someone from Australia.

But you’re also probably uncertain about:

1. Navigating the country’s labor and compliance laws/rules.
2. Whether the workforce is good enough.
3. How to hire with the least hassle.
4. If it’s all worth it when all is said and done.

If that sounds familiar, this guide will answer every one of your questions.

It’s a 13-minute read that will save you time, money, and headaches..

The answer to all your dilemmas might be partnering with an Employer of Record (EOR).

Here’s what you’ll learn – table of contents:

1. EOR – what it is and how it can make your life easier.
2. How to find and hire local talent in Australia.
3. How EOR compares to setting up a legal entity.
4. Get all the right information from your employee.
5. How to choose an EOR provider in Australia (this one’s tricky).
6. How to clearly communicate what you’re looking for in your hires.
7. How the EOR sets up contracts and procedures.

Step 1: Look into partnering with an EOR

An Employer of Record (EOR) is the legal employer for workers, handling HR responsibilities like payroll, taxes, and compliance.

This allows you (the company) to deal with the employees’ day-to-day tasks.

What it means for hiring in Australia: When hiring remotely, a range of labor laws, such as those governing work hours, termination processes, and mandatory employee benefits, must be considered.

The benefit: You can hire from Australia without establishing a local entity. In other words – you can focus on scaling your business and leave all the compliance to the EOR.

How do I know the Australian hires will be worth it?

There are measurable trends that illustrate the expertise:

1. It’s one of the top countries in STEM (Science, Technology, Engineering, and Mathematics). About 62% of graduates work in engineering, health, IT, and natural sciences (Australian Bureau of Statistics, 2022).
2. The Australian workforce is among the most skilled in the world – about 4 in 10 Australians aged 25-64 hold a post-secondary qualification (OECD, 2023).
3. English Proficiency: Australia ranks 6th globally for English proficiency (EF English Proficiency Index, 2023).

Step 2: Find talent to hire in Australia

Finding the top talent in Australia means exploring every channel available, including local and global platforms.

Start with job boards

SEEK and Indeed Australia are the country’s largest job boards, offering extensive listings across various industries.

LinkedIn has a strong presence in Australia and is crucial for networking and headhunting, particularly for professional and managerial roles.

Talk to recruitment agencies

Specialized recruitment agencies like Hays and Michael Page have a strong presence in Australia and can provide tailored solutions for industries requiring specific expertise.

Partnering with career centers at top Australian universities, such as the University of Melbourne or the University of Sydney, can benefit entry-level positions or internships.

Step 3: Compare using an EOR to setting up a local entity in Australia

This is an important step when hiring employees in Australia.

Take the time to weigh the options of using an Employer of Record against setting up your legal entity.

The key advantages (and one downside) of working with an EOR:

• It lowers the cost: An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the Australian market or expand quickly without significant upfront investment.
• It unburdens you from responsibilities: An EOR manages all local employment laws, tax, and compliance issues, assuming responsibility for hired employees. This setup allows you to start operations in weeks, compared to the months required to establish a legal entity.
• It simplifies processes: Establishing a legal entity involves complex registration processes, significant upfront fees, and a deeper understanding of local laws and tax regulations. It eliminates the need for a local expert or dedicated legal and tax teams, as the EOR handles these aspects.
• One key downside is that hiring through an EOR offers limited flexibility in tailoring employment contracts and benefits to specific company policies.

The table below offers a more comprehensive comparison.

Step 4. Get the information you need from your talent

To hire employees in Australia, you’ll need their personal information.

Typically, you’ll need the following:

• Employee’s full name
• Date of birth
• Address
• Tax File Number (TFN)
• Superannuation fund details
• Bank account details for salary payments
• Emergency contact information
• Visa information (for non-Australian citizens)
• Educational qualifications and work history

Additionally, you’ll need to provide a comprehensive job description, including title, duties, and place of work.

While not mandatory, it’s strongly recommended that you provide written employment contracts in Australia.

The contracts should include:

• Contract type
• Start date
• Salary
• Work hours
• Other employment conditions

Step 5. Choose an EOR provider in Australia to match your needs

Two key aspects are key when choosing an EOR provider to work within Australia.

Look for an EOR with:

To recognize the right EOR, consider the following:

1. Deep knowledge of the Australian market.
2. Strong understanding of local labor laws (crucial to ensure compliance and smooth business operations).

• Experience managing employee onboarding, payroll, and legal compliance in Australia is essential. Look for a provider with a proven track record of working successfully with companies similar to yours, and check their reputation through client case studies or reviews.
• Check the range of services offered to see if they align with your needs, such as visa and work permit support, benefits management, and payroll processing. Choose a provider that offers comprehensive employment services and is flexible enough to adapt to changes in Australian labor laws.
• Provider’s technology and platforms: Make sure they offer secure, user-friendly systems with solid data protection measures.
• Their pricing models: Look for transparency in fees, whether they charge a fixed monthly fee or a percentage of the employee’s salary.

Finally, choose an EOR provider that demonstrates a commitment to staying up-to-date with Australian employment laws and can provide proper guidance and support to ensure your business remains compliant while operating in Australia.

Step 6. Communicate your hiring needs

Communication is key.

It’s a cliche, but it’s true, especially when laws and legal requirements are involved.

What it means specifically

It means providing a detailed job description, including title, responsibilities, required qualifications, and skills.

Here’s a reference checklist:

• Specify the job’s expected start date, location, and whether it’s remote or onsite.
• Outline the proposed salary, superannuation contributions, and any other compensation benefits.
• Clarify the contract type (full-time, part-time, casual, or fixed-term).
• Detail the working hours, including any flexibility or shift requirements.
• Discuss the company culture, growth plans, and how the position fits into future expansion.
• List equipment needs and onboarding procedures.

What it means for you

It means peace of mind and smooth hiring.

By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance.

Step 7. Have the EOR set up the contracts and hiring procedure

Once you’ve chosen the provider and communicated your hiring needs, the EOR will set up the contracts and hiring procedure.

They’ll ensure compliance with local labor laws and employment practices.

Below are the specific steps:

• The EOR will draft employment contracts that adhere to Australian labor laws, including specific terms regarding job details, working hours, and termination procedures.
• The EOR will manage the necessary documentation for tax, superannuation, and payroll setup, adhering to mandatory withholdings and reporting requirements.
• The EOR will register employment with relevant Australian authorities to ensure the company is appropriately licensed and authorized to operate and hire employees in Australia.
• If necessary, the EOR will obtain work visas for foreign employees, collect personal and bank account information for payroll, and outline the onboarding procedures per Australian employment laws.
• The EOR will ensure your company complies with modern awards and enterprise agreements, if applicable, and adjust contracts and practices as laws and agreements change.
• The EOR will handle formal onboarding, including the introduction to company systems and culture.

The following section will answer frequently asked questions about the whole process.

Some might sound repetitive, but bear with us; it’s important for context and getting the full picture.

What specific help does an EOR provide in Australian payroll, taxes, and benefits administration?

The EOR ensures payroll compliance

The EOR will support all Australian payroll, taxes, and benefits administration, ensuring compliance with complex local laws. It calculates and processes employee salaries, withholds the correct tax amounts, and handles superannuation contributions.

They manage the payroll and income tax

The EOR manages payroll in compliance with Australian regulations, including calculating and paying mandatory benefits such as annual leave, personal/carer’s leave, and long service leave.

They also handle the withholding and payment of income tax, which in Australia follows a progressive system with rates ranging from 0% to 45%.

They handle the benefits

For benefits, the EOR enrolls employees in the superannuation system.

This requires an 11% contribution of an employee’s ordinary time earnings (set to increase to 12% by 2025).

They manage the time off as per Australian law

EOR manages statutory paid time off, including the minimum 4 weeks of paid annual leave for full-time employees.

They also ensure correct accrual and payout of long service leave, which varies by state and territory.

They manage the compensation insurance

The EOR also manages workers’ compensation insurance and ensures compliance with modern awards and enterprise agreements, which set industry-specific minimum pay rates and conditions.

They handle any additional benefits you offer, like private health insurance or additional leave.

In Australia, benefits like these attract and retain top talent.

What are the best EOR providers to use in Australia?

The table below is an overview of the top EOR providers in Australia.

It focuses on their key strengths and what separates each company from the competition.

Key Labor Laws to Consider When Hiring in Australia

This is an obvious (but often overlooked) question.

What labor laws to consider when hiring in Australia?

When hiring in Australia, consider the following labor laws:

• Fair Work Act 2009
• Superannuation Guarantee Act 1992
• Work Health and Safety Act 2011
• Anti-Discrimination Laws
• Long Service Leave
• Privacy Act 1988

The table below outlines the key points of each law, followed by a sub-section with more detail.

Bottom line: Australia’s approach to labor laws is generally employee-friendly and offers protections, which are more stringent than those in many other countries.

Fair Work Act 2009

The Fair Work Act 2009 is the primary legislation governing employment in Australia. This comprehensive act sets out the rights and responsibilities of employers and employees and establishes a safety net of minimum entitlements for workers.

Critical aspects of the Fair Work Act include:

1. National Employment Standards (NES): These are 11 minimum employment entitlements that must be provided to all employees, including maximum weekly hours, leave entitlements, and termination notice periods.
2. Modern Awards: Legal documents that outline the minimum pay rates and conditions of employment for specific industries or occupations.
3. Enterprise Agreements: Collective agreements between employers and employees are made at an enterprise level.
4. Unfair Dismissal and Adverse Action Provisions: These provisions protect employees against unfair dismissal and adverse actions taken against them for exercising their workplace rights.

Superannuation Guarantee (Administration) Act 1992

This Act mandates employer contributions to employees’ retirement funds, currently set at 11% of an employee’s ordinary time earnings (increasing to 12% by 2025). This applies to most employees, including part-time and casual workers.

Work Health and Safety Act 2011

This Act governs work health and safety and outlines obligations for maintaining a safe workplace. It includes duty of care obligations, requirements for identifying and controlling workplace hazards, and provisions for worker consultation on health and safety matters.

Anti-Discrimination Laws

Australia has several anti-discrimination laws that apply to employment:

• Age Discrimination Act 2004
• Disability Discrimination Act 1992
• Racial Discrimination Act 1975
• Sex Discrimination Act 1984

These laws prohibit discrimination based on protected attributes in all aspects of employment, including hiring, promotion, and termination.

Long Service Leave

Long service leave is a unique feature of Australian employment law, governed by state and territory legislation. It typically provides extended paid leave for employees after a long service period with one employer (usually 10 years).

Privacy Act 1988

While not strictly a labor law, the Privacy Act of 1988 has significant implications for employment practices. It regulates how organizations collect, use, and disclose personal information, affecting recruitment processes, employee record-keeping, and data protection.

Workplace Gender Equality Act 2012

This Act aims to promote and improve gender equality in the workplace. It requires non-public sector employers with 100 or more employees to submit annual reports to the Workplace Gender Equality Agency on the gender composition of their workforce and governing bodies.

Understanding and complying with these laws is crucial for any company hiring in Australia. The complexity of these regulations, particularly around Modern Awards and enterprise agreements, can make compliance challenging for foreign companies.

This is where an Employer of Record (EOR) can provide significant value, offering expertise in navigating these laws and ensuring full compliance with Australian employment regulations.ll compliance with Australian employment regulations.

How does the hiring process work in Australia?

How does the hiring process work in Australia?

The hiring process in Australia typically involves the following steps:

1. Job Posting and Recruitment: Companies advertise positions through various channels, including online job boards, social media, and recruitment agencies.
2. Application Review: HR teams or recruiters review applications and resumes to shortlist candidates.
3. Initial Screening: Often involves a phone or video interview to assess basic qualifications and cultural fit.
4. In-depth Interviews: Qualified candidates are invited for more comprehensive interviews, which may include multiple rounds with different team members.
5. Skills Assessment: Candidates might be asked to complete tests or practical assignments depending on the role.
6. Reference Checks: Employers often contact previous employers or provide references.
7. Job Offer: A formal job offer is extended, usually in writing.
8. Contract Negotiation: The terms of employment are discussed and finalized.
9. Contract Signing: Both parties sign the employment contract.
10. Registration and Onboarding: The new employee is registered with the relevant authorities and begins onboarding.

When hiring through an EOR in Australia, many of these steps are managed or facilitated by the EOR provider, ensuring compliance with local regulations throughout the process.EOR provider, ensuring compliance with local regulations throughout the process.

Is Australia a relatively easy country to hire employees remotely through an EOR?

Australia is considered a moderately complex country for hiring employees remotely through an Employer of Record (EOR).

Hiring in Australia Through an EOR – resume and key takeaways

While not the most accessible country for remote hiring, with the right EOR partner, companies can successfully navigate the complexities of employing workers in Australia.

The key is working with an EOR with deep local expertise and a strong track record of compliance with Australian labor laws.

In conclusion

Using an Employer of Record service in Australia can significantly simplify hiring and managing employees in this dynamic market.

By handling complex compliance issues, payroll, and benefits administration, an EOR allows you to focus on growing your business while minimizing risks associated with international expansion.

With the right partner and a clear understanding of the local landscape, companies can effectively tap into Australia’s talented workforce and expand their global footprint.