Hiring in Australia

Hiring in Australia in 2026 is expensive, heavily regulated, and now carries personal criminal risk for the executives who sign off on payroll.

The cost line that breaks most foreign Finance teams is not the Superannuation Guarantee. It is the way the Closing Loopholes reforms count sham-contracting penalties: each pay period is a separate contravention, so a 12-month fortnightly contractor engagement the Fair Work Ombudsman later treats as employment becomes 26 stackable contraventions at up to A$82,500 each, landing close to A$2.1 million in civil penalties before serious-contravention multipliers apply. From 1 January 2025, intentional wage theft is also criminal. Individuals face up to 10 years in prison, corporations up to A$8.25 million in fines (or three times the underpayment if greater), and the Fair Work Ombudsman has signalled it will prosecute systemic or repeat cases. Once Super Guarantee at 12%, state payroll tax, workers' compensation, leave loading, long service leave accrual, and Modern Award allowances are all included, the true employment cost in Australia lands close to 118 to 120% of base salary before any EOR fee, with sharply higher tail risk if classification or award mapping is wrong. This guide explains what hiring in Australia actually costs in 2026, how Closing Loopholes and Payday Super reshape the compliance picture, and when it makes sense to use an Employer of Record, run payroll through your own Pty Ltd, or hire contractors instead.

Why do international companies hire in Australia?

Australia is not the cheapest market in the Asia Pacific, and our editorial team has never claimed otherwise. It ends up on the shortlist for five specific reasons that come up again and again in what we hear from companies hiring in Australia.

• English-speaking technical depth. Sydney CBD and North Sydney are still the deepest senior engineering, fintech, and SaaS market. Parramatta is the lower-cost-of-living satellite. Melbourne Docklands holds the data, AI, and design clusters, and Brisbane anchors regulated industries and resources.
• Common-law familiarity for US and UK buyers. The National Employment Standards, the Fair Work Commission's unfair-dismissal jurisdiction, and the Fair Work Act 2009 read familiarly. Notice on tenure, four weeks of annual leave, and parental leave entitlements all map onto recognisable concepts.
• APAC bridge market. One or two Sydney hires let a UK or US business test demand in the region before committing to an entity in Singapore or Hong Kong. The Skills in Demand visa replaced the Temporary Skill Shortage stream in late 2024 and shortened the route for scarce roles.
• Productive working week. The standard 38-hour week under the National Employment Standards plus reasonable additional hours leaves room for genuine on-call expectation in engineering and trading roles, and full-time hours run above the OECD median in the ABS Labour Force Survey.
• Useful time zone. Sydney overlaps Singapore mornings, US west-coast pre-open, and London late afternoon. A Sydney trading or client-success desk catches three markets at a payroll cost a Singapore desk cannot match on engineering seniority.

The trade-offs are the cost build-up we cover in the next section, and the way Closing Loopholes quietly inflates the downside on any contractor model. That combination is why Australia looks worse on cost-only comparisons and better when you factor in retention and the depth of senior talent.

What are the employer costs of hiring in Australia?

The main employer costs in Australia are the Super Guarantee paid into the employee's chosen super fund, state payroll tax that varies by jurisdiction, workers' compensation insurance set by industry class, leave loading on annual leave, and fringe benefits tax on any non-cash benefits such as a novated car lease. On an A$140,000 salary, core employer costs typically add around A$25,000 to A$28,000 a year before optional benefits or EOR fees. Once long-service leave, modern award supplements, and casual conversion exposure are factored in, the true employment cost is often far higher than foreign employers expect. The table below shows the typical cost structure for an A$140,000 hire in Australia.

What are the employer costs of hiring in Australia?

Cost line	Rate	Annual on an A$140,000 hire	Important considerations
Super Guarantee (SG)	11.5% to 30 Jun 2025; 12% from 1 Jul 2025	A$16,800	Bonuses and most cash allowances are inside ordinary time earnings; Payday Super 7-day window starts 1 Jul 2026.
State payroll tax (NSW shown)	5.45%	A$7,630	Rate and threshold vary by state; grouped wages aggregate across related entities.
Workers' compensation	0.5-0.8% office; 3-6% industrial	A$700-A$1,120 (office)	Cover required in each state where staff sit; confirm the industry class before signing off.
Annual leave loading	17.5% on 4 weeks' base	A$1,884	Most Modern Awards keep leave loading; annualised salaries sometimes absorb it.
Long service leave accrual (NSW)	~1.67%	A$2,338	State-based entitlement; payable on most exits after 5 to 10 years' service.
PAYG withholding (withheld from salary)	19/32.5/37/45% + 2% Medicare	Withheld from gross	STP Phase 2 requires real-time disaggregation at every pay event.
FBT on novated lease or salary packaging	47% grossed-up if applicable	Variable	Most EORs refuse to administer novated leases; the ones that do charge a separate admin fee.
Core employer cost on top of base	~18-20%	A$25,000-A$28,000	Award allowances, overtime, and FBT-eligible benefits usually add another 3 to 8% on top.

Add an EOR fee at 10 to 15% of gross payroll or roughly USD 599 per employee per month (around A$13,000 to A$20,000 a year) and the total annual cost lands close to A$185,000 to A$190,000 on an A$140,000 base. Any quote that shows only Super on top of salary is a placeholder, not a real budget number. State payroll tax deserves a closer look. Thresholds apply to grouped Australian wages across related entities and across states, so the marginal rate kicks in once aggregate national payroll crosses roughly A$1.5 million. Victoria's threshold is A$700,000, NSW is A$1.2 million, Queensland is A$1.3 million, and South Australia is A$1.5 million, with marginal rates between 4.75% and 6.85%. On an EOR's book the grouped wages will almost always be past every threshold, so the marginal rate applies from your first hire and should be in the model from day one.

What changed in Australia for 2026?

Six changes that affect any 2026 hiring plan for Australia, in order of how much they shift the budget or the compliance picture.

What changed in Australia for 2026?

Change	Effective date	What it does	Action for HR/Finance
Payday Super arrives	1 Jul 2026	Every SG contribution must reach the employee's fund within 7 business days of payday; Small Business Superannuation Clearing House retires	Stress-test the clearing-house workflow against the 7-day window before 1 Jul 2026
Wage theft criminalised	1 Jan 2025	Intentional underpayment is now criminal: up to 10 years' prison or A$8.25M corporate fine (or 3x underpayment)	Move award and SG diligence to board-level review; brief responsible officers on personal liability
Super Guarantee rises to 12%	1 Jul 2025	Final step in the legislated ramp from 10% in 2021	Update the offer-letter loaded-cost calculator; ~A$700 extra employer cost on every A$100k base
Closing Loopholes sham-contracting test tightened	In force 2024-25	Section 357 defence shifted from "not reckless" to "reasonable belief"; each pay period is a separate contravention	Document active classification diligence for every contractor and revisit it annually
Right to Disconnect extends to small business	26 Aug 2025	Employees can refuse unreasonable out-of-hours contact; the Fair Work Commission can issue stop orders	Refresh on-call policies; brief managers on the reasonableness test for engineering and support rotations
Casual conversion "employee choice" pathway	26 Aug 2024	Employer-initiated offer replaced by an employee-initiated request after 6 months (12 months in small business)	Review casuals on regular shifts for 12+ months; the 25% loading does not buy immunity from reclassification

Read together, the Closing Loopholes Acts move certain payroll failures from civil into criminal territory, with personal liability for responsible officers. Audit and risk committees that used to treat underpayment as a remediation line now treat it as a personal-liability line for executives. Building that step into the 2026 governance calendar is cheaper than retrofitting it after a Fair Work Ombudsman investigation.

What employment laws should you know before hiring in Australia?

The Fair Work Act 2009 and the 11 National Employment Standards sit at the centre. Modern Awards layer on top. The National Employment Standards set the floor, the award is the working contract, and the individual contract cannot reduce either. A provider quoting the "Australian standard" without naming the Modern Award is hiding 3 to 8% of the real cost. The Clerks Award, the Professional Employees Award, and the General Retail Industry Award carry materially different allowance and overtime stacks on the same base salary.

What employment laws should you know before hiring in Australia?

Standard	Statutory minimum (NES)	Common award uplift	Practical note
Working week	38 hours plus reasonable additional	Award span-of-hours caps tighter	Reasonableness test reinforced by Right to Disconnect from Aug 2024 (large) and Aug 2025 (small)
Annual leave	4 weeks (5 for continuous shift workers)	17.5% leave loading in most awards	Annualised salaries under the Professional Employees Award often absorb the loading
Personal/carer's leave	10 days a year + 2 days compassionate per occasion	Top-ups in healthcare and emergency services	Accrues progressively; cash-out limited to specific circumstances
Parental leave (unpaid)	12 months + right to request a further 12	Award and policy top-ups common	Commonwealth Paid Parental Leave: 22 weeks in 2025-26, 26 weeks in 2026-27
Long service leave	State-based; NSW 8.67 weeks at 10 years	Pro-rata from 5 years on certain triggers	Portable in construction, contract cleaning, and community services under statutory schemes
Notice period	1 week (under 1y) to 5 weeks (5y+ and 45+)	Awards or contracts may set longer	Senior contracts routinely run 3 to 6 months
Redundancy pay	4 weeks (1-2y) to 16 weeks (9-10y)	Award-based uplifts common	Small businesses (under 15 staff) are exempt from NES redundancy
Unfair dismissal eligibility	6 months' service (12 months in small business)	21-day filing window after dismissal	High-income threshold A$175,000 (2025-26) excludes award-free roles
Probation	No statutory cap; minimum employment period is 6m or 12m	Contract terms set the length	Cannot extend beyond the minimum employment period to defer unfair-dismissal protection
Fixed-term contracts	Capped at 2 years total including one renewal	Limited statutory exceptions	Breach converts to permanent employment by operation of law
Award-free threshold	A$175,000 high-income threshold (2025-26)	Requires a written guarantee of annual earnings	Many senior engineering and product roles cross the line; the guarantee must be drafted, signed, and on file
STP Phase 2 reporting	Mandatory at every pay event	Real-time disaggregation of gross pay	Foreign earnings-code mappings often under-classify; the ATO reads that as a lodgement error

Unfair-dismissal procedural failure is what the Fair Work Commission orders against employers on most often. The remedy is reinstatement or compensation of up to six months' pay, and the procedural record needs to be built over the months before termination, not assembled afterwards. Verbal warnings, undated notes, and missing response opportunities are the recurring failure points.

Should you use an EOR or set up a Pty Ltd in Australia?

The numbers are more specific than the usual "10 employees" rule of thumb. The right answer depends on whether you can produce a resident director, how many states the staff will sit in, and whether the role mix is award-heavy.

Should you use an EOR or set up a Pty Ltd in Australia?

Factor	EOR	Own Australian Pty Ltd
Minimum capital	None (provider's entity)	No statutory minimum; A$1 share capital is common
Setup time	3-10 business days	ACN issued same day via ASIC Form 201; ABN typically 1-5 business days
First-year all-in cost	USD 399-799/month per hire or 10-15% of payroll	A$15,000-A$30,000 (ASIC fee, registrations, accounting, resident director)
Annual run-rate from year 2	Flat per hire	A$8,000-A$15,000 before payroll provider
Break-even headcount	Cheaper at 1-10 hires (almost always)	Cheaper from 15+ on per-head economics
Wind-down	Contract notice + NES redundancy	3-6 months deregistration, A$5,000-A$10,000 legal and accounting
Director residency	Not applicable (provider holds)	At least one director ordinarily resident in Australia under the Corporations Act 2001
Modern Award control	Provider sets the default; depth varies sharply by EOR	Full control of award mapping and high-income guarantee structuring
State payroll-tax aggregation	Provider's book is usually past the threshold (marginal rate from hire 1)	Stand-alone threshold per state; aggregation across your group
Labour hire licensing diligence	Provider must hold an active licence in QLD, VIC, SA, ACT, and NT (whichever apply)	Not applicable (you employ directly)
5-year cumulative cost, 10-person team	~A$1.0M-A$1.2M (USD 599/mo per head)	~A$60,000-A$90,000 run-rate post setup

Australian EOR services intersect with labour hire licensing in Queensland, Victoria, South Australia, the ACT, and the Northern Territory. An EOR supplying workers in any of those states without an active licence is operating unlawfully. That rule is what separates a directly licensed Australian operator from a reseller working through a partner network. One practical detail that's often missed during procurement is the licence-status check between the EOR provider and its operating entity. Some providers route Australian hires through a sister entity that holds the labour hire licence, while billing flows through a different group entity. Always ask for the licence numbers in each relevant state and the legal name of the entity that will appear on the employment contract itself, not just on the master services agreement, and check that entity on ASIC company search before you sign. The Sydney fintech founder who tried to scale from three to 14 Australian hires on an EOR last year ran exactly this calculation during his third-quarter post-budget review. He kept the original three EOR hires for the bridge period, set up a Pty Ltd in October for the 11 expansion roles, and used a resident-director nominee until his COO relocated in the first quarter the following year. That split is becoming common in what we hear from companies hiring in Australia.

What are the biggest compliance risks when hiring in Australia?

Three risks, in order of how often they catch our readers out: sham contracting under the new "reasonable belief" test, Modern Award misclassification at scale, and the casual-conversion re-test under the August 2024 reforms.

What are the biggest compliance risks when hiring in Australia?

Risk	Legal source	What it changed	Practical effect
Sham contracting	Fair Work Act s.357 after Closing Loopholes No. 1	Defence shifted from "not reckless" to "reasonable belief" supported by active diligence	Each pay period a separate contravention; 26 stackable on a 12-month fortnightly engagement at up to A$82,500 each (~A$2.1M ceiling)
Wage theft (criminal)	Closing Loopholes No. 2 from 1 Jan 2025	Intentional underpayment criminalised	Up to 10 years' prison for individuals; A$8.25M corporate fine (or 3x underpayment)
Modern Award misclassification	Fair Work Act + 121 Modern Awards	Wrong award (or wrong classification) creates back-pay over the entire engagement	Roles must be re-tested on promotion or scope change; foreign cost models under-allow 3 to 8%
Casual conversion (employee choice)	Closing Loopholes amendments from 26 Aug 2024	Statutory definition of casual employment; employee-initiated request after 6 or 12 months	The 25% loading does not buy immunity; regular shifts for 12+ months trigger review
Payday Super	ATO Payday Super legislation, from 1 Jul 2026	7-business-day SG window; quarterly cadence ends; clearing house retires	Any delay triggers the SG Charge: non-deductible, interest-bearing, with a per-employee admin fee

If a sham-contracting finding lands, the penalties stack up as follows:

• Each pay period is counted as a separate contravention. A 12-month fortnightly engagement equals 26 stackable contraventions.
• Civil penalty of up to A$82,500 per contravention for a body corporate (2024-25 indexation).
• Serious contravention (businesses with 15+ employees): the greater of A$495,000 or three times the underpayment.
• Retrospective leave, super, notice, and redundancy back-pay over the full engagement.
• Criminal exposure under Closing Loopholes No. 2 where the underpayment was intentional.

State payroll-tax aggregation is the other risk procurement teams routinely under-model. Thresholds apply to grouped Australian wages across all states, and once aggregate national payroll crosses roughly A$1.5 million an employer will almost always trip at least one state threshold. EOR providers that fail to monitor aggregation across their book or across client entities create unbudgeted liabilities, so buyers should ask for the aggregation methodology in writing before signing. The Fair Work Ombudsman's 2025-26 strategic intent focuses on systemic underpayment, large-employer conduct, and the gig and franchise sectors. The agency has the budget to investigate, the powers to compel evidence, and a public pipeline of cases that it has already taken to court since 2024. A real example we've come across illustrates how the section 357 contravention-count maths works in practice. A US SaaS vendor engaged six Sydney contractors on monthly ABN invoices to staff a regional client-success function through a partner-network EOR with a single Queensland-registered licence. The contractors worked exclusive hours, used company laptops with company single sign-on, attended daily standups, and had their performance reviewed in the vendor's internal HR tool. Within 11 months a Fair Work Ombudsman investigation reclassified all six. Per-pay-period counting across the 11-month engagement generated 66 contraventions across the six workers. Settlement and back-pay landed near A$1.4 million before legal fees, on roles that had been priced as contractor work at A$110 an hour. How the work is organised matters more than what the contract calls the relationship, every time. Permanent-establishment drift is the quieter version of the same problem. An EOR does not eliminate the risk where the parent company has substantial economic activity in Australia. A senior leader who closes deals on Australian soil, manages staff onshore, or signs material contracts in-country can crystallise PE exposure for the parent. That is a tax-residency question first, but it sits in the EOR conversation because the EOR model is sometimes used to defer the question past the point where it should have been answered.

Which hiring model fits your Australia plans?

Here's how we think about choosing between the options, matched to the real questions People Ops leads bring to us.

Which hiring model fits your Australia plans?

If you...	Best model	Why	See also
Are hiring 1-3 employees to test APAC bridge demand	EOR	No resident-director requirement; payroll live in days; no Modern Award learning curve	Australia EOR providers and pricing
Have 4-10 hires concentrated in one or two states	EOR still cheaper; model Pty Ltd at year-2 review	Break-even sits at 10-15; run the labour hire licensing diligence in every relevant state	Australia EOR providers and pricing
Have 15+ hires or roles across 3+ states	Own Pty Ltd + global payroll	Year-2 run-rate is lower; direct award mapping; no provider template friction	Australia global payroll providers
Engage a genuinely autonomous specialist with multiple clients	Contractor (ABN)	"Reasonable belief" defence holds if there is no exclusivity, scheduling, tooling-mediated control, or onshore management line	Australia contractor management guide
Run short-tenure APAC sales or seasonal regional roles	EOR (even alongside a Pty Ltd)	Avoids state payroll-tax aggregation hit on a small standalone Pty Ltd; flexible exit	Australia EOR providers and pricing
Have casuals running regular shifts for 12+ months	Re-test casual classification immediately	Employee-choice conversion pathway active from 26 Aug 2024; the 25% loading is not a shield	Australia EOR providers and pricing
Have crossed roughly A$1.5M aggregate national payroll	Pty Ltd + global payroll partner with multi-state registration	Almost certainly tripping at least one state payroll-tax threshold; needs active monitoring	Australia global payroll providers

The single most useful thing a People Ops lead can do is build the full cost picture for the specific Modern Award that applies to the role they're hiring, not a generic Australian average. The award decides the leave loading, the allowance schedule, the penalty rates, and the overtime ladder. Doing that one piece of work removes roughly 80% of the surprises that turn up in a budget review three months later.

Recommended Australian EOR providers

These five providers run their own Australian Pty Ltd entities with verifiable ASIC company-search records and, where applicable, active state labour hire licences. Anything described as "Australian coverage via partner network" should be treated as an extra layer of counterparty risk, not as the same thing as the five below.

Recommended Australian EOR providers

Provider	Australian entity	HQ city	Pricing band	Best for	View provider
Employment Hero	Employment Hero Pty Ltd (Australia-headquartered)	Sydney	~A$100-A$150 per employee per month	Deepest Modern Award engine; Australia-first product roadmap	View Employment Hero →
Deel	Deel Australia Pty Ltd	Sydney	~USD 599/mo	Broadest 150+ country coverage with a full Australian entity	View Deel →
Remote	Remote Australia Pty Ltd	Sydney	~USD 599/mo	Owned entity, in-house payroll, transparent flat fee	View Remote →
Rippling	Rippling Australia Pty Ltd	Sydney	~USD 500-700/mo	IT and HRIS integration depth; verify Modern Award update cadence before signing	View Rippling →
Multiplier	Multiplier Technologies Australia Pty Ltd	Sydney	~USD 400-450/mo	Best value; APAC strength; test Modern Award depth before signing on award-heavy roles	View Multiplier →

Frequently asked questions about hiring in Australia

Our verdict for People Ops leads

If your Australian headcount is 1 to 10 and concentrated in one or two states, use an EOR and pick one of the five verified Pty Ltd providers above, after confirming the labour hire licence numbers in Queensland, Victoria, South Australia, the ACT, and the Northern Territory wherever staff will sit. If you have 15 or more hires, or staff running across three or more states with a resident director on hand, setting up a Pty Ltd usually pays back within 18 months on direct cost alone. If you're leaning towards contractors, run the section 357 "reasonable belief" diligence before signing anything. Each pay period is a separate contravention under Closing Loopholes No. 1, and the per-pay-period counting will undo any saving inside one audit cycle. The first practical step is to work out the full cost for the specific Modern Award that applies to the role you plan to hire, rather than relying on a generic Australian average. Pair that with a Payday Super readiness check for the 1 July 2026 window and you remove roughly 80% of the budget surprises that show up three months later. It is the number that holds up across every Treasury and Legal review on the way to an offer letter, and it is the diligence file the Fair Work Ombudsman will ask for first if the relationship is ever disputed.

Running payroll for Australia employees? See our guide to payroll in Australia.