Australia is a natural first stop for companies expanding into the Asia-Pacific region: a skilled, English-speaking workforce, strong rule of law, and a time zone that bridges Asian and US-West-Coast business hours. The complexity isn't in finding people — it's in Australia's employment system, which is more prescriptive than the US one. There's a national safety net of minimum entitlements, a compulsory retirement-contribution scheme that adds 12% to every salary, and an industrial-relations framework (awards) that can set pay floors role by role.
This guide covers what a US or global team needs to know to employ someone in Australia compliantly in 2026 — the leave entitlements, the payroll and superannuation math, and the Fair Work rules — plus the two routes to doing it: setting up an Australian entity, or using an employer of record (EOR) like Deel that already has one.
Australian Employment at a Glance (2025–26)
Figures reflect the 2025–26 Australian financial year (1 July 2025 – 30 June 2026). Wage rates, superannuation, and thresholds are reviewed annually — confirm current numbers against fair work and ATO sources before running payroll.
Two Ways to Hire in Australia: Entity vs. Employer of Record
Before the detail, the structural decision: do you become an Australian employer yourself, or does a third party do it for you? It comes down to how many people you're hiring and how permanent your Australian presence is.
| Factor | Your own Australian entity | Employer of record (EOR) |
|---|---|---|
| Time to first hire | Weeks (registration, PAYG, super, payroll setup) | A few days |
| Who is the legal employer | You | The EOR's Australian entity |
| Setup | Register entity + ABN, PAYG withholding, super, workers' comp | None — pay a per-employee monthly fee |
| Ongoing compliance | You run STP payroll, super, payroll tax, Fair Work duties | Handled by the EOR |
| Best for | Scaling a permanent Australian team | 1–2 hires, market testing, speed |
Running your own entity is more cost-effective per head once you have a sizeable team, and it gives you full control. But it's a real commitment: you'll register the business (an ABN, and ASIC registration for a foreign company or a local subsidiary), register for PAYG withholding with the ATO, set up superannuation via a SuperStream-compliant system, report every pay run through Single Touch Payroll (STP), take out state workers' compensation insurance, and potentially register for state payroll tax. For one or two hires, that overhead usually outweighs the savings.
An employer of record flips it. The EOR already operates an Australian entity and becomes the legal employer — running compliant payroll, withholding PAYG, paying superannuation, issuing a Fair Work-compliant contract, and managing leave — while you direct the person's day-to-day work. You can be live in days, which is why most teams making their first Australian hire start here and build an entity later once headcount justifies it.
Annual Leave and the National Employment Standards
Australia's minimum entitlements live in the National Employment Standards (NES) — 11 baseline rights that apply to every employee regardless of contract or award. For US employers used to no federal leave floor at all, the leave entitlements are the biggest adjustment.
Full-time employees are entitled to 4 weeks (20 working days) of paid annual leave per year, accruing progressively from day one and rolling over if unused. Part-time employees get the same four weeks pro-rata. On top of that, employees get 10 days of paid personal/carer's (sick) leave per year, also accruing and rolling over, plus 10 days of paid family and domestic violence leave. Public holidays — roughly 10 to 13 a year depending on the state or territory — are a separate entitlement, paid at the base rate, not counted within annual leave.
Two nuances catch employers out. First, annual leave loading — an extra ~17.5% paid while on leave — is common, but it comes from Modern Awards or agreements, not the NES itself. Second, cashing out annual leave is tightly restricted: an employee must keep at least four weeks accrued, and each cash-out needs a separate written agreement.
Payroll: PAYG, Superannuation, and Payroll Tax
Australian payroll has three employer cost centres to understand beyond gross salary.
Income tax (PAYG withholding)
Employers withhold income tax from each pay through PAYG (Pay As You Go) withholding and remit it to the ATO, reporting every pay run via Single Touch Payroll. Australia has a tax-free threshold of $18,200, above which 2025–26 resident rates run 16%, then 30%, 37%, and 45% across the brackets. A 2% Medicare levy is generally built into the withholding tables.
Superannuation — the cost US employers forget
This is the big one. On top of salary, employers must pay superannuation of 12% of ordinary time earnings (the Super Guarantee rate as of 1 July 2025) into the employee's chosen complying super fund. It's compulsory retirement saving, it's a genuine additional cost beyond gross pay, and underpaying it carries penalties. Budget 12% on top of every Australian salary.
Payroll tax (state-based)
Payroll tax is a state tax on total wages above a threshold — for example, around $1.2M in NSW or $1.0M in Victoria, at rates near 4.85–5.45%. A company making its first one or two Australian hires is almost always below the threshold and pays nothing, but it becomes relevant as the local payroll grows.
The Fair Work Framework: Awards, Contracts, and Casuals
Australian employment is governed by the Fair Work Act 2009. Beyond the NES, most employees are covered by a Modern Award — an industry- or occupation-specific instrument that sets minimum pay rates, penalty rates, allowances, and conditions above the national minimum. Identifying the right award (or confirming an employee is award-free) is a key early step, because award minimums can exceed the National Minimum Wage of $24.95/hour.
Every new employee must be given the Fair Work Information Statement before or as soon as they start, and casual employees must also receive the Casual Employment Information Statement. Casuals are paid a loading (commonly ~25%) in place of paid leave, and longer-term casuals now have pathways to convert to permanent employment. There is no US-style at-will employment — terms are set by the contract, the award, and the NES together.
Ending Employment: Notice, Redundancy, and Unfair Dismissal
Minimum notice of termination scales with service: one week for up to a year, rising to four weeks beyond five years, with an extra week for employees over 45 with at least two years' service. Genuine redundancies attract scaled redundancy pay (capped, and with a small-business exemption for employers with fewer than 15 staff).
Crucially, employees gain access to unfair dismissal protection after a minimum employment period of 6 months — or 12 months in a small business (fewer than 15 employees). Within that period dismissals are lower-risk, but discrimination and general protections apply from day one, and claims must be lodged within 21 days. Follow a fair, documented process from the start.
How Deel Handles Australian Hiring
If you're hiring one or a handful of Australian employees and don't want to register an entity, this is exactly what an employer of record solves. Deel operates its own Australian entity and employs your worker on your behalf, so the PAYG, superannuation, and Fair Work complexity above becomes its responsibility rather than yours.
For Australia specifically, Deel runs local payroll with PAYG withholding, calculates and remits the 12% superannuation to the employee's fund, handles state payroll tax where it applies, issues a Fair Work-compliant employment contract, and manages leave entitlements under the NES — typically onboarding a new hire in days rather than the weeks an entity build would take. That lets you employ in Australia compliantly without becoming an Australian employer yourself.
Hire your first Australian employee without setting up an entity
Deel's Australian entity handles PAYG, 12% superannuation, payroll, and a Fair Work-compliant contract — so you can onboard in days instead of registering a company.
See how Deel hires in Australia →Deel isn't the only option — it competes directly with Remote.com and others in the EOR space, and the right pick depends on your country mix, headcount, and budget. We compare the leading providers in our Deel vs. Remote.com comparison. And to see how Australia's 4-week floor stacks up globally, see annual leave around the world.
Frequently Asked Questions
How much annual leave do employees get in Australia?
Full-time employees are entitled to 4 weeks (20 working days) of paid annual leave per year under the National Employment Standards, accruing progressively from their first day and rolling over if unused. Part-time employees get the same four weeks pro-rata. Public holidays are a separate entitlement, on top of annual leave.
What is the superannuation rate employers must pay in Australia?
From 1 July 2025, employers must pay superannuation of 12% of an employee's ordinary time earnings, on top of their salary, into a complying super fund. This is the Super Guarantee, and it's a real additional employer cost beyond gross pay.
Do I need an Australian company to hire an Australian employee?
No. You can either register an Australian entity (with ABN, PAYG withholding, superannuation, Single Touch Payroll, and state payroll-tax obligations) or use an employer of record that already has an Australian entity and legally employs the worker for you. An EOR lets you hire in days; an entity makes sense once you're scaling a permanent Australian team.
What is the minimum wage in Australia in 2026?
From 1 July 2025 the National Minimum Wage is $24.95 per hour (about $948.00 per 38-hour week), set by the Fair Work Commission. Casual employees receive a 25% loading on top. Many employees are covered by a Modern Award that sets a higher minimum for their industry or role.
What is the Fair Work Information Statement?
It's a document every new employee must be given before, or as soon as possible after, they start. It summarizes their rights under the National Employment Standards. Casual employees must also receive the Casual Employment Information Statement.
Can I dismiss an Australian employee during a probation period?
Australia has a minimum employment period before an employee can claim unfair dismissal — 6 months, or 12 months in a small business with fewer than 15 employees. Dismissals within that period are lower-risk, but discrimination and general protections still apply, and you must follow a lawful process. There's no US-style at-will employment.