Guide to Hiring in Australia

Labour Law – Basics

What are the basic requirements for employers in Australia?

• Other than taking into account of minimum wages, discrimination laws and workplace safety measures, there are other considerations Australian employers must be aware of to run a compliant business:
  • Australian Business Number (ABN) – this is an 11-digit number issued upon company registration that is used to identify the business to the government and community. This number will also be used in important documents pertaining to employees such as pay slips.
  • Pay As You Go (PAYG) Withholding Tax – under this system, employers must hold an amount from employees for tax purposes and submit it to the Australian Tax Office. The amount must cover the employees’ income tax, any Study and training support loans (STSL) payments and the Medicare (healthcare) levy.
  • Payroll Tax – this is paid on a regional/state level and is calculated based on the total wages a company pays out each month. Each region/state has its own threshold – find out if your business should declare payroll in the ‘Reference Links’ section at the bottom of this page.
  • Superannuation – also known as ‘super’, superannuation is a retirement pension benefits fund which employers will contribute to. It is mandatory for employers to contribute for all eligible employees, including contractors and workers under 18. A new employee can be allowed to choose which ‘super’ fund they would like the money to go into.

Australia implemented some key changes as of 1 July 2023:

• The high income threshold rises for unfair dismissal cases will rise to $167,500 annually and the compensation limit will be $83,750 for dismissals occurring on or after 1 July 2023.
• The filing fee for unfair dismissal, general protections, bullying, and sexual harassment at work applications will increase to $83.30.
• A 5.75% increase in minimum award wages.
• The minimum superannuation guarantee percentage will increase to 11%.
• An updated Fair Work Information Statement (FWIS) for the start of the new financial year.

What to note for existing employees?

• Employees must continue to declare their income tax each year on the myGov portal. Tax rates vary between Australian residents and non-residents. Who is classified as a ‘resident’ depends on various factors such as:
  • where they are domiciled (permanently live)
  • whether they live in the country for at least 183 days (50% of the year)
  • if they are an Australian working at an Australian post overseas and a member of a government superannuation scheme

Residents will need to declare income they earn all over the world, while non-residents only have to declare income earned in Australia. The income tax rates for 2022-2023 for both residents and non-residents are as follows:

Residents

Source: Australian Taxation Office

Non-residents 

Source: Australian Taxation Office

In terms of bonuses, the law does not make it compulsory for employers to give them any. However, if an employment contract states that bonuses will be given each year, employees may have a right to claim the bonus payment.

What to remember when hiring new employees?

• Important documents to have in order when hiring a new employee include:
  • Pay As You Go (PAYG) Withholding Tax (refer to the ‘What are the basic requirements for employers in Australia?’ section)
  • Payroll Tax – if applicable (refer to the ‘What are the basic requirements for employers in Australia?’ section)
  • Superannuation payments (refer to the ‘What are the basic requirements for employers in Australia?’ section)
  • Mandatory insurance payments such as the Workers Compensation Insurance (refer to the ‘Is employment insurance mandatory in Australia?’ section)

What are the different discrimination laws in Australia?

• Australia has enacted several legislations to protect against discrimination, such as the:
  • Racial Discrimination Act 1975 – makes it unlawful to discriminate against a person because of their race, colour, descent, national origin or ethnic origin, or immigrant status.
  • Sex Discrimination Act 1984 – makes sexual harassment and discrimination based on sex and gender, sexual orientation, marital/relationship status, and pregnancy unlawful.
  • Disability Discrimination Act 1992 – makes it unlawful to discriminate someone based on their disability, and it covers people who have temporary and permanent disabilities; physical, intellectual, sensory, neurological, learning and psychosocial disabilities, diseases or illnesses, physical disfigurement, medical conditions, and work-related injuries. The law also extends to disabilities that people have had in the past and potential future disabilities, as well as disabilities that people are assumed to have.
  • Age Discrimination Act 2004 – makes it unlawful for someone to not be given the same opportunities as others based on their age, and to harass or bully another person because of his or her age. This applies to young and older workers, as well as to recruitment processes organised through recruitment/employment agencies.
  • Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 – passed on December 6^th 2022, this Act lists amendments made to the main piece of legislation, the Fair Work Act 2009. These amendments cover pay rates and secrecy, gender equality, sexual harassment, and flexible working arrangements – to name a few.

The laws against discrimination listed above do not only apply during employment, but even for job advertisements and during the recruitment and selection process.

The Australian Human Rights Commission Act 1986 lists out the Australian Human Rights Commission (AHRC)’s roles and responsibilities in ensuring compliance with the laws above. The AHRC is a statutory authority that is tasked with investigating complaints on discrimination and human rights breaches.

Note: The laws mentioned above are federal-level laws. Each territory/region may have their own laws that overlap with federal laws.

What are the working hours in Australia?

• The standard work week in Australia runs from Monday through Friday, while the regular working hours in a week for most companies are 38 hours a week – or 7.6 hours a day.Extra hours may be subject to overtime payments; however, employers can ask employees to work additional hours that are reasonable. Employees may refuse to work additional hours that are unreasonable.According to Australia’s Fair Work website, as to what constitutes reasonable/unreasonable additional hours, the following factors are usually taken into consideration:
  • risks to employee health and safety
  • employee’s personal circumstances, including family responsibilities
  • needs of the workplace or enterprise
  • whether the employee is entitled to receive overtime payments, penalty rates or other compensation
  • any notice given by the employer to work the additional hours
  • any notice given by the employee of his or her intention to refuse to work the additional hours
  • usual patterns of work in the industry
  • nature of the employee’s role and the employee’s level of responsibility
  • whether the additional hours are in accordance with averaging provisions included in an award or agreement that is applicable to the employee, or an averaging arrangement agreed to by an employer and an award/agreement-free employee
  • other relevant matters

What is the legal probation period in Australia?

• In Australia, a probation period can range from 3-6 months – starting from the first day of employment.

In terms of entitlement, employees who are on probation must be treated the same way as employees who are not. Employees who are hired on a full-time or part-time basis are to be given access to annual leave and sick leave even while on probation.

In the case an employee does not pass probation, they are still entitled to receive notice when the employment ends and receive payment for unused annual leave.

For more information, refer to the ‘Relevant Links’ section below.

What are the minimum wage requirements in Australia?

• Australia’s national minimum wage stands at AU$23.23 per hour (or AU$882.80 for a standard 38-hour work week). This applies to all regions in the country. Casual employees who are only hired as and when needed will receive casual loading – an additional payment on top of the minimum wage, given that they do not receive the same entitlements as permanent employees such as paid annual leave. Currently, the casual loading rate is 25%. More information on Australia’s minimum wage in the ‘Reference Links’ section below.

Termination of Employment – Employment Insurance, Tax, Severance Payment & Long Service Payment

• An employee’s term of service may come to an end for various reasons such as resignation, termination by employer, redundancy, and so on. Other than the case of a resignation where the employee notifies the employer, in all other instances, the employer must notify the employee that his/her employment will be terminated.Employers can allow employees to work through the notice period, or to issue a payout to them (pay in lieu of notice).Employees who are terminated may receive a lump-sum payment within 12 months of being terminated. This payment can be taxed by the government.Other payments that an employee would be entitled to upon termination of employment include:
  • any outstanding wages or other remuneration still owing
  • any pay in lieu of notice of termination
  • any accrued annual leave and long service leave entitlements
  • the balance of any time off instead of overtime that the employee has accrued but not yet taken
  • any redundancy pay or entitlements if the employee has been made redundant and is eligible

Some of the payments listed may be included in the lump-sum payment mentioned above and therefore may be taxed.

In the case of redundancy, an employee who has worked for at least a year for a company that has 15 or more employees may be entitled to a redundancy/severance payment of 16 weeks’ salary.

What is the retirement age in Australia?

• There is no mandatory retirement age in Australia. Instead, those planning to retire should consider when they can be eligible for the Age Pension:
  • 65 years and 6 months, if you were born between 1 July 1952 and 31 December 1953.
  • 66 years, if you were born between 1 January 1954 and 30 June 1955.
  • 66 years and 6 months, if you were born between 1 July 1955 and 31 December 1956.

Starting from 1 July 2023, the Age Pension age will be 67 years for those born on or after 1 January 1957.

Retirees will also be able to access their superannuation – known as ‘super’ – which is a retirement pension benefits fund that employers contribute to. Retirees must also reach their ‘preservation age’ to be able to get their ‘super’ funds.

Super Guarantee Percentage:

Source: Australian Government – Australian Taxation Office

Employment dispute channels

• Employees in Australia who have workplace disputes can seek solutions through the following state-level tribunals/courts:
  • South Australian Employment Tribunal
  • Western Australian Industrial Relations Commission
  • Industrial Magistrates Court of Western Australia
  • Tasmanian Industrial Commission
  • NSW Industrial Relations Commission
  • The Queensland Industrial Relations Commission. Decisions from this Commission can be appealed to the Industrial Court of Queensland

Is employment insurance compulsory in Australia?

• Australia makes it mandatory for employers to provide employees with Workers Compensation Insurance. This insurance protects workers if they suffer a work-related injury or disease. Coverage must be purchased for every state and territory where the employer has workers. Premiums vary between each state and depend on the employee’s pay and industry. Non-mandatory employment insurance include healthcare, life and disability, and long-term disability. However, most employers still cover these types of insurance.