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EoR solutions Australia

Hiring employees in Australia usually means setting up a legal entity, which can be costly and time-consuming. Employers can avoid this hassle by working with an employer of record (EoR) service provider, like CXC.

What are EoR services?

EoR services allow businesses to hire employees without the administrative burden that usually represents. They do this by acting as the official employer of your workers for legal and tax purposes — though you still retain control of their day-to-day management. The EoR acts as an intermediary between you and your workers, handling everything from payroll to benefits to onboarding. With these time-consuming HR tasks off your plate, you can focus on growing your business.

The power of international EoR solutions

Plus, using an international EoR solution allows businesses to easily hire workers anywhere in the world, without setting up a local legal entity. If you want to hire overseas workers, working with a global EoR partner can help you to do so quickly, easily, and compliantly. Because the EoR is your workers’ legal employer, you’ll be protected from risks like permanent establishment and employee misclassification. And your workers will get a smooth and consistent HR experience from day one — all provided by your global EoR partner.

Using EoR solutions in Australia

With its highly skilled and educated workforce, cultural diversity and reputation for innovation and creativity, Australia is a top destination for hiring remote talent. The country’s robust economy and thriving business environment also make it a key location for companies seeking to expand internationally. But there’s a problem: if you want to compliantly hire workers in Australia, you usually need to have a corporate presence there. That means setting up a legal entity, opening a bank account, and dealing with a whole mountain of paperwork. Using an EoR solution can help you to hire employees in Australia without all of that hassle — so you can confidently expand your business without the admin headache.

CXC’s global EoR solutions in Australia

Through our global EoR services, you can confidently hire employees in Australia without worrying about compliance issues or adding to your team’s administrative load. We’ll handle everything from onboarding to onboarding and redeployment, so all you have to worry about is finding the right person for the job. CXC’s international EoR solutions can help you to confidently expand your business to Australia by deploying the right workers, in the right location, at the right time — with no compliance worries.

Hiring in Australia without an EoR

If you want to hire workers in Australia without the services of a global EoR provider, you’ll need to set up a local legal entity. You’ll also need an understanding of Australian employment law and customs, so you understand what you can and can’t do as an employer. In this guide, we’ll take you through some of the most important things you need to know, including the different hiring options available, pre-hire checks you’ll need to complete, and the requirements for corporate presence and payroll setup in Australia.

Hiring employees in Australia

Every country is different, and each one has its own rules and regulations that employers need to be aware of. Companies hiring in Australia need to make sure they have a strong understanding of the rules before embarking on a hiring mission — or you could end up in legal hot water.

Australian hiring guidelines are mostly defined by the Fair Work Act 2009, which includes the National Employment Standards (NES). This piece of legislation sets out statutory requirements for things like fair pay, working hours, leave and other benefits. Each state and territory also has its own legislation governing Australian companies hiring employees there (and international organisations hiring employees in Australia).

Key considerations when hiring employees in Australia

Before you can hire in Australia, you’ll also need to think carefully about your requirements. For example, you’ll need to figure out what type of employees you need. In Australia, there are a few different types of employees, including:

  • Full-time or part-time employees
  • Fixed-term employees
  • Casual employees
  • Trainees or apprentices

You’ll also need to understand the differences between employees and other types of workers, like independent contractors and agency workers. We’ll cover these differences in the ‘hiring options’ section below.

Understanding modern awards

A large portion of the Australian workforce is covered by ‘awards’ or ‘modern awards’, which are industry or occupation-level agreements that provide minimum conditions that employers must provide. These may be more favourable than those set out in the Fair Work Act 2009 and other legislation.

Each award sets out the minimum terms and conditions for things like:

  • Hours of work and rosters
  • Breaks
  • Allowances
  • Penalty rates (extra pay for working evenings, weekends or public holidays)
  • Paid and unpaid leave

When employees aren’t covered by an award or agreement, they’re considered ‘award-free’. These workers are still entitled to the National Minimum Wage and certain minimum entitlements for maximum working hours, leave and termination.

What about casual employees?

When hiring employees in Australia, one option is to take people on as casual employees. These workers agree to work for their employer without a firm commitment to further work or agreed work pattern. This means that their working hours might change each week to suit the needs of their employer.

Casual employees have fewer rights than other types of employees, like those on fixed-term and permanent contracts. However, they are entitled to the national minimum wage, plus a ‘casual loading’ of at least 25%. This is an extra payment that Australian companies hiring casual employees must pay them to compensate for the fact that they don’t have access to most paid leave entitlements.

The cost of hiring employees in Australia

Like in all countries, there are certain costs associated with hiring employees in Australia in addition to their salary. It’s important to understand what the real cost of hiring an employee will look like before you make anyone an offer.

For example, you’ll need to consider:

  • The cost of recruiting an employee
  • The employee’s salary or wages
  • Allowances, overtime, penalty rates and leave
  • Workers’ compensation insurance
  • Superannuation and payroll taxes
  • The cost of setting up and maintaining a workplace

In addition to the costs involved, hiring employees in Australia involves a lot of admin. You’ll need to keep certain records and report payments made to employees to the tax office. All of this adds up to a lot of work — which is one reason why using an EoR solution could be a good idea.

Pre-hire background checks

In Australia, there are certain pre-hire background checks that you must carry out before you can take on a worker.

Visa checks

Specifically, you must ensure that the worker has the necessary visa to work in Australia. Foreign nationals can apply for visas through the various immigration programmes administered by the Australian Department of Home Affairs (DHA).

If you’re hiring for a role where there’s a skill shortage in Australia, the worker can apply for the Temporary Skills Short (TSS) visa (subclass 482). This visa allows foreign workers to live and work in Australia for two years (or four years in certain circumstances) when the business isn’t able to find an Australian worker with the right skills. Of course, visas are inherently complicated, and there may be other caveats or limits on eligibility. The former Temporary Work (Skilled) visa (subclass 457) no longer accepts new applications.

Industry-specific checks

Depending on the industry you’re hiring in, there may also be other necessary checks. For example, the Working with Children Check is a special type of pre-hire background check for roles that involve regularly interacting with minors.

Additional pre-hire background checks

There are also other checks that you can carry out, even if they’re not legally required. For example, it’s permissible to make an offer of employment subject to an Australian Police Check, which allows you to find out about the worker’s criminal history (with some exceptions).

It’s also common to run pre-hire background checks to verify a candidate’s employment history, references and education. You can do this by contacting the HR or payroll departments of a new hire’s previous employers to verify their history, or by contracting the relevant educational institutions in the case of education checks. In some circumstances, you may be able to conduct a medical examination to determine fitness for the requirements of the job. You’ll need to have the applicant’s permission to perform these checks, and to ensure they’re allowable under the relevant discrimination laws.

What type of pre-hire background checks are illegal in Australia?

The exact rules and requirements for pre-hire background checks are different in each state and territory in Australia. However, all states and territories prohibit the disclosure of criminal history from more than 10 years prior to employment.

Background checks in Australia also need to comply with Australian anti-discrimination laws and the Australian Privacy Act. That means you can’t screen for protected attributes like race, religion or disability. Employers are also only permitted to collect information that’s relevant to the candidate’s suitability for the job, and must protect this information from third parties. Employers in Australia must get consent from candidates or employees before carrying out any pre-hire background checks.

How long do pre-hire background checks take?

The amount of time needed for pre-hire background checks depends on the type of check you’re performing. Basic checks like identity verification and criminal record checks can take anything from a few days to a few weeks. More intensive background checks like those verifying educational qualifications and employment history could take several weeks or more. Working with an EoR to hire employees in Australia is one way to simplify and streamline this process. EoR providers like CXC have set processes in place for conducting pre-hire background checks on each worker, which means they can typically get this done much more quickly.

Hiring options

If you want to hire workers in Australia, you’ll first need to understand the different types of workers that you could engage. Generally speaking, there are three main worker types that you should be aware of: employees, independent contractors and agency workers.

Here’s what those terms mean in Australian employment law:

  • Employee: Hiring employees is the most common way of engaging workers in Australia. Businesses can hire employees either on a full-time, part-time, or casual basis (i.e. employed by hour or by day). Contracts may be either fixed-term or indefinite. Employees are entitled to certain minimum terms and conditions, which are set out in the National Employment Standards (NES). There are also more than 100 ‘awards’ (or ‘modern awards’): legal documents that set out minimum pay rates and conditions for specific industries or occupations, and which cover most people who work in Australia.
  • Independent contractor: Independent contractors provide services to businesses, and usually negotiate their own rates and working conditions. They may work for more than one company at the same time. Businesses can engage independent contractors directly or via a personal services company. Independent contractors have fewer rights and protections than employees. For this reason, the Australian government has implemented various changes to the law in order to prevent employers from misclassifying employees as independent contractors.
  • Agency worker: In Australia, agency workers are employees of the labour agency they are sourced through, which means they are not considered to be independent contractors. The host company pays the labour agency for the hours that the employee works, and the labour agency is responsible for providing workers with their statutory requirements. The host company and the labour agency must carry out a risk assessment to ensure compliance with workplace health and safety regulations. Since 2018, labour-hire companies in South Australia and Queensland have to be licensed.

Of course, there is a fourth option: hiring employees through an EoR. This allows you to access Australian employees, without the administrative hassle (and expense) of setting up a legal entity. If you choose this route, your workers will legally be employees of your EoR provider. That means the EoR will handle things like payroll, benefits administration and other HR tasks on your behalf, so you can get on with running your business.

Using an EoR to hire employees in Australia also helps you to avoid legal and compliance risks that could come with other hiring options, like employee misclassification or problems with visas and immigration. Plus, an experienced EoR can deliver region-specific benefit packages, which can help to cement your organisation as a top employer in Australia.

Australia language requirements

There are no specific English language requirements in Australia for official employment documents. However, it’s most common for them to be written in English, which is the country’s official language.

Australia visa language requirements

If you’re bringing in workers from abroad, there may be certain language requirements related to their visa. The requirements are different depending on the type of visa they’re applying for. Australian immigration language requirements consider five different levels of English proficiency:

  1. Functional English
  2. Vocational English
  3. Competent English
  4. Proficient English
  5. Superior English

For points-tested visa applications, the applicant’s level of English has an impact on the overall points they can receive (and therefore their chances of being granted a visa). For example, those applying for the Skilled Independent visa (Subclass 189) will receive 10 points if they prove they have ‘Proficient English’, and 20 points for ‘Superior English’. Spouses of applicants for this visa also need to have at least ‘Competent English’.

Accepted English language tests for work in Australia

Visa applicants have to prove their proficiency in English by taking an English language test recognised by the Australian Department of Home Affairs. Currently, they only recognise the following tests:

  • International English Language Testing System (IELTS)
  • Pearson Test of English (PTE)
  • Cambridge English (CAE)
  • Occupational English Test (OET)
  • Test of English as a Foreign Language (TOEFL iBT)

These tests are designed to assess candidates’ proficiency in reading, writing, speaking and listening. Also, Home Affairs only accepts the results of tests taken at secure test centres as proof of English proficiency, even though some of the above providers offer ‘at home’ or ‘online’ options.

The role of EoRs in meeting Australian visa language requirements

International EoR providers like CXC are experienced in helping workers with visa and immigration processes. That means that they can assist your workers in gathering the necessary proof of English proficiency to obtain a visa to live and work in Australia.

Corporate payroll requirements and payroll setup

Foreign entities can engage employees in Australia, but there are certain business, corporate and tax considerations to keep in mind.

Registering as a business in Australia

First, to set up payroll in Australia, companies need to have an Australian Business Number (ABN) and a Tax File Number (TFN). You can apply for an ABN for free through the Australian Government’s Business Registration Service, and you’ll be automatically issued with a TFN at the same time.

Corporate presence requirements

You also need to establish a legal corporate presence, which you can do by either registering as a foreign company or incorporating a subsidiary. Foreign companies hiring in Australia need to get an Australian Registered Body Number (ARBN), which involves filling in a form, providing supporting documentation and paying a fee.

Payroll setup

To set up payroll in Australia, you’ll need an active business bank account. To qualify for a bank account, your business needs to be registered in Australia, which means you need to get set up with your ABN first. You’ll also need to register for Goods and Services Tax (GST) and Pay As You Go (PAYG) withholding tax.

Taxes

Australian employees have to pay personal income tax on their assessable income, and it is the responsibility of the employer to deduct this tax from the employee’s remuneration. This is called Pay As You Go (PAYG) withholding, and you must pay and report the tax you withhold to the Australian Taxation Office (ATO).

Companies whose total payroll is above a certain threshold also have to pay payroll tax, which is a state or territory tax based on the total wages you pay each month as an employer. The threshold for paying payroll tax and the amount you have to pay is different in each state and territory.

Employers also have to pay fringe benefits tax (FBT) if they provide their employees with certain fringe benefits. This includes things like company cars, gym memberships, parking, and entertainment. You can work out how much FBT you would have to pay by calculating the taxable value of the benefits you want to provide to your employees.

Superannuation (super) contributions

Employers must also pay into eligible employees’ superannuation accounts, which are a form of pension. The minimum amount you have to pay is called the ‘super guarantee rate’, and employers have to pay eligible employees’ super guarantee at least four times a year.

Most employees are eligible for super guarantee, as long as they are 18 years old or older. That means it doesn’t matter whether they are:

  • Full-time or part-time employees
  • Casual employees
  • Temporary residents
  • Company directors
  • Family members working for your business

Employees who are under 18 are also eligible if they work at least 30 hours per week.

The super guarantee rate is currently set at 11% of the employee’s ‘ordinary time earnings’ (OTE), but it may gradually be increased to 12% over the next few years.

Avoid the hassle of payroll setup with an EoR

Setting up payroll in Australia is a complex process that involves a lot of time and resources. International businesses can avoid that hassle by hiring employees through an EoR. An EoR provider like CXC can handle payroll, taxes and super contributions for you, so you can confidently hire workers in Australia without drowning in paperwork or getting to grips with complex payroll setup and corporate presence requirements.

Easily hire employees in Australia with our EoR solution

Hiring employees in Australia usually means setting up a legal entity, which can be costly and time-consuming. Employers can avoid this hassle by working with an Employer of Record (EoR), like CXC.

Through our EoR solution, you can confidently hire employees in Australia, without worrying about compliance issues. We’ll handle everything from payroll to benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.

Compliantly hire employees anywhere with CXC

With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.

DISCLAIMER: The information contained on this website is provided for general informational purposes only and should not be construed as legal, tax, or other professional advice on any subject matter. While we endeavor to ensure that the content is accurate and up to date, we make no warranties or representations of any kind regarding the completeness, accuracy, reliability, suitability, or availability of the information contained herein. The content on this site is not intended to be a substitute for professional advice. Users should not act or refrain from acting based on any information on this website without seeking the appropriate legal, tax, or other professional advice tailored to their specific circumstances from qualified professionals. We expressly disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this website. Use of the information on this site does not create an attorney-client, tax advisor-client, or any other professional-client relationship between the user and the website or its authors.

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