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Payroll and benefits in Australia

Like in every country, payroll in Australia is subject to specific rules and regulations. Employers need to understand the minimum pay and benefits they can offer their employees, the practicalities of paying payroll taxes in Australia, and the deductions and charges they can take from their wages.

To attract Australian talent, you’ll also need to understand the benefits that Australian employees generally expect in addition to their statutory entitlements. We’ll take you through everything you need to know in this guide

Australia minimum wages

Employees working in Australia are entitled to a minimum wage, which may be defined by their award, enterprise agreement or other registered agreement. The minimum wages stated in these agreements can’t be lower than the National Minimum Wage.

National Minimum Wage

As of 1st July 2024, the National Minimum Wage in Australia is $24.10 AUD per hour. For full-time employees, this amounts to:

  • $915.90 per week
  • $3,968.90 per month
  • $47,626.80 per year

The National Minimum Wage is applicable to every employee, whether they are on a permanent, fixed-term or casual contract. Every year, the Fair Work Commission conducts an Annual Wage Review to determine whether there should be a change to the National Minimum Wage and award pay rates. When there is a change, it applies from the next full pay period after the change.

Award-based minimum wages in Australia

Most employees in Australia are covered by modern awards or other agreements that set minimum employment terms for employees in their industry or occupation. Employees who are covered by an award or registered agreement are entitled to the minimum wage outlined in that agreement, which may be higher than the Australian minimum wage.

Awards also set the rates of pay for employees at various levels of execution within each industry or occupation. For example, they may define different pay rates for entry-level employees, managers and employees that work different shift profiles.

After the most recent increase to the National Minimum Wage, the minimum award wages also increased by 3.75%. As of 1 July 2024, the minimum wages for the five most common awards are:

  • General Retail Industry Award 2020: $25.66 per hour
  • Social, Community, Home Care and Disability Services Industry Award 2010: $25.40 per hour
  • Hospitality Industry (General) Award 2020: $24.10 per hour
  • Fast Food Industry Award 2010: $25.66 per hour
  • Restaurant Industry Award 2020: $24.10 per hour

Minimum wages for young workers

Only workers aged 21 and over are entitled to the National Minimum Wage in Australia. Younger workers who are not covered by an award or other registered agreement are entitled to the following minimum wages depending on their age:

  • Under 16: 36.8% or $8.86 per hour
  • Aged 16: 47.3% or $11.39 per hour
  • Aged 17: 57.8% or $13.93 per hour
  • Aged 18: 68.3% or $16.46 per hour
  • Aged 19: 82.5% or $19.88 per hour
  • Aged 20: 97.7% or $23.55 per hour

Younger workers who are covered by an award may be entitled to a higher hourly rate, depending on the provisions of the award.

Minimum wages for apprentices and trainees

Apprentices and trainees are employees who have a formal training agreement with their employer. Pay rates for apprentices and trainees depend on how long the apprenticeship or traineeship is and how much training the apprentice or trainee has done. Trainees and apprentices may be covered by an award that sets the minimum pay rates they can receive.

Disability pay rates

In Australia, some employees with disabilities are covered by the Supported Wage System. This is a special workplace arrangement that allows employees to be paid based on how productive they are in their job. For example, an employee who is able to work at 70% productivity would receive 70% of the pay level defined in their award or registered agreement. Under most awards, the employee must still receive a minimum of $102 per week.

The Supported Wage System can only be applied if:

  • The employee’s award or registered agreement allows for it
  • The employee is eligible
  • The employer has applied to the Department of Social Services

Once an employer makes an application to the Department of Social Services, they can arrange for a qualified independent assessor to assess the employee’s work to determine their capacity.

Payroll in Australia

Payroll in Australia is a complicated business. Employers need to get to grips with everything from superannuation contributions to PAYG withholding to payroll taxes — and the rules are often different from one state to another. Here’s everything you need to know about payroll in Australia.

Payroll periods in Australia

Employees in Australia may be paid weekly, fortnightly, or monthly. Most awards or registered agreements set out when employees must be paid. If they don’t (or the employee is not covered by an award or registered agreement), they must be paid at least monthly.

Superannuation guarantee

Employers in Australia have to make contributions to their employees’ superannuation accounts, or ‘supers’. This is a type of pension scheme that allows Australian employees to plan for their retirements. The amount you have to pay for each employee is called the ‘super guarantee rate’, and it’s currently set at 11% of the employee’s ordinary time earnings (OTE). This amount may gradually be increased to 12% over the next few years.

All employees are eligible for super guarantee, whether they are full-time, part-time, or casual employees. The only exception is employees aged 17 and under, who are only eligible if they work more than 30 hours per week. The amount an employee earns has no bearing on their eligibility for super guarantee.

PAYG withholding in Australia

If you pay employees in Australia, you probably need to withhold tax from the payments you make to them and send it to the Australian Taxation Office (ATO). This system is called pay as you go (PAYG) withholding. You need to register for PAYG withholding before you can start running payroll in Australia.

Payroll taxes in Australia

Payroll taxes in Australia are a state or territory tax that businesses need to pay if their total payroll is above a certain threshold. This threshold is different in each state or territory, and payroll tax rates also vary. The amount you have to pay is calculated based on the total wages you pay each month.

You only need to register for payroll taxes in Australia if your total payroll is more than the threshold for each state or territory where you have employees. For example, the annual threshold is:

  • $1,500,000 in South Australia
  • $1,300,000 in Queensland
  • $700,000 in Victoria
  • $1,000,000 in Western Australia

Understanding Single Touch Payroll (STP)

Single Touch Payroll (STP) is an initiative of the Australian Tax Office (ATO) that was introduced in 2018. The idea behind it is to streamline employers’ reporting to government agencies including the ATO. As of July 2019, all employers have to use STP-enabled software to report payroll information including salaries and wages, PAYG withholding and superannuation liabilities.

13th salary and bonuses

There are no provisions in Australian law for the 13th salary. Australian employers can choose to give their employees bonuses for good work or for achieving certain targets. The ATO treats bonuses the same as wages, which means they’re liable for payroll tax and PAYG withholding.

Leveraging global payroll companies to manage payroll in Australia

If you’re hiring workers in Australia and don’t want to deal with the hassle of managing payroll, you could outsource it to an international payroll provider, like CXC. Our global payroll services allow you to easily and compliantly pay workers anywhere in the world. That means we can ensure your Australian workers are paid on time, every time — and handle everything from super contributions to PAYG withholding on your behalf.

Statutory benefits

Statutory benefits are the minimum benefits you need to provide by law. In Australia, these are set out in the National Employment Standards (NES). Keep in mind that an employee’s award, enterprise agreement or other registered agreement might grant them more generous benefits than those set out in the NES. In that case, you have to give the employer the rights laid out in their agreement or award.

Maximum weekly hours

The maximum hours an employee can work per week is set by the NES or the employer’s award. Generally speaking, employers can’t ask full-time employees to work more than 38 hours per week, unless the additional hours are reasonable. Requests for flexible working arrangements

Flexible working requests also fall within the statutory benefits set by the NES. Some employees have the right to request flexible working arrangements once they have worked for an employer for at least a year. This might include requests for:

  • Flexibility in hours of work (e.g. starting and finishing at different times)
  • Flexibility in patterns of work (e.g. split shifts or job sharing)
  • Flexibility in location of work (e.g. working from home)

Employees who have worked for their employer for at least 12 months can make a flexible working request if:

  • They have young children
  • They’re a carer
  • They have a disability
  • They’re aged 55 or older
  • They’re pregnant
  • They’re experiencing family and domestic violence

Offers and requests to convert to permanent employment

The right to convert to full-time or part-time permanent employment is an important statutory benefit for casual employees in Australia. These employees have the right to request this if they have worked for the same employer for 12 months and work a regular pattern of hours.

Employers have to formally offer to convert casual employees to permanent employment within 21 days of the employee’s 12-month anniversary with the company, if they have been working a regular pattern of hours for at least six months. Small business employers are exempt from this requirement.

Superannuation contributions

Employers are required to make superannuation (super) contributions into a super fund on their workers’ behalf. This is a pension plan, and the main way that employees in Australia save for their retirements. Foreign workers may be able to claim their super back as a departing Australia superannuation payment (DASP) when they leave Australia.

Notice of termination and redundancy pay

For permanent employees, the right to receive fair notice of termination and redundancy pay are two extremely important statutory rights in Australia. The exact amount of notice and redundancy pay (or severance pay) an employee is entitled to depends on how long they have been employed.

Fair Work Information Statement (the FWIS) and Casual Employment Information Statement (the CEIS).

Employers in Australia have to give their employees a Fair Work Information Statement (FWIS) or a Casual Work Information Statement (CWIS) when they start working for a new employer. This is a written statement of the employee’s conditions of employment, and employers must deliver it to them as soon as possible after their employment begins.

Healthcare

Australian employees are covered by a universal health insurance system, Medicare. An employee from a country or territory that has a reciprocal health agreement with Australia with a taxable income over a certain level pays 2% of income to Medicare in order to access these benefits.

Leave

The NES also provide for various types of leave, including annual leave, parental leave, personal/carer’s leave, compassionate leave and family and domestic violence leave. You can find out more about these and other types of leave in Australia on the Leaves and Time off page.

Workers’ compensation insurance

Under Australian employment law, employers in Australia but have insurance that covers their employees for any injuries or illnesses they might sustain while at work. There is a different workers’ compensation scheme for each state and territory, and three Commonwealth schemes. These are all governed by different laws and may work slightly differently, so it’s important to check the rules in the states and territories where you have employees.

Other benefits

While statutory benefits are legal requirements, many Australian employers choose to offer their employees additional benefits. Putting together a valuable benefits package can help you to attract quality Australian talent and stand out as a top employer.

Private health insurance

Employees in Australia are covered by a public healthcare system, which is paid for by small payments taken out of their taxable income. However, some employers choose to provide additional coverage or a healthcare allowance to their employees.

Life insurance

Again, Australian employees automatically have a certain level of life insurance and disability coverage through their superannuation, or super. But employers can choose to offer them higher levels of protection through personal life insurance plans. There are also group life insurance plans, which have cheaper premiums and can be a more cost-effective way to offer this benefit to your employees.

Flexible working arrangements

Over the past few years, the way we think about work has changed. And many Australian employers now offer various types of flexible working arrangements to their employees. For example, they may allow employees to work remotely all or part of the time, or they might offer flexibility in the time they start and finish work. More radical policies like the four-day work week are also becoming more common. These benefits all help employees to improve their work-life balance, which is highly valued by today’s talent.

Childcare benefits

Benefits that help employees with the cost of childcare can be very beneficial in Australia, because it is typically quite expensive. For example, some employers offer financial assistance for employees with children. Offering flexibility on where and when employees complete their work can also help them with their childcare costs.

Additional leave

Today’s employees value a strong work-life balance, and offering time off in addition to what’s required by law can be a useful benefit to offer. Some employers offer additional paid time off, while others give employees the ability to ‘buy’ extra leave by sacrificing a day’s salary. Additionally, many companies in Australia choose to shut down their operations completely between the end of December and the beginning of January, and offer this time to their employees as additional paid leave.

Personal development plans

Employees want to work for companies that value them — and giving your Australian employees the opportunity to learn new skills and gain new qualifications is a great way to demonstrate this. Many Australian employers offer various types of personal development programmes to their employees. For example, you might offer:

  • Leave for studying or financial support for course costs
  • Learning and development budgets for each employee
  • Mentorship or coaching programmes

Other benefits and perks

There’s a whole range of perks and benefits that you could offer to your Australian employees. Finding out what is most important to your workers can help you to attract and retain talent by developing a benefits package that will be valuable to them.

Examples of other benefits you could provide include:

  • Company cars
  • Birthday leave
  • Home office allowances
  • Gym memberships
  • Discount vouchers
  • Food and travel expenses

Fringe benefit tax (FBT)

Employers in Australia have to pay a tax on any benefits other than salary and the statutory benefits they’re required to provide by law. This is called Fringe Benefits Tax, or FBT. Taxable fringe benefits include things like parking, company cars, entertainment, discounted loans and perks like gym memberships or vouchers for shops and restaurants. Certain other long-term employee benefits, like laptops and mobile phones for business use, are exempt from this tax.

FBT is calculated on the taxable cost of the benefits that you offer to your employees. You can calculate how much you owe by ‘grossing up’ the amount you paid for the benefits in question. Effectively, you need to work out how much the employee would have to earn to pay for the benefits themselves after paying their income tax. The FBT you pay is 47% of the ‘grossed-up’ value of the benefits.

Compliant, seamless payroll and benefits in Australia and beyond

Getting payroll and benefits right is not just a legal issue. Every country also has its own customs, norms and expectations about employee compensation. And if your operations aren’t in line with your workers’ expectations, they may not stick around for long.

Thankfully, we know what we’re doing. When you work with CXC to engage workers in Australia, we’ll handle everything from tax withholding to employee bonuses on your behalf.

Want to find out more?

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