How to hire employees in Australia through an Employer of Record (EOR) [2023 Guide]
Apr 27, 2023
Hiring in Australia? Foreign employers keen on tapping into the country’s skilled workforce can start by hiring Australian contractors and sending international payments. But if you want to expand and hire full-time employees, you’ll need to establish a legal entity or hire through an EOR.
Registering a legal entity can take months. Once established, it requires knowledge of complex Australian employment laws. Any misstep can incur fines and legal action from the Australian Taxation Office (ATO), the Australian Government’s Fair Work Commission, and other state and territorial authorities.
Alternatively, you can use an “Employer of Record” (EOR), which handles Australian payroll, tax, and compliance considerations. Through Rippling EOR’s entities, you can start hiring and working with employees in Australia quickly and compliantly.
Here’s a step-by-step guide for hiring through an EOR in Australia.
Step by step: How to hire through an Employer of Record in Australia
Step #1: Decide between an Australian EOR and a legal entity
Should you hire Australian employees through an EOR, or set up your own entity? This depends on your company’s resources, size, and plans to scale.
- Legal entity in Australia. Setting up a legal entity from scratch usually requires registration with local authorities, opening a local bank account, and consulting with local experts to ensure compliance with tax and labor laws.
- Australian EOR. An EOR is a third-party service that operates as an employer on a company’s behalf—meaning you don’t need to set up your own entity. As well as allowing you to hire full-time Australian employees, EORs handle all the legal requirements for complying with Australian laws for payroll, contracts, and benefits. EOR services also include calculating and withholding taxes, onboarding and managing employees, and running payroll.
Pros and cons of EORs vs. setting up a legal entity
Cost & Implementation
✔ Less time-consuming to set up.
✔ You can start hiring within days instead of months.
✘ Becomes costlier as your headcount increases.
✘ Takes up to six months to set up—and requires registration fees.
✔ More cost-effective once you’ve hired enough employees in a foreign country.
✔ Quickly set up new hires, often within 1-14 days, depending on the provider.
✔ Supports large-scale expansion in a new market.
✔ Manages all of your compliance work for you, takes on liability, and provides localized employment contracts.
✘ Can’t tailor certain policies, and other HR/legal processes, to the needs of your business.
✘ Requires expert knowledge of local laws and tax regulations and internal legal resources, as your company is liable for all legal and compliance infractions.
✔ Can tailor certain policies, and other HR/legal processes, to the needs of your business.
Payroll & Benefits
✔ Quickly pay and insure employees around the world.
✔ Taxes are filed for you.
✘ Must manually keep track of statutory deductions and employee entitlements for every hire.
Step #2: How to choose the best EOR for your business
Several EORs on the market—including Deel, Papaya Global, and Rippling—can help hire, pay, and manage Australian employees. Before you choose a platform, you should consider the services you will need, and how much you plan to grow your global hiring presence.
Here’s how Rippling EOR stacks up against Deel in Australia:
Recruiting & Applicant Tracking
Time & Attendance
All-in-one global HR platforms, like Rippling, allow you to hire, pay, and manage employees and contractors worldwide. They are also “payroll processors,” which means they process your payroll, transmit funds, and calculate and file taxes in every country through their own software. This allows you to manage and automate the entire employee journey in one place, all around the world.
Most EOR platforms are not HRIS's (Human Resource Information Systems). They were built with the express purpose to hire and pay people internationally. They aggregate local payroll providers in every country and manually transmit your payroll files to them. This approach comes with many limitations.
All-in-One Global HR Platforms
Most EOR platforms
Onboarding new hires
Payroll processing time
Integrated with every HR, IT, and Finance tool you need to run your business
Hire employees in Australia in 90 seconds with Rippling
Normally, setting up a corporate entity abroad is a long, expensive process. But through Rippling EOR’s entities, you can start hiring and working with people abroad quickly and compliantly. See Rippling.
Step #3: How to hire and onboard your Australian employees
Once you’ve picked an EOR that works in Australia, you can begin the onboarding process by collecting the following information from your new employees:
- Name (matching the account where you’ll deposit their pay).
- Date of birth and date of hire.
- Contact information, including their mailing address in Australia.
- Bank account information.
- Amount to be paid in Australian dollars (including any bonuses).
- Completed Tax File Number (TFN) declaration forms, which every full-time employee needs to fill out to determine withholdings.
Next, you need to send out an employment agreement that outlines key working conditions. An EOR can automatically localize and distribute employment agreements. Every Australian hire will have a legally compliant contract offering statutory requirements for probationary periods, working hours, national minimum wage, benefits, and termination policies like severance pay and notice periods.
Rippling EOR automatically flags non-compliant sick leave policies and tells you how to fix them. If you'd like to give your employees more leave to match policies in other countries, you can do that too. See Rippling.
Step #4: Run payroll
For the A-to-Z on global payroll, read our comprehensive guide to running international payroll for employees in Australia.
Once you’ve collected a new hire’s information and both parties have signed employment agreements, an EOR will pay your Australian employees in AUD, while withholding legally required taxes from salaries. This includes contributions to:
- Superannuation funds
- Payroll taxes
- Workers’ Compensation Insurance
Keep in mind many EOR companies are payroll aggregators, meaning they pay employees via third-party vendors. This makes for slower processing times and headaches when it comes to managing international employees under the same system.
Rippling EOR, by contrast, simplifies global employment by using native payroll software to send funds and handle taxes, allowing you to pay Australian employees alongside your local workforce—all within a single pay run.
Below is a preview of how Rippling’s one-click global payroll system works:
Frequently asked questions about hiring through an EOR in Australia
How much does an EOR cost?
EORs typically use one of two pricing structures:
- Fixed monthly fee per employee
- Percentage of payroll plus applicable taxes
Both methods can also come with various administrative fees, onboarding charges, and other costs for supplemental features.
Keep in mind that you don’t need to use an EOR for your entire workforce. If you want to segment its use, you’ll only be charged for the employees you employ through the EOR.
What is the difference between an EOR and PEO?
A Professional Employer Organization (PEO) co-employs a company’s workforce and provides administrative services like paying employees, handling compliance, and filing payroll taxes. The company and PEO are jointly responsible for the workforce. A PEO does not, however, allow you to hire in other countries where you haven’t set up a local entity.
An EOR, on the other hand, is the sole legal employer of the portion of your workforce you use it for, assuming all the associated liabilities. An EOR allows companies to work with employees in other countries without setting up a legal entity.
Does an EOR protect your sensitive and confidential information?
While outsourcing your payroll management to an EOR can spare you time and compliance risk, sharing your data with companies who use third-party vendors leaves you exposed to data breaches from manual uploads.
You should seek out EORs that prioritize data protection, including:
- Compliance with industry-standard privacy regulations in different countries.
- Secure infrastructure with around-the-clock maintenance.
- Carefully vetted personnel.
You can also establish a Data Processing Agreement (DPA) with a payroll service that mandates sound privacy practices and provides legal protection.
Does an EOR help with Australian tax filings?
An EOR can automatically calculate and file your taxes in Australia. Rippling, for instance, is an authorized payroll provider by the ATO. On your company’s behalf, it can distribute and submit forms that outline withholdings for:
- Income taxes
- Payroll taxes
- Fringe benefits taxes
- Medicare levies
What are the mandatory benefits for Australian employees?
Australia’s Fair Work Act of 2009 set forth the National Employment Standards (NES) that set minimum working conditions for Australian employees. Statutory benefits include:
- Pension (known in Australia as superannuation)
- 20 days paid annual leave
- Carer’s leave
- Paid parental leave (including paternity and maternity leave)
- Long service leave
- Medicare (Australia’s public health insurance system)
- Public holidays
- Workers’ compensation
While these benefits are mandatory for all Australian employees, exact pay rates and conditions will vary depending on the worker’s “Modern Award,” which sets different requirements depending on the job category.
For more information on mandatory employee benefits in Australia, read our complete guide.
What are the employer costs for full-time employees in Australia?
Employers are responsible for deducting the following from their full-time employees’ paychecks. Along with super guarantees and workers’ compensation premiums, payroll taxes apply to companies exceeding a certain wage threshold. Find the details below:
Super guarantee rate
State payroll taxes
Varies by territory—see the table below
Payroll Tax Rates by Territory
Annual Threshold (AUD)
Australia Capital Territory
Contractor controls key aspects of how they complete their work
Employee’s day-to-day work is overseen by the company, which can dictate how the work is done
New South Wales
Agreement tends to have a defined end date
Agreement does not have a defined end date (though many countries permit fixed term employment agreements)
Doesn’t participate in typical company processes; a true contractor’s work isn’t considered integral to the business
Does participate in company processes; an employee’s work is considered integral to the business
Can realize a profit or incur financial losses from their work
Does not bear an economic risk
Can freely provide services to multiple organizations
Generally works for their employer exclusively