Contract for hiring employees in Australia
Contracts must follow the regulations set by the National Employment Standards but can be agreed upon either verbally or through a written contract.
Employees must have a working visa to work in Australia. Employees and employers must have an agreement or employment contract before the employee enters Australia.
HR & Labor
Standard Working Hours: The standard full-time working week in Australia is typically 38 hours. This means that employees working full-time are generally expected to work 38 hours per week, usually spread over five days. However, part-time employees have different working hour arrangements based on their agreed-upon employment contracts.
Overtime: When employees work beyond their standard working hours, they may be entitled to overtime pay or additional time off. Overtime rates and eligibility criteria can vary depending on the applicable industrial awards, enterprise agreements, or employment contracts. It’s important to note that overtime rates may differ for weekdays, weekends, and public holidays.
Flexible Working Arrangements: Australia has provisions that allow for flexible working arrangements to accommodate employees’ needs. This includes options such as flexible start and finish times, compressed workweeks, job sharing, or working from home. The specific eligibility and terms for flexible working arrangements depend on the circumstances and the employer’s policies.
Breaks and Rest Periods: Employees in Australia are entitled to rest breaks during their working hours. The duration and frequency of breaks can depend on the length of the shift or the relevant award or agreement. For example, a typical full-time employee may be entitled to a 30-minute unpaid meal break during a shift of at least five hours.
Minimum working age
The minimum age requirements vary from state to state.
• New South Wales, South Australia, and Tasmania: no minimum working age.
• Victoria: the legal working age in Victoria is 13, with the exemption of 11 year olds being permitted to perform supervised deliveries. Employers are required to obtain a permit to hire someone under the age of 15.
Western Australia: individuals can start working at 15 years of age, but can work under the age of 15 if working in the entertainment industry or a family business.
• Queensland: minimum working age of 13 but can be 11 under certain circumstances.
Salaries for work completed between the first and last days are disbursed on a monthly basis. The most common payday is the 28th of the month but maybe decided between the employee and employer.
Social Security In Australia
When hiring employees in Australia, the Superannuation Guarantee (SG) system requires that employers are required to contribute to a complying superannuation fund or retirement savings account on behalf of their employees, at a rate of 11% of the employee’s “ordinary time earnings”. From July 1, 2023, the SG is legislated to rise in half per cent increments each year until it reaches 12 per cent of wages in 2025.
In addition to income tax, a 2% levy is payable on the taxable income of most Australian residents to fund Medicare, a universal health program that provides basic medical and hospital care free of charge, and Disability Care.
However, relief is available to low-income taxpayers. Certain individuals on temporary visas are ineligible for Medicare benefits and can apply to the Minister of Health for a certificate of exemption.
Contribution Rates In Australia
Australian superannuation guarantee insurance: 0% of employee’s monthly gross salary.
Medicare levy insurance: 2.0% of employee’s monthly gross salary.
Total cost: 2%
Australian superannuation guarantee insurance: 11% of employee’s monthly gross salary.*
Medicare levy insurance: 0% of employee’s monthly gross salary.
Total cost: 11%
*Note: From July 1, 2023, the SG is legislated to rise in half per cent increments each year until it reaches 12 per cent of wages in 2025.
Australia Individual Income Tax & Deductions
Individual Income Tax rate
Australia uses a Pay As You Go (PAYG) withholding system regarding personal income taxes. The employer is required to withhold an employee’s tax payments from his or her salary. Individuals are required to file taxes on an annual basis based on their worldwide income.
|Taxable Income||Tax Rate|
|Up to AUD 18,200||0%|
|AUD 18,201 – AUD 45,000||19%|
|AUD 45,001 – AUD 120,000||32.5%|
|AUD 120,001 – AUD 180,000||37%|
|Above AUD 180,000||45%|
*Note: The above rates do not include the Medicare levy of 2%. The above rates include changes announced in the 2022/23 Federal Budget.
The following deductions are allowed as it applies to each individual:
• Superannuation contributions- Individuals can claim a deduction for contributions made to complying superannuation funds, regardless of the extent of their employment-related activities. Additional tax may apply to the extent that the total of all superannuation contributions made in a year for the individual (including contributions made by an employer) exceed the annual ‘concessional contributions cap’ of AUD 27,500.
• Charitable Donations: Donations made to registered charities and deductible gift recipients (DGRs) may be tax-deductible. Taxpayers can claim deductions for these donations, subject to certain conditions and limitations.
• Medical Expenses: Some out-of-pocket medical expenses may be eligible for deductions. However, it’s important to note that eligibility and claiming criteria for medical expense deductions have changed in recent years, and certain limitations may apply.
• Self-Education Expenses: If the education or training is directly related to a person’s current employment or business, they may be able to claim deductions for self-education expenses, such as course fees, textbooks, and travel expenses.
It’s crucial to keep accurate records and documentation to substantiate claims for deductions. Taxpayers should consult the Australian Taxation Office (ATO) website or seek advice from a tax professional for detailed information on eligible deductions and the necessary requirements for claiming them.
Residents receive the first AUD 18,200 of taxable income tax-free. Non-residents generally do not benefit from a tax-free threshold, nor do they qualify for the various tax rebates and tax offsets
Family Tax Benefits- Provided family income is below certain thresholds, resident individuals may be entitled to Family Tax Benefit payments if they have a dependent child or a secondary school student under the age of 20 for whom one cares for at least 35% of the time. The limits, rates, and nature of Family Tax Benefit payments vary depending upon family income, the number of children, and ages of children, and change from year to year.
VAT/ GST Rates
A goods and services tax of 10 percent applies to most goods and services.
Employee Termination Policies In Australia
An employer must provide an employee with written notice of the day of termination when ending employment. Payment can be given in lieu of notice. The notice period required is based on periods of continued service for the company and follows the table below:
Employees are not entitled to redundancy pay if their period of continued service to the company is less than 1 year. In Australia, severance pay is also referred to as redundancy pay. The below table demonstrates the redundancy pay schedule an employee is entitled to:
- There is a reduction in redundancy pay from 16 weeks to 12 weeks for employees with at least 10 years of continuous service.
Probationary Period In Australia
Employers can put their employees on a probationary period to assess if employees are suitable for the role and business. The employer decides on the length of the probationary period which can range from a few weeks to a few months not exceeding 1 year.
During a probationary period, employees receive the same entitlements as an employee, not on probation. If an employee does not pass his or her probationary period, he/she is still entitled to receive notice when employment ends (1 week).
Rest & Holiday Leaves In Australia
When hiring employees in Australia, employment law sustains that employees are entitled to four weeks or 20 days of annual leave.
New Year’s Day – January 1
Australia Day – January 26
Canberra Day – March 12
Good Friday – March 30
Easter Saturday – March 31
Easter Sunday – April 1
Easter Monday – April 2
ANZAC Day – April 25
Reconciliation Day – May 28
Queen’s Birthday – June 11
Labour Day – Oct 1
Christmas Day – Dec 25
Boxing Day – Dec 26
For additional information, contact NNRoad to help successfully expand your business and start hiring employees in Australia or other international destinations!