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Hiring without an entity in Australia

EOR vs PEO in Australia: Hiring Without Your Own Entity

In Australia an employer of record (EOR) is the legal employer of your hire, so you can employ someone without an Australian company. A PEO, in the American sense, shares employer duties with a business that already employs its own staff. Many Australian providers use “PEO”, “employee leasing” or “global employment organisation” for the EOR model, so the useful question is simpler: who signs the employment contract?
Last reviewed in October 2026 against ATO, ASIC, Fair Work and state labour hire regulator sources. General information, not legal or tax advice.
Comparison of four ways to engage someone in Australia: your own Australian company, an employer of record, a PEO or payroll provider, and an independent contractor

Five ways to employ or engage someone in Australia

ModelLegal employerNeed an Australian entity?Usually suitsWatch out for
Your own companyYour Australian subsidiary (Pty Ltd)YesA growing team, local customers, long-term rolesSet-up and ongoing compliance: tax registrations, payroll, awards, payroll tax, workers’ compensation
Registered foreign company (branch)Your overseas company, registered with ASICRegistration (ARBN) and a local agentCompanies already carrying on business in AustraliaYour overseas company carries the liabilities directly
Employer of record (EOR)The EOR’s Australian employing entityNoFirst hires, testing the market, a bridge while you set upThe EOR must hold labour hire licences in QLD, VIC, SA and the ACT; fixed-term limits apply
PEO or payroll outsourcingYour own entityYesYou employ the staff and want payroll and HR run for youDoes not solve the “no entity” problem
Independent contractorNobody: a business-to-business contractNoGenuine project work by someone who runs their own businessSham contracting penalties and super for contractors paid mainly for labour
A foreign company can also register for PAYG withholding and employ directly without an ABN, using a withholding payer number. It then carries every employer obligation itself. ATO

Why the word “PEO” causes confusion in Australia

Australian law has no category called PEO or EOR. The labels you will see are commercial ones:
LabelWhat it usually means in Australia
Employer of record (EOR)A provider’s Australian entity employs the person; you direct the work.
PEO or professional employer organisationUsually the same EOR service. Sometimes HR and payroll support for a company that already employs its own staff.
Global employment organisation (GEO)Another name for an EOR that works across several countries.
Employee leasing or labour hireA provider employs workers and supplies them to a host business. An EOR arrangement is labour hire in this sense.
Umbrella companyA payroll intermediary for contractors who find their own work. How it differs from an EOR.

Labour-hire licensing schemes operate in Queensland, Victoria, South Australia and the ACT. Assess each arrangement against the relevant definitions, exclusions and exemptions, and verify required licences on the regulator’s register. Victoria’s definition changed on 1 October 2026 to focus on the character of labour supply, including some intermediaries. The location of the worker and the roles of all entities in the supply chain matter.

When an EOR fits, and when it does not

EOR usually fits when

  • The person already has the right to work in Australia
  • You will direct the work, like any employee
  • You have no Australian entity, or it is still being set up
  • You want to test the market before committing to a company
  • Two years is enough time to decide your long-term set-up

Look at another route when

  • The person needs a sponsored visa (see Hire Foreigner in Australia)
  • You already have an Australian company (use payroll outsourcing)
  • The work is a defined project by a real business (see on-demand talent)
  • You plan a large local team or will sign Australian customer contracts
  • The role must run beyond two years on the same contract

Hiring without an entity: the five risks to manage

RiskWhat it meansHow to manage it
Unlicensed labour hireUsing an EOR without the right state licence exposes you as the host, not just the provider.Check the provider’s licence on the state register before you sign.
Permanent establishmentStaff who habitually conclude contracts for you can give your company a taxable presence.Assess the actual Australian activities and applicable treaty with a tax adviser. ATO
Contractor misclassificationFrom 26 August 2024, constitutionally covered businesses generally use the whole-of-relationship test. Different rules can apply to other businesses and valid opt-outs.Assess the applicable test and the actual arrangement before choosing employment or a contractor engagement. Fair Work
Fixed-term limitsFixed-term contracts are generally capped at two years in total, including renewals.Assess a lawful ongoing arrangement before expiry. Moving to another entity does not automatically reset fixed-term restrictions or remove employee rights. Fair Work
Work rightsNNRoad’s Australia EOR service covers local employees, subject to employment eligibility checks.Foreign employee hiring is assessed through NNRoad’s separate Hire Foreigner service.

What setting up your own Australian company involves

Registering a proprietary company with ASIC can be done in a day. Becoming a working employer takes longer: at least one director who ordinarily lives in Australia, a registered office, an ABN and tax registrations, GST once turnover passes A$75,000, PAYG withholding, payroll software that reports through Single Touch Payroll, a super set-up for Payday Super, workers’ compensation cover in each state, payroll tax registration once wages pass the threshold, and an understanding of the modern awards that cover your staff.
If you only want to sell into Australia for now, you may not need any of this. See doing business in Australia without a company.

Questions about EOR and PEO in Australia

An EOR employs the person through its own Australian entity, so you do not need one. A PEO in the strict sense supports a company that already employs its own staff. In practice most Australian providers that call themselves a PEO offer the EOR model, so ask who signs the employment contract.

Yes, in two ways. It can use an employer of record, or it can register for PAYG withholding and employ people directly, carrying every employer obligation itself. Many companies choose an EOR first and set up a subsidiary later.

Yes. The employee has a normal Australian employment contract with the EOR’s local entity. Because the employee works under the client’s direction, the EOR must hold a labour hire licence in Queensland, Victoria, South Australia and the ACT.

A global employment organisation (GEO) is another name for an employer of record that operates in many countries. In Australia it works the same way as an EOR.

Not by itself. Employing through an EOR does not register your company in Australia. But if your staff regularly negotiate or sign contracts for you, you may need tax advice on permanent establishment, and to consider ASIC registration.

As long as each employee’s contract stays within the Fair Work Act rules. Most EOR employment is fixed-term, generally up to two years in total, so plan your own entity or the next step before then.

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