Payroll & Employment Guide Australia

In Australia, the main types of employment contracts are permanent (full-time or part-time), fixed-term, and casual. Casual contracts offer flexibility and higher hourly pay to offset fewer benefits, while permanent roles provide ongoing employment. Employment agreements can be oral, written, or electronic and should include the employment responsibilities, rights, and conditions.

Notice periods: One to four weeks.

Termination of employment: Termination of employment can occur through resignation, dismissal for serious misconduct or other valid reasons such as poor performance or redundancy, or during a probationary period.

Employers in Australia must provide mandatory employment benefits under national legislation. Many also offer additional perks to attract and retain top talent. Understanding both is key to building a competitive and compliant workforce.

• Mandatory benefits: Superannuation (11% of ordinary earnings), paid annual leave, personal/carer’s leave, paid parental leave (up to 18 weeks at minimum wage).
• Common perks: Flexible working arrangements, wellness programs, and salary packaging.
• Leave policies: Annual leave, sick/personal leave, parental leave (as per the Paid Parental Leave Act 2010).

Employers are responsible for withholding income taxes and the Medicare levy from employees’ wages. The Australian Taxation Office (ATO) administers income tax, which is calculated on a progressive scale, and additional tax rules apply to goods and services tax (GST), superannuation, and other levies.

Personal income tax rate: Australian residents pay no tax on the first $18,200 of taxable income. Income between $18,201 and $45,000 is taxed at 16%, income from $45,001 to $135,000 at 30%, income from $135,001 to $190,000 at 37%, and income over $190,000 at 45%. These rates exclude the Medicare levy of 2%, which most residents pay.

VAT: Australia doesn’t have a VAT but instead applies a Goods and Services Tax (GST) of 10% on most goods and services.

Tax allowances: The tax-free threshold of $18,200 is the primary allowance, meaning individuals don’t pay income tax on earnings up to this amount. Additional allowances include the Low Income Tax Offset (LITO), which reduces tax payable for low-income earners, and various other offsets for seniors, pensioners, and specific circumstances.

Additional tax reliefs: Taxpayers may benefit from deductions for work-related expenses, charitable donations, and contributions to superannuation.

Employers in Australia are required to pay salaries which can’t be less than the national minimum wage set by the Fair Work Commission. Salaries must be paid at least monthly, although more frequent payment cycles, such as weekly or fortnightly, are common.

Salary payment deadline: There is no fixed national deadline, but most employers pay weekly, fortnightly, or monthly, typically at the end of the pay cycle.

Taxes and contributions payments deadline: Pay As You Go (PAYG) withholding amounts must be reported and paid to the Australian Taxation Office (ATO) either monthly or quarterly, depending on the employer’s registration; superannuation contributions must be paid at least quarterly, by the 28th day after the end of each quarter.

Payroll declarations deadline: Single Touch Payroll (STP) reporting must be submitted to the ATO on or before each payday, every time employees are paid.

Payroll currency: AUD

Australia’s labour law is defined primarily by the Fair Work Act 2009, which covers all essential aspects of employment, including employment types, minimum wage, probation periods, payroll, and other employer obligations.

Total employment cost:

• Employer’s superannuation contributions: 11.5% of ordinary time earnings (capped annually).
• Employer’s payroll tax: Varies by state, generally around 5.45% for employers above the threshold.
• Employer’s accident insurance: Approximately 1.5%, but varies by industry and state.
• Employees’ Medicare levy: 2% of taxable income.

Minimum wage: $24.10 per hour or $915.90 per 38-hour week

Probation period: three to six months, depending on the role

Using Employer of Record (EOR) services in Australia enables you to hire employees legally without setting up a local legal entity. The EOR becomes the official employer on your behalf and handles all employment-related responsibilities, including:

• Legal employment and compliant contracts
• Payroll processing and tax withholding
• Administration of statutory benefits
• Employee onboarding and offboarding

Professional Employer Organisation (PEO) services in Australia offer HR and administrative support while you remain the legal employer. PEO is ideal for companies with an existing legal presence in Australia that need assistance managing day-to-day workforce operations, such as:

• HR support and employee administration
• Payroll and benefits management
• Compliance with local labour laws
• Assistance with employment contracts

Native Teams offers a payroll calculator tailored to Australia's labour laws. With our tool, you can quickly estimate net and gross salaries, as well as employer and employee contributions, along with other required deductions under Australian regulations.