Thinking about hiring talent in Australia? It’s a great move, but navigating its employment laws can feel like a full time job. From superannuation to Fair Work statements, the compliance checklist is long. This is where using an employer of record Australia solution comes in. An employer of record in Australia is a third-party organization that legally hires employees on your behalf, shouldering all the complex local HR, payroll, and compliance responsibilities. It’s a straightforward way to tap into the Aussie talent pool quickly and compliantly, without the headache of setting up a local company.

This guide breaks down everything you need to know, from how an EOR works to the nitty gritty of payroll taxes and employee rights.

What Exactly is an Employer of Record in Australia?

An employer of record Australia (EOR) is a third party company that legally hires employees on your behalf. While you manage your employee’s day to day tasks and projects, the EOR handles all the official HR and legal responsibilities in the background. They become the legal employer on paper, taking care of everything from contracts and payroll to taxes and benefits.

This setup allows you to hire full time employees in Australia without establishing a local legal entity, a process that can take months and involves significant legal and administrative costs. An EOR already has an established entity, so you can often onboard new hires in a matter of days.

What are an EOR’s Responsibilities in Australia?

An employer of record Australia takes on the full legal responsibility of an employer. Their key duties include:

• Compliant Onboarding: Ensuring all new hires are onboarded correctly, including right to work checks and providing the Fair Work Information Statement.
• Payroll and Taxes: Managing all aspects of payroll, including calculating wages, withholding income tax and the Medicare levy, and remitting payments to the Australian Taxation Office (ATO).
• Superannuation: Making compulsory superannuation (pension) contributions on behalf of the employee.
• Benefits and Leave: Administering all statutory benefits and leave entitlements according to the National Employment Standards (NES) and any relevant awards.
• Employment Contracts: Drafting and maintaining localized employment contracts that comply with all Australian laws.
• Compliance and Risk: Staying up to date with ever changing labor laws and ensuring your company remains compliant, shielding you from legal risks related to employment.

Essentially, the EOR acts as your outsourced HR and legal department in Australia, letting you focus on growing your team and business.

How Does the EOR Model Work?

The process is simple. You find the candidate you want to hire, and the EOR does the rest.

1. You Find the Talent: You recruit and select your ideal candidate in Australia (or use Bolto’s recruiting platform to source pre-vetted engineers).
2. The EOR Hires Them: The EOR hires the candidate through its local Australian entity, making them the legal employer.
3. Onboarding Begins: The EOR manages all onboarding paperwork, including the employment contract, tax forms, and right to work verification.
4. You Manage the Work: The employee integrates into your team and reports to you for all daily tasks, projects, and performance management.
5. The EOR Manages HR: The EOR handles payroll, taxes, benefits, and ongoing compliance, ensuring everything is done by the book.

This co employment relationship allows you to maintain full operational control over your employee while the EOR takes on the legal and administrative burden.

EOR vs. Establishing a Local Entity in Australia

Deciding between using an employer of record Australia and setting up your own legal entity is a key strategic choice.

• Speed and Simplicity: An EOR allows you to hire in days (see how Rebet hired four engineers in under five weeks). Setting up an entity can take four to six months and involves complex registrations with multiple government bodies.
• Cost: Using an EOR has a predictable monthly fee per employee, which is highly cost effective for small teams or for testing the market. An entity involves high upfront costs for incorporation, legal advice, and accounting, plus ongoing administrative salaries.
• Risk Mitigation: With an EOR, the compliance burden is on them. If you set up an entity, you are fully liable for any mistakes in payroll, tax, or employment law, which can lead to significant penalties.
• Scalability: An EOR is perfect for your first few hires. If you plan on building a very large team (e.g., 20+ employees) in Australia, setting up your own entity might become more economical in the long run.

Many companies start with an EOR to get established quickly and then transition to their own entity once they reach a certain scale. Platforms like Bolto offer a seamless way to manage this process, providing the flexibility you need as you grow. Learn more about Bolto’s global EOR services.

The Hiring and Onboarding Process with an EOR

Hiring through an employer of record Australia is designed to be fast and straightforward.

Steps to Hire Through an EOR

1. Partner with an EOR: Select an EOR provider that operates in Australia (compare EOR providers).
2. Provide Candidate Details: Give your EOR the information for the person you want to hire, including their role and salary.
3. Review the Employment Agreement: The EOR will draft a locally compliant employment contract for you and the employee to review and sign.
4. Complete Onboarding: The EOR will collect all necessary documents, verify their right to work, and set them up in the payroll system.
5. Start Working: Your new team member can begin working, fully onboarded and compliant from day one.

Onboarding Requirements for an EOR in Australia

An EOR must handle several key onboarding tasks:

• Right to Work Verification: Employers are legally required to verify that every employee has the right to work in Australia. This is typically done using the government’s free VEVO (Visa Entitlement Verification Online) system. Failing to do this can result in fines of up to AUD $270,000 per illegal worker.
• Employment Contract: A written contract is essential. It must meet the minimum conditions set by the National Employment Standards (NES) and any applicable Modern Awards.
• Fair Work Information Statement: By law, every new employee must be given the Fair Work Information Statement (FWIS) before or as they start their job. There is also a separate Casual Employment Information Statement (CEIS) for casual workers.

Australian Payroll, Taxes, and Superannuation

Managing payroll in Australia involves several layers of compliance that an EOR handles for you.

Payroll Processing and Payment Frequency

In Australia, employees are typically paid on a weekly, fortnightly, or monthly basis. Monthly is common for salaried professionals. The EOR ensures payments are made on time, in Australian Dollars (AUD), and with compliant payslips that detail all earnings, deductions, and contributions. If you also run payroll in the U.S. or other countries, Bolto Payroll unifies employee and contractor payments in one flow.

Employee Income Tax and Medicare Levy

Australia has a progressive income tax system, meaning higher earners pay a larger percentage of their income in tax. The tax free threshold is $18,200. On top of income tax, most employees pay a Medicare levy, which is a flat 2% of their taxable income to fund the public healthcare system. The EOR manages these withholdings (known as PAYG or Pay As You Go) and remits them to the ATO.

Superannuation Contribution

Superannuation is Australia’s compulsory retirement savings system. Employers are legally required to contribute a percentage of an employee’s ordinary time earnings into a nominated super fund. The current Superannuation Guarantee rate is 11.5% and is scheduled to increase incrementally to 12% by 2025. An employer of record Australia service will manage these contributions for you.

Payroll Tax by State or Territory

Payroll tax is a state and territory based tax paid by employers on the total wages they pay out. Each state has its own tax rate and tax free threshold. For example, in New South Wales, the rate is 5.45%, while in Victoria, it’s 4.85% (with lower rates for regional employers). The EOR is responsible for registering and paying the correct payroll tax in the state where your employee resides.

Employee Entitlements and Protections in Australia

Australia has a robust legal framework protecting employee rights. An employer of record Australia ensures you comply with all of them.

Statutory Benefits and Leave Entitlements

Under the National Employment Standards (NES), all full time employees are entitled to:

• Annual Leave: Four weeks of paid annual leave per year.
• Personal/Carer’s Leave: Ten days of paid sick and carer’s leave per year.
• Compassionate Leave: Two days of paid leave per occasion.
• Public Holidays: Paid days off for national and state recognized public holidays. Australia has national holidays like New Year’s Day and Australia Day, plus additional holidays that vary by state, such as the Queen’s Birthday.

Working Hours, Probation, and Termination

• Working Hours: The standard work week is 38 hours for a full time employee.
• Probation Period: Probation periods are common and typically last between three and six months.
• Termination and Redundancy: Employees are protected from unfair dismissal after a minimum employment period (6 months for large businesses, 12 for small). Terminations must follow a fair process and provide a minimum notice period based on length of service. Redundancy situations may require severance pay.

Employee Rights and Protections

Australian laws provide strong protections against discrimination, harassment, and workplace bullying. Employees also have the right to join unions. The Fair Work Act contains “general protections” that make it unlawful to take adverse action against an employee for exercising a workplace right.

Independent Contractor Misclassification Risk

Incorrectly classifying an employee as an independent contractor is a serious risk in Australia—review contractor management best practices to reduce exposure. The authorities look closely at the reality of the working relationship, not just the contract. Misclassification can lead to penalties, back payment of wages, superannuation, and leave entitlements. Using an employer of record Australia ensures your workers are classified correctly from the start.

Health, Safety, and Data Privacy

• Health and Safety Obligations: Employers have a primary duty of care to ensure the health and safety of their workers, so far as is reasonably practicable. This includes providing a safe work environment, whether in an office or a remote setting.
• Data Protection and IP: Australia’s Privacy Act regulates how personal information is handled. Employment contracts drafted by an EOR will also include clauses to protect your company’s intellectual property created by the employee during their employment.
• Remote and Flexible Work: Employees with at least 12 months of service have the right to request flexible working arrangements, and employers can only refuse on reasonable business grounds.

Choosing the Right EOR Provider in Australia

Selecting the right partner is crucial for a smooth experience.

Cost of an EOR in Australia

The cost of an EOR typically involves the employee’s full compensation package (salary, super, etc.) plus a monthly administration fee. This fee often ranges from USD $500 to $800 per employee per month. Some providers, like Bolto, offer transparent, flat-rate EOR pricing around $599 per employee, making it easy to budget for your global team. This fee is often far less than the cost of setting up and maintaining a local entity.

Criteria to Choose an Australian EOR

When evaluating providers, consider the following:

• Local Expertise: Do they have a deep understanding of Australian employment law, including the nuances of Modern Awards and state specific regulations?
• Platform and Services: Do they offer an integrated platform that handles more than just payroll? (Bolto’s global HR platform)
• Transparent Pricing: Is the pricing structure clear, with no hidden fees for things like onboarding, offboarding, or currency exchange?
• Global Reach: If you plan to hire in other countries, can the provider scale with you? A single partner for all your global hiring simplifies everything.
• Support: What kind of support do they offer? For startups and growing companies, having access to dedicated, human support can be a game changer.

An employer of record Australia can be your most valuable partner for international expansion. With an expert handling the complexities of compliance, you are free to build a world class team.

Ready to hire in Australia without the red tape? Book a demo with Bolto today and see how our all in one platform makes global hiring simple.

Frequently Asked Questions (FAQ)

1. How quickly can I hire someone with an employer of record in Australia?
With an established EOR, you can often have a new employee fully onboarded and ready to start in just a few days, compared to the months it would take to set up your own entity.

2. Is an Employer of Record (EOR) the same as a Professional Employer Organization (PEO) in Australia?
No. While similar, a PEO typically requires you to already have a local legal entity in Australia (PEO software guide). An EOR does not, as it uses its own entity to legally employ your staff. This makes an EOR the ideal solution for companies without a local presence.

3. Can I offer custom benefits to my Australian employees through an EOR?
Yes. While the EOR ensures all statutory benefits are provided, most providers can also help you administer supplemental benefits like private health insurance or wellness stipends to create a more competitive compensation package.

4. What happens if I need to terminate an employee hired through an EOR?
The EOR will manage the termination process in a compliant manner, ensuring all legal requirements for notice periods, final pay, and documentation are met according to Australian law, minimizing your legal risk.

5. Can I switch from an EOR to my own entity later?
Absolutely. Many companies use an EOR to enter the Australian market and later transition their employees to their own local subsidiary once it’s established. A good EOR partner can help facilitate this transition smoothly.