Requirements of Hiring Employees in Australia

Contract of hiring employees in Autralia

Contracts must follow the regulations set by the National Employment Standards but can be agreed upon either verbally or through a written contract.

Immigration Requirements

Employees must have a 457 visa to work in Australia. Employees and employers must have an agreement or employment contract before the employee enters Australia.

HR & Labor

Working hours: Employees working full time will work 38 hours a week. Employees working overtime on regular workdays are guaranteed 150% of regular wages. Employees working Sundays are guaranteed 200% of regular wage. Employees can ask for time off instead of overtime compensation.

Minimum working age: The minimum age requirements vary from state to state.

• New South Wales, South Australia, and Tasmania: no minimum working age.

• Victoria and 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.

Payroll

Salaries for work completed between the first and last day are disbursed on a monthly basis. The most common payday is the 28th of the month but may be decided between the employee and employer.

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Social Security in Australia

Social Security Deductions in Australia

When hiring employees in Australia, employment law maintains that, employers are required to contribute to a complying superannuation fund or retirement savings account on behalf of their employees, at a rate of 9.5% of the employee’s “ordinary time earnings,” up to a maximum earnings base of AUD 52,760 per quarter in 2017/18.

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. 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%

*Note:

  • Rate of 9.5 percent is applied to a capped earnings level of AUD 52,760 per quarter (2017/18 rates).

**Note:

  • A further Medicare levy surcharge (up to 1.5%) may be imposed on taxpayers whose taxable income exceeds a certain threshold only if they do not hold appropriate private hospital insurance.

Australian superannuation guarantee insurance: 9,5% of employee’s monthly gross salary.*

Medicare levy insurance: 0% of employee’s monthly gross salary.**

Total cost: 9.5%

*Note:

  • Rate of 9.5 percent is applied to a capped earnings level of AUD 52,760 per quarter (2017/18 rates).

**Note:

  • A further Medicare levy surcharge (up to 1.5%) may be imposed on taxpayers whose taxable income exceeds a certain threshold only if they do not hold appropriate private hospital insurance.

Individual Income Tax & Benefits in Australia

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.

Residents Tax Rates In Australia

*Note:

  • The above rates do not include the Medicare levy of 2%. The above rates include changes announced in the 2018-19 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 25,000.

Charitable contributions- Charitable contributions of AUD 2 or more are generally deductible where they are made to entities that are specifically named in the tax law or endorsed by the Commissioner of Taxation as ‘deductible gift recipients’.

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, number of children, and ages of children, and change from year to year.

A goods and services tax of 10 percent applies to most goods and services.

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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:

Termination Policies in Australia

Severance Pay

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:

Severance Pay in Australia

*Note:

  • 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

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2018-12-03T23:13:22-03:00November 27th, 2018|Hiring Employees Guides|