Moving your business to the South Pacific is a smart game plan, and it’s time you start learning about Australia employment. Inflation is at an all-time low, and Australian leaders are looking for ways to boost the economy to raise wages and create a stimulus. Your business could contribute to the spike and reap the rewards. During your global strategy creation for entry Down Under, let’s discover best practices for hiring in Australia.
Types of Australia Employment
There are four types of employees in Australia. Aside from the permanent employees, which encompass both full- and part-time workers, there are other temporary worker types recognized by the Australian labor authorities.
Permanent employees are subject to withholdings such as taxes, social security, and benefits. They also receive the right to minimum paid holidays and sick time.
Some multinational companies choose to opt for more temporary employment engagements to save money and resources. The temporary options for hiring in Australia include:
- Casual Employees
These are employees that receive a single assignment. Their work status begins and ends with that assignment.
- Fixed-Term Employees
Consider fixed-term options when there is consistent work for an employee on a short-term basis. The employment relationship ends when the term ends.
Any work with contractors or consultants is considered non-employee work.
Temporary employees receive the same benefits as permanent employees, except for the contractors. You’ll want to clarify required benefit contributions with an in-country expert to ensure your business is staying compliant.
All of these employees are required to have an Australian visa.
Legal Implications to Consider for Australia Employment
As with any country, both employers and employees must abide by both federal and state laws surrounding an employment relationship in Australia. Before setting up shop Down Under, you’ll want to collaborate with either a trusted in-country expert or an international consultant to ensure you understand the basics of employment law and stay compliant.
Legalities surrounding Australia employment typically focus on paid time off, benefits contribution, termination, and minimum wages.
Termination is of particular importance to focus on because there is no “at-will” employment in Australia, which is similar in many foreign countries.
There are strict guidelines for terminating employees in Australia. These guidelines are governed by the National Employment Standards (NES) and make it difficult to fire an employee without just cause. The reason it’s so difficult to terminate an employee is that it’s very complicated to determine just cause.
Employees let go without just cause are subject to reinstatement with backpay or up to six months compensation.
Employees can also fight the employer if there is a breach of their employment contract. For many employees, a minimum period of notice, or payment for that time, is required under the statute. Typically this equates to a maximum of five weeks.
You do not need a written agreement in Australia, but we suggest you develop one to protect your company, assets, and IP. You’ll similarly want to work with a legal expert to arrange this written agreement.
Common law already covers an employer’s responsibility to provide a safe workplace, while the employee must perform their job appropriately.
In addition to protecting your company’s property, you’ll want to address any trial periods, termination standards, and specifics regarding the position. If you’re working with independent contractors, your agreements need to express autonomy on the contractor’s behalf and also pay very close attention to the protection of your IP.
Social Security Contributions
Just like taxes, which we will dive into soon, employers contribute to their permanent employees’ social security funds. Since July 2014, employers must make contributions at the minimum rate of 9.5% into an employee’s social security. That rate increases to 10% in 2021.
Taxes for Australia Employment
Similar to the US, earnings in Australia determine tax rates. The highest marginal rate for the latest fiscal year is 47% plus the Medicare levy of 2%. The Medicare levy does not apply to non-residents.
Tax rates for Australian nationals are as follows (in Australian dollars):
- Between $1 and $18,200: 0%
- Between $18,201 and $37,000: 0-9.7%
- Between $37,000 and $80,000: 9.7-21.9%
- Between $80,001 and $180,000: 21.9-30.3%
- $180,001 and over: 30.3-less than 45%
Tax rates for Foreign Nationals in Australia are as follows (in Australian dollars):
- Between $0 to $80,000: 32%
- Between $80,001 and $180,000: $26,000 plus 32%
- $180,001 and over: $63,000 plus 45%
Paid Time Off Requirements
NES requires full-time employees receive four weeks of paid annual leave each year. This time off is prorated for part-time employees and increased to five weeks for shift workers. Temporary workers, including casual employees, do not receive annual pay by law.
In addition to the four weeks annual leave, many employees can take off time for public holidays. Full-time employees also receive ten days of paid personal days.
To learn more about expanding your business internationally, give our team of experts a call today. We’d love to talk about your strategy and discover how you can start up operations in Australia as quickly as possible.