Expanding overseas and hiring employees in Australia is a great way for remote employers to grow their businesses in the APAC region. However, onboarding foreign workers presents challenges for global companies, such as knowing how to correctly classify employees versus contractors and remaining compliant with local labor laws.
Hiring Employees in Australia: What Are Your Options?
There are two primary routes to hiring employees in Australia: partnering with a global employer of record (EoR) or establishing a legal entity in the country.
Partner With an Employer of Record
The most straightforward way to hire foreign employees is by partnering with an employer of record. An EoR takes the guesswork out of onboarding, payroll, and benefits so companies can focus on growth and managing their team—not complex employment laws.
An Australian employer of record hires, pays, and manages supported employees in Australian states and territories. Choosing to engage with a global EoR allows companies to expand overseas without creating legal entities in each new country.
For example, if a remote French software company wanted to hire a UX designer in Australia, a global EoR would become the legal employer of the company’s supported employees. The EoR would handle pay, statutory benefits, and support for the Australian UX designer.
Set Up an Entity in Australia
Another way for companies to hire employees in Australia is by setting up a legal entity. While this may make sense for companies that want to establish a permanent presence in Australia, it’s costly and time-consuming.
For example, if that same French software company wanted to establish an office in Sydney, they would need to complete the process of creating a legal entity. The company would need, at minimum, to establish a registered office address, hire a local employee to become the registered company director, and pay ongoing administrative costs.
These requirements add up to a costly endeavor for remote companies.
Can You Employ Someone in Australia as a Contractor?
Yes, it’s possible to employ someone in Australia as a contractor. While hiring contractors may seem like an easier and quicker way to expand overseas, there are complex factors to consider.
Companies that hire international contractors risk worker misclassification. Misclassification happens when an Australian employment official considers a business’s contractors as employees. The business would then face expensive fines, back pay, and reputational damage. To avoid misclassifying workers, global companies opt for a contractor classification solution. This solution ensures companies correctly classify their talent under local labor laws.
How Much Are Employer Payroll Contributions in Australia?
Employer payroll contributions vary drastically in each country. Companies that want to hire remote workers in Australia must be aware of the following employer payroll contributions.
Superannuation Fund
The Australian superannuation fund (also known as “Super”) requires employers to pay 10.5% of an employee’s salary. This contribution is called the super guarantee (SG). Australian labor law requires employers to pay the SG for almost all employees, with few exceptions.
State Taxes
Employers in Australia must pay state taxes, which vary depending on the state or territory. These taxes are a part of an employer’s total payroll contributions. Noncompliance could result in hefty fines and back taxes.
Worker’s Compensation Insurance
All companies that employ Australians must pay worker’s compensation insurance to cover both the company and the employee. These rules and rates vary between different Australian states.
In 2022, superannuation, state taxes, and employer compulsory insurance amount to about 16-21% of an employee’s gross salary.
Can a U.S. Company Hire an Australian With an E3 Visa?
Yes, a U.S. company can hire an Australian with an E3 visa, but it can be a difficult undertaking.
An E3 visa is an American visa for highly skilled Australians. The E3 visa is available only to professionals who have a university degree and whose job requires that degree for “specialty roles.” Examples of specialty roles include software developers, architects, and engineers.
The E3 visa also requires that the candidate relocates and lives in the U.S., which may create additional challenges for an Australian worker who doesn’t want to relocate.
E3 visa applications are time-consuming and don’t always guarantee that an American company can hire an Australian employee. A more simplified approach to hiring Australian employees is partnering with a global employer of record. An EoR streamlines all aspects of hiring overseas, making the E3 visa unnecessary for hiring Australian workers.
The Simple Way to Hiring Employees in Australia
Growing your business in Australia is easier than you think—if you partner with Velocity Global.
Velocity Global’s Employer of Record makes hiring Australians straightforward. Our global EoR solution handles hiring, paying, and managing Australian employees so you can focus on growth and operational decisions.
Contact Velocity Global today to begin hiring employees in Australia.
