Australia PEO Services
Working in Australia
With its reliable economy and progressive economic growth, we’re seeing an increasing number of employers look for their next expansion opportunity “down under”. As the world’s 14th largest economy, Australia is a reliable and low-risk market to enter — representing a safe but potentially rewarding option for those looking to grow internationally.
Australia is a great place to find talented people to join an international team. As well as having a well-educated workforce (well over a third of the population hold a tertiary qualification), the country also offers a multi-cultural, multi-lingual talent pool.
Thanks to its close business ties with Asia, Australia offers a potential gateway to sell goods and services into Asian markets, while its many free trade agreements also provide opportunities to do business all around the world. This combination of a thriving domestic market and a steppingstone for further global trade makes Australia a tempting target for internationally expanding companies.
Thinking about expanding into Australia?
Employment contracts and related legislation
Employees in Australia benefit from protection in the workplace through a combination of fair work laws, awards, enterprise agreements and employment contracts.
If you’re looking to expand into Australia, you should be aware that some jobs are covered by awards (modern awards). A modern award is a document which sets out the minimum terms and conditions of employment on top of the National Employment Standards (NES). These modern awards came into effect on the 1st of January 2010. Our contracts team will work with you to identify if an award applies and if so, we will ensure the contractual provisions meet the requirements of the applicable award.
Alongside awards, employment in Australia is governed by the National Employment Standards, which dictate certain statutory provisions: maximum working hours, annual leave, personal/carer’s leave and compassionate leave. It’s compulsory for employees to be provided with a copy of these provisions (Fair Work Information Statement) on commencement of employment. You can find further information on this here: https://www.fairwork.gov.au/employee-entitlements/national-employment-standards.
The Fair Work Act 2009 does not use the word ‘probationary’, but we incorporate this into our contracts for ease of understanding. The act states that a new employee must serve a minimum period of employment of six or 12 months before they are allowed to access the unfair dismissal legislation. The applicable period is subject to certain criteria.
Paid time off
The Fair Work Act 2009 allows for the following as a minimum:
In Australia, the public holidays which an employee will enjoy will vary depending on which province they reside in. Full information on these are provided to our clients during the onboarding phase.
Under national law, full-time employees in Australia are entitled to 10 days paid personal, sick or caregivers’ leave per year. Untaken sick leave accumulates from year to year, but it is not paid out on termination of employment.
Sick leave (called personal leave) can be taken when the employee is unwell or to allow the employee to care for a family member who is unwell or affected by an unexpected emergency. In Australia, sick leave is funded by the employer rather than by the state.
The Fair Work Act 2009 provides the following termination notice periods where no written agreement or relevant modern award applies:
Healthcare in Australia
Australia boasts a universal public healthcare. All permanent Australian residents have access to Medicare, the state health care provider, and this is paid for through taxes. The government is also active in trying to persuade anyone who earns over a certain threshold to take out private policies on top of their state coverage to relieve pressure on the system. Medicare provides coverage for basic healthcare coverage including GP costs, hospital costs, 85% of a specialist’s costs and pharmaceutical costs.
High earners face an extra tax unless they take out private insurance, and costs for private insurance rise incrementally once an individual reaches the age of 30. A high proportion of the population — around 50% — has private insurance. For most, this is in addition to Medicare.
There are three basic types of private insurance: hospital insurance, ‘extras’ and ambulance insurance. Hospital insurance provides cover in private hospitals with private doctors. Extras include things like glasses and dental costs. Ambulance insurance provides cover as emergency vehicles are not covered by Medicare (except in some states).
Individuals who are not resident in Australia but who may be working on a visa would not normally be entitled to Medicare in Australia — instead, the individual is required to take out their own private policy. It should be noted that some visas dictate that the policy must be one of the “registered private healthcare policy providers” and places the onus on securing this healthcare on the employee.
If an employee on a working visa doesn’t have access to the state system and is taken ill or hospitalised, this can be very costly for them and the state may well levy these charges on the employee. It’s, therefore, important to ensure employees on a visa have the requisite insurance in place.
Employers are required to pay superannuation contributions (also called “superannuation guarantee” (SG) contributions) to an approved superannuation fund for their employees at 9.5% (as of 2020) of the employees’ “ordinary time earnings”. This generally consists of wages and salaries, commissions and allowances — but not overtime.
Payroll tax is payable at a rate of between 0% and 5.5%. The actual rate will depend on the province where certain minimum thresholds will also apply.
Fringe benefit taxes
In Australia, employers have to pay an additional Fringe Benefit Tax (FBT) if they provide certain benefits to their employees. This FBT applies even if the benefit is provided by a third party under an arrangement with the employer. Examples of these include:
A fringe benefit liability may also arise if an employee incurs expenses and the employer:
The expenses can be business or private expenses or a combination of both, but they need to be incurred by the employee. If the employer incurs the expense, for example through a corporate credit card, they won’t have provided an expense payment fringe benefit. However, depending on what is paid for — a property, meal entertainment or tax-exempt body, for example — entertainment fringe benefit could arise.