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Hiring employees in Australia comes with legal responsibilities beyond choosing the right person for the job. Employers must meet Fair Work obligations, manage tax and superannuation, and maintain proper records. Failing to comply can result in fines, back payments, or legal action. This guide serves as a new hire compliance checklist, helping you meet every requirement from day one and ensure your business stays on the right side of the law.
Before you even begin the hiring process, it's crucial to understand whether your worker is classified as an employee or a contractor. Misclassifying an employee as a contractor can lead to breaches of FairWork obligations and ATO rules.
As a rule, employees generally have set hours, are under your direction, and receive entitlements such as paid leave. Contractors, on the other hand, run their own businesses, set their own hours, and invoice for their services.
There are also different categories of employees that you must understand when hiring. Full-time employees work ongoing, permanent roles with standard hours, usually around 38 hours per week, and are entitled to the full range of benefits under the National Employment Standards. Part-time employees also have ongoing employment but work fewer hours than full-time staff; they receive the same entitlements on a pro-rata basis. Casual employees, on the other hand, work irregular or unpredictable hours and do not have guaranteed ongoing work. While they have fewer entitlements, they are typically paid a higher hourly rate known as a casual loading to compensate for this.
Fair Work Australia provides detailed definitions and minimum entitlements for each type. Visit the Fair Work website for current guidelines.
Before you begin paying wages to employees, it’s essential to ensure your business is properly registered and set up for compliance. You’ll need a valid Australian Business Number (ABN) and Tax File Number (TFN) to operate and meet your tax obligations. You must also register for Pay As You Go (PAYG) withholding, which allows you to deduct income tax from employee wages and send it to the Australian Tax Office (ATO).
In addition, you are legally required to have workers compensation insurance in place for each employee to cover workplace injuries. Finally, make sure your payroll system is properly set up using software that complies with Single Touch Payroll (STP) reporting, so that wage, tax, and superannuation details are submitted to the ATO each pay cycle.
The NES are a set of 11 entitlements that apply to all employees covered by the national workplace relations system, regardless of any award, agreement, or employment contract. These include
In many cases, employees may also be covered by a Modern Award or Enterprise Agreement, which can provide additional conditions specific to their industry or role. These instruments sit alongside the NES and must not undercut the minimum standards it provides. Understanding both the NES and any relevant award or agreement is essential to ensuring your business stays compliant and employees receive their full entitlements.
You can learn more about the National Employment Standards on the Fair Work Ombudsman website.
An employment contract in Australia must clearly outline:
In addition to these compulsory inclusions, common optional clauses include confidentiality agreements to protect sensitive business information, intellectual property provisions to ensure ownership of work created by the employee, and non-compete or restraint clauses to limit post-employment competition.
Other useful inclusions might relate to performance expectations, dispute resolution processes, and the right to vary duties or location within reason. Though optional, these clauses can play a role in preventing misunderstandings and managing risk.
Employers often include a probation period in employment contracts to assess a new hire's suitability for the role. While probation is not legally required, it must be clearly stated in the contract if used. It typically lasts three to six months and should outline the duration, evaluation process, and outcomes if expectations are not met.
A trial period can apply before formal employment begins; however, this must comply with Fair Work rules: unpaid work trials are only lawful if they are genuinely necessary to assess a candidate’s suitability and are limited in duration. They must not involve productive work unless the person is paid for it. Both probation and trial periods must respect legal entitlements under the NES and any relevant award.
Once your employment contract is signed, there are several important onboarding steps every employer must complete to stay compliant with Australian workplace laws. First, a Tax File Number (TFN) Declaration must be collected from the employee so the ATO can determine the correct amount of tax to withhold from their pay. You must also provide the employee with a Superannuation Standard Choice Form, which allows them to nominate their preferred super fund.
All new employees are legally entitled to receive a copy of the Fair Work Information Statement, which outlines their minimum rights and entitlements at work. Additionally, it’s essential to collect and securely store your employee’s personal and emergency contact details as part of your internal records
After onboarding, the next step is to ensure your payroll systems are compliant with ATO and Fair Work requirements. This includes setting up PAYG withholding and reporting through Single Touch Payroll (STP) each pay cycle. You’ll also need to meet your Superannuation Guarantee obligations by paying at least 11% of an employee’s ordinary earnings into a complying super fund on a quarterly basis. Keeping your payroll software up to date and correctly connected to the ATO is essential for meeting these obligations accurately and on time.
Every employer in Australia is responsible for providing a safe working environment in line with Workplace Health and Safety (WHS) laws. This includes identifying potential workplace hazards and implementing measures to manage them. Safety training should be provided to all staff, and personal protective equipment (PPE) must be supplied where necessary.
In addition to these duties, employers are required to hold workers compensation insurance to cover employees in the event of a work-related injury or illness. This ensures that workers receive appropriate support, including medical expenses and income replacement, if they are injured on the job.
While not legally required, having clear workplace policies such as a code of conduct or grievance policy, helps set expectations and promotes consistency across your business. Having written policies can also help demonstrate that your business took reasonable steps to prevent misconduct or discrimination, which is important if a dispute goes to Fair Work or court.
Compliance isn’t just about ticking boxes—it’s about building a sustainable and legally sound business. When you understand and meet your employer obligations, you’ll avoid costly mistakes and build trust with your employees.
Our team at Darcy Bookkeeping & Business Services can help you manage your onboarding requirements, set up compliant payroll systems, and ensure you're meeting all tax and superannuation requirements from day one.
Learn more about our payroll services.
You must register for PAYG withholding, provide workers compensation, comply with NES, and issue contracts and onboarding forms.
The NES, applicable Modern Awards, WHS laws, and Fair Work obligations are the main frameworks you must follow.
A signed contract, TFN declaration, super choice form, and the Fair Work Information Statement must all be given to a new employee.
They must register with the ATO, comply with Fair Work and WHS rules, provide accurate contracts, and manage payroll, super, and tax correctly.
Need help managing the paperwork, payroll, and employee entitlements? Contact Darcy Bookkeeping & Business Services or call us on 1300 025 769.
