Employment Law

It is vital that all businesses employing people in Australia comply with applicable tax and employment laws. This includes laws relating to employment contracts, minimum employment rights, labor laws and wage/employment taxes.

Australian Employment Contracts

Australian National Employment Standards provide a variety of mechanisms for employing workers in Australia, depending on the industry. These options include awards, enterprise agreements or employment contracts.

Awards include minimum employment standards and outline the rules and conditions for all employees within a specific industry. These include base pay, type of employment, overtime rates, annual salary, allowances, layoffs and provisions regarding leave, resignation and termination.

An enterprise agreement sets out the working conditions of a group of employees with one employer (a "single enterprise agreement") or with multiple employers (a "multiple employer agreement").

Businesses can also enter into enterprise agreements before employees join the workforce. This is known as a "greenfield enterprise agreement" and is negotiated between business and union representatives.

Traditionally, written contracts apply to employees who do not qualify for an enterprise agreement or award. The contract should include the employee's job responsibilities, wage rate, expected hours worked per week, and vacation entitlements.

Working with our Australian PEO, Remoly's team of local experts can provide assistance in drafting strong employment contracts that comply with local regulations.

Fixed Term

Indefinite

Australian Working Hours

In Australia, national employment standards provide for a 38-hour work week. However, working hours can be extended if necessary.

Australian Payroll and Employment Taxes

Australia's pay-as-you-go tax system requires employers to withhold employee income tax and remit it to the government. Payroll taxes, pensions and other employment benefits may be subject to payroll taxes. These taxes are levied by individual states and territories and are not considered federal taxes. Therefore, tax rates vary from region to region.

Employers are required to contribute a quarterly superannuation (retirement) fund equal to 10% of the employee's gross salary to all employees earning more than A$450 a month.

In addition, Australian employers who provide fringe benefits must pay fringe benefits tax based on the value of those benefits. Fringe benefits include a company car, parking space, free private health insurance and other benefits. Laptops or mobile phones used for business purposes are not subject to fringe benefits tax.

Australia's Healthcare System

Public Insurance

In Australia, there is a universal public health care system. Permanent residents of Australia are covered by Medicare, the national healthcare provider. In addition, the government recommends that employees whose income exceeds certain monetary thresholds purchase private insurance on top of the state insurance. This provides residents with greater coverage while also taking the pressure off the public health system. Medicare provides basic health care coverage for hospital charges, a percentage of specialist charges, and drug charges.

Private Insurance

In Australia, higher-earning employees pay higher taxes if they choose not to take out private insurance. There are three main types of private insurance: ambulance insurance, hospital insurance and "extra insurance". Ambulance insurance covers the cost of emergency service vehicles that are not covered by Medicare. Hospital insurance provides coverage for private hospitals and doctors' offices, while "extra insurance" covers additional health care needs such as dental and optometry.

Non-resident Insurance

Employees in Australia on a work visa are not entitled to health insurance benefits and must purchase their own private policy. It is important to ensure that all employees have the minimum required coverage. Failure to do so may result in the employer being responsible for potential hospitalization or medical emergency expenses.

Holiday Policy

Annual Leave

Full-time workers are entitled to at least 28 days of vacation per year. However, some employers offer additional vacation time as a perk. If the employee does not take annual leave, the unpaid leave amount will be paid to the employee on termination of employment.

Personal Leave

Australian full-time employees are entitled to ten days of paid personal leave per year. This feature can be used when an employee is sick or needs to take care of a relative. If no leave is taken, it will be accumulated to the next year. However, unlike annual leave, employees are not paid for unused personal leave when employment ends.

Maternity and Paternity Leave

In Australia, female employees are entitled to the required 12 weeks of paid maternity leave, which is provided by the federal government as part of the Australian public healthcare system. This amount is paid in line with the national minimum wage and must be received over a continuous period.

In addition, female employees are entitled to "flexible" paid parental leave of up to 30 days. This does not need to be ongoing and should be negotiated with the employer.

To receive full maternity leave benefits, a woman must be the primary caregiver of a newborn or recently adopted child. Employees must also have been employed by the same company for at least 10 of the past 13 months. In addition, employees need to meet local residency requirements, earn less than $150,000 in the previous fiscal year, and are not allowed to return to work while on maternity leave.

The spouse or partner of a female employee on maternity leave is entitled to two weeks of paid leave. This cost is paid by the government as long as the employee has not received paid leave from their employer. They are also paid according to the national minimum wage.

In addition, employees are entitled to unpaid parental leave for up to 12 months.

Termination and Severance

If an employer intends to terminate employment, it must give notice to the employee. This must include the minimum statutory notice period, which depends on the employee's length of service.

• If the employee is over 45 years old and has worked for the employer for at least two years, the notice period will be increased by an additional week.
• Employers may choose to pay in lieu of notice period
• Employment contracts may require longer notice periods. In some cases, this notice period can be up to one year

An employee may be eligible to make an unfair dismissal claim if they comply with the National Industrial Relations System and have served the minimum period of employment. If the employer is a small business with fewer than 15 employees, the minimum employment period is one year. Otherwise, the minimum period of employment is six months. Employees must be protected by an enterprise agreement or award. Additionally, the employee's annual income must be below the income threshold.

If the application is successful, the employee may be reinstated. If reinstatement is inappropriate, compensation of up to six months' wages may be claimed.

If an employer lays off workers, severance may be paid. A job becomes redundant if the employer decides it no longer wants the employee to perform the job and terminates the employment relationship. When a layoff occurs, severance pay may be required. Redundancy occurs when:

• New technology replaces the need for humans to perform jobs
• A merger or acquisition means the job is no longer needed
• The company is restructured and this job is no longer needed
• Employer becomes bankrupt or insolvent
• Business downturn leads to staff reductions
• The amount of severance pay depends on the period of continuous employment of the employee with the employer.

Severance pay is not mandatory in the following circumstances:

• The employer has less than 15 employees
• The employee has worked continuously for less than one year
• The employee is an apprentice or temporary worker
• The employee was dismissed for serious misconduct
• If the employee has been employed for a specified period of time and the termination of the contract ends at that time
• If the employee works under an enterprise agreement or an industry-specific redundancy scheme which is detailed in the agreement or included in the award

For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's Australian PEOs can reduce risk for foreign companies and provide guidance during the process.

Salary and Benefits

Australian Compensation Law

Australia's minimum wage is A$20.33 per hour (A$722.60 per week for full-time workers). This applies to all employees over the age of 21. Salary and Classification Scales in Australia outlines the different salary levels across states. If a position is not included in the criteria, the employee must receive the national minimum wage.

Australian pay laws also set a maximum working week of 38 hours. However, some positions will have greater flexibility to work longer hours.

Employees must receive pay stubs within one working day of receiving wages. In most cases, wages are deposited into the employee's bank account.

Guaranteed Benefits in Australia

Employees in Australia are entitled to certain benefits, which may or may not include health care. Although it is not compulsory, many employers will provide a stipend to their employees rather than purchasing a private health insurance plan on their behalf. All employees whose taxable income exceeds a specified threshold are required to pay 2% of their income to Medicare, the U.S. primary health care system.

Employers must make mandatory contributions to state workers' compensation programs, which cover injuries suffered by employees on the job.

Employees are eligible for a certain number of days off – vacation, personal leave, maternity and paternity leave. All full-time employees must take at least four weeks of annual leave each year.

Full-time employees are eligible for 10 days of personal leave per year. There are also protections for parental leave as long as the employee meets certain eligibility requirements.

Australian Benefits Administration

For employers who choose to manage benefit payments themselves, this can be expensive and time-consuming. Employers must also be aware of Australia’s compensation laws. Otherwise, they could be subject to hefty fines.

Instead of struggling to manage benefits payments yourself, you can work with Remoly’s Australian PEO. We source, hire and onboard your employees; our global payroll department ensures your employees receive the most competitive statutory and supplemental benefits.  

Benefits and Compensation Limitations

Two of the main limitations of Australian employment law that employers need to consider are Australia's minimum wage and maximum working time regulations. Employers must be aware of these restrictions when hiring employees. Horizon will assist your company with accurate and timely distribution of benefits and compensation. Our in-house recruitment experts will hire your staff; while our payroll department will allocate benefits and remuneration in accordance with Australian workplace regulations.