Australia boasts a robust economy with a GDP of 1.7 trillion U.S. dollars, making it one of the world’s leading advanced economies. It ranks second in GDP per capita among G20 nations, largely driven by its strong mining sector and strategic export focus. Despite experiencing its first recession in nearly three decades due to the COVID-19 pandemic, Australia continues to excel in exporting raw materials, primarily to its key trade partner, China. This economic resilience and significant export activity position Australia as an attractive destination for global business and trade.

What you need to know before hiring employees in Australia

Job market in Australia

Australia’s job market in 2024 reflects a blend of stability and evolving challenges that demand strategic adaptation:

• The unemployment rate remains constant at 3.9%, underscoring a stable economic climate, while the total employment has risen to over 14.25 million, indicating positive job growth.
• A slight dip in the participation rate to 66.6% suggests a need for policies that re-engage sectors of the workforce that may be withdrawing or underutilized.
• With 88% of businesses experiencing skill shortages, there is a clear impetus for shifting towards skills-based hiring practices. This approach broadens talent pools and aligns with the immediate needs of modern businesses.
• High inflation and interest rate hikes have increased living costs, pushing employees to prioritize competitive salaries. This trend compels a reevaluation of compensation strategies to retain top talent.
• Legislative changes and significant investment in cybersecurity are driving demand for specialized roles across sectors, not just in technology but also in areas intersecting with new regulations and digital security measures.

Australia Hiring Trends

• While the market remains tight historically, labor demand is softening, evidenced by decreased job postings and a vacancy rate that, though reduced to 2.6%, still sits nearly double that of pre-pandemic levels.
• Despite a relaxation in labor demand, talent shortages continue, particularly in healthcare and social assistance. These shortages necessitate innovative recruitment strategies to attract and retain skilled professionals.
• With wages rising by 4% against a 5.3% increase in consumer prices, the cost-of-living crisis remains a critical issue. Organizations may face higher turnover as workers seek more lucrative opportunities to counteract rising expenses.
• About 21% of job roles are highly exposed to AI innovations, which can both displace traditional roles and enhance worker productivity, potentially leading to higher wages for those adept at leveraging these technologies.
• Emphasizing flexibility, DEIB (Diversity, Equity, Inclusion, and Belonging), and pay transparency can markedly improve recruitment outcomes. Flexible work arrangements are especially appealing to carers, while pay transparency has shown to increase applications by 30%.

How to hire employees from Australia

1. Set up an entity in the country

Establishing a legal entity in Australia is a strategic step for companies aiming for long-term growth and a stable presence in the market. This approach allows for direct management of employees and offers significant long-term financial benefits.

The process involves selecting an appropriate business structure, such as a Proprietary Limited Company (Pty Ltd) or a Public Limited Company (PLC), registering with the Australian Securities and Investments Commission (ASIC), and obtaining an Australian Business Number (ABN), which also serves as a tax identifier.

Setting up an entity in Australia requires a thorough understanding of Australian corporate and employment laws, making effective HR and payroll management crucial. This highlights the importance of careful planning or seeking advice from professionals who are adept at navigating these requirements.

2. Hire independent contractors

Engaging independent contractors in Australia involves creating contracts for specific tasks or projects, offering flexibility well-suited for temporary or specialized work needs. It is crucial to correctly classify workers to prevent legal complications and penalties under Australian labor law. Keep in mind that contractors might not provide the same commitment or loyalty as permanent employees, an essential factor to consider in this employment model.

3. Partner with an EOR in the country

Using an Employer of Record (EOR) service in Australia provides a straightforward entry into the Australian market, bypassing the complexities of establishing a local entity. This method significantly lowers liabilities and increases cost efficiency. Collaborating with an EOR ensures compliance with Australian labor laws, taxation, and regulatory requirements, greatly reducing legal risks and facilitating smooth operations.

Employment Laws You Must Know Before Hiring in Australia

Compliance risk while hiring in Australia

In Australia, hiring compliance risks include misclassification of employees versus contractors, non-adherence to workplace laws, and improper handling of payroll and taxes. It's crucial to ensure employment contracts are clear and follow Australian labor regulations to avoid legal penalties and damage to your business reputation.

Key Aspects of Australia Labor Law:

Employment Contract: In Australia, employment contracts are established based on general contract law principles including offer, acceptance, intention for legal binding, consideration, and clear terms. Contracts must not offer terms less favorable than those set by legislation or awards. The distinction between employees and independent contractors is critical, assessed by courts through various criteria such as remuneration method, tax deductions, work conditions, and the level of control over work execution.

Working Hours: The workweek in Australia is defined as 38 hours

Overtime: Minimum employment conditions in Australia are detailed in the Fair Work Act, 2009, and various Industrial Awards, which may be industry or occupation-based. Award employees typically receive overtime pay for working beyond 38 hours weekly or 10 hours daily, including weekends and public holidays. Non-Award employees, while not entitled to statutory overtime pay, are expected to work only 38 hours plus reasonable additional hours necessary for their roles.

Minimum Wage: Effective July 1, 2021, Australia raised its minimum wage to 20.33 AUD per hour, equating to a weekly rate of 772.60 AUD.

Payroll laws in Australia

Employees receive their wages weekly, bi-monthly, or monthly. While there are no strict legal mandates on payment schedules, it's usual practice to pay monthly wages between the 28th and 30th, bi-weekly on a consistent day like Wednesday or Thursday, and bi-monthly on the 15th and last day of the month.

Employment benefits in Australia

Leave Policies in Australia

Paid Time Off:

Full-time employees in Australia are eligible for four weeks of paid annual leave each year. Those working shift patterns are granted five weeks to accommodate the irregular hours associated with shift work.

Public Holidays:

Public holidays differ across each state.

Sick Days:

Employees receive 10 days of paid leave annually, which can be used for sickness or to care for a family member.

Maternity Leave:

Mothers qualify for 12 months of unpaid maternity leave after a year with the same employer, with some employers offering paid leave. Additionally, a federal scheme grants 18 weeks of paid leave.

Paternity Leave:

Fathers receive 5 days of unpaid leave for the birth or adoption of a child. Employees may also seek additional leave through a Federal Government scheme.

Public Health Insurance 

In Australia, public health insurance is primarily provided through Medicare, which is the country's universal healthcare system. Funded by taxpayers, Medicare offers all Australian citizens and permanent residents access to a wide range of health services at little or no cost. These services include hospital care, primary care, and subsidized prescriptions. Medicare ensures that essential medical services are accessible and affordable, emphasizing preventive care and treatment. Additionally, residents can complement their coverage with private health insurance, which can provide benefits for services not fully covered by Medicare, such as dental care, private hospital rooms, and physiotherapy.

Filing tax in Australia

Income Tax:

In Australia, income tax is progressive, increasing in percentage as individual earnings rise. There are several brackets starting from a tax-exempt status for the lowest earners, progressing to higher rates for those with greater annual income. The tax system ensures that those who earn more contribute a higher percentage of their income. This structure helps in maintaining equity within the financial system. Additionally, standard deductions and tax credits are available to reduce liability for eligible taxpayers. For a detailed exploration of how these rates apply and potential impacts on your finances, please refer to our comprehensive guide on Australian income tax.

Other Tax and Social Security Contributions:

In New South Wales and Victoria, Australia, employer payroll contributions total 15.85% of employment costs. This includes a 4.85% payroll tax, a 1.00% Medicare levy, and a 10.00% contribution to superannuation, which is capped at 21,002.06 AUD annually. The consistent rates across both states simplify payroll calculations for businesses operating in multiple regions. For a detailed breakdown of Australia's payroll contribution structure, please refer to our comprehensive guide.

Business culture in Australia

The business culture in Australia involves understanding several key aspects that shape professional interactions across various industries:

• The Australian workplace champions egalitarian principles, encouraging open communication channels across all levels of the organization. This approachable demeanor enhances collaboration and fosters a more dynamic work environment.
• Clarity and straightforwardness are prized in business dealings. Australian professionals prefer direct communication, which aids in effective decision-making and accelerates the progress of business initiatives.
• Recognizing the importance of well-being, Australian companies often promote policies that support a healthy balance between work and personal life. This not only boosts employee satisfaction but also increases productivity and loyalty.
• Adherence to schedules is a critical component of professional conduct. Promptness is viewed as a reflection of reliability and respect for others’ time, enhancing one’s professional reputation.
• Despite a focus on efficiency, cultivating strong personal relationships is essential. Initial interactions might lean towards building trust and understanding, setting a solid foundation for future business engagements.

Top sectors to hire from in Australia

Australia's diverse economy offers significant opportunities across multiple sectors, each showing varied levels of growth and potential for employment. Here's a breakdown of the top sectors for hiring based on recent performance:

Mining Industry

Demonstrating robust growth, the mining sector saw a 32.7% increase in EBITDA to $54.3 billion and a 29.5% rise in IVA to $64.6 billion in 2021-22. This sector continues to be a powerhouse of the Australian economy, providing lucrative employment opportunities in areas such as engineering, geology, and various operational roles.

Rental, Hiring, and Real Estate Services

This sector experienced a significant rise with a 13.5% increase in EBITDA to $8.5 billion and a 15.4% jump in IVA to $13.4 billion. It offers potential for growth in property management, equipment leasing, and related services.

Wholesale Trade

The wholesale trade industry showed a remarkable recovery with a 30.2% growth in EBITDA to $8.0 billion and a 19.9% increase in IVA to $14.3 billion. Careers in supply chain management, logistics, and sales are key areas within this sector.

Manufacturing

With an EBITDA growth of 17.8% to $7.6 billion and a 15.2% rise in IVA to $16.1 billion, the manufacturing sector is rebounding, offering opportunities particularly in advanced manufacturing, production management, and quality assurance.

Agriculture, Forestry, and Fishing

Showing a strong performance with a 26.2% increase in EBITDA to $5.6 billion and a 25.5% increase in IVA to $8.1 billion, this sector is vital for those interested in agribusiness, environmental management, and marine sciences.

Professional, Scientific, and Technical Services

This sector reported the largest employment growth, adding 90,000 jobs. It is ideal for professionals in IT, consulting, scientific research, and technical services.

Health Care and Social Assistance

Adding 84,000 jobs, this sector is essential for healthcare professionals, social workers, and support staff, driven by an aging population and greater health awareness

Top cities to hire from Australia

Sydney

As the financial and economic powerhouse of Australia, Sydney is home to a vast array of industries including finance, technology, and professional services. It hosts numerous multinational corporations and startups, making it a prime location for finding diverse and highly skilled talent.

Melbourne

Known for its cultural diversity and vibrant arts scene, Melbourne also thrives in sectors such as technology, manufacturing, and education. The city's rich ecosystem of universities and research institutions makes it an ideal spot for recruiting innovative thinkers and highly educated professionals.

Brisbane

As one of the fastest-growing cities in Australia, Brisbane offers significant opportunities in the fields of information technology, public administration, and healthcare. Its growth is supported by major infrastructure projects and a strong focus on innovation.

Perth

Positioned as a hub for the mining and energy sectors due to its proximity to vast natural resources, Perth attracts professionals in geosciences, engineering, and related fields. It's also growing in sectors like technology and commerce.

Adelaide

Known for its defense and manufacturing sectors, Adelaide is expanding into technology and bio-sciences, supported by innovation hubs and academic institutions. The city is an excellent source for specialists in these evolving industries.

Hire in Australia compliantly with Gloroots

Gloroots, as an Employer of Record (EOR) in Australia, offers a streamlined solution to the challenges of entering and operating in the Australiaese market. Our EOR platform facilitates rapid candidate onboarding, ensuring quick operational setup while strictly adhering to both local and international compliance standards. Tailored for businesses of all sizes, Gloroots simplifies payroll management, benefits administration, and tax handling, eliminating the need for establishing a local entity. This enables companies to efficiently build and manage a remote team in Australia. For more information on how Gloroots can support your hiring needs in Australia, please contact us.

Frequently Asked Questions 

What are the legal requirements for hiring employees in Australia?

In Australia, employers must adhere to the Fair Work Act 2009, which sets standards for employment conditions, including wages, leave, termination, and redundancy. Employers are also required to ensure that all employees have a valid work visa if they are not Australian residents, provide a fair work information statement, and comply with tax and superannuation obligations.

How can I determine the correct award or agreement for an employee in Australia?

Identifying the correct award or agreement involves understanding the industry and occupation of the employee. The Fair Work Ombudsman's website provides tools and resources to help employers find the applicable award or enterprise agreement that outlines the minimum pay rates and conditions.

What is the standard process for onboarding new employees in Australia?

Onboarding in Australia typically involves several key steps: issuing a formal job offer and employment contract, setting up payroll and superannuation accounts, conducting necessary workplace health and safety inductions, and ensuring compliance with relevant awards or agreements. Additionally, providing new hires with an employee handbook that outlines company policies and procedures is considered best practice.

Are there specific rules regarding termination of employment in Australia?

Yes, the Fair Work Act provides clear guidelines on lawful termination of employment. Employers must give the appropriate notice period based on the length of service, which can vary or be outlined in the employment contract or award. Termination must be conducted fairly and for valid reasons, with documentation and the opportunity for the employee to respond to any allegations of misconduct or performance issues. Unfair dismissal laws protect employees from being terminated without cause