Decrypting Australia’s labour environment
Article 3 minute read

Decrypting Australia’s labour environment

10 November 2016

Australia has a number of different requirements and regulations to abide by in terms of human resources; having a partner who understands local rules can provide you with everything you need to keep on top of essential HR requirements.

Here’s a brief summary of HR and payroll requirements in Australia.


  • Employers must contribute 9.5% of each employee’s gross salary and a number of pay items that cone under the heading ordinary time earnings, up to a quarterly salary cap, to a complying superannuation fund or a retirement savings account.

Public Health System

  • 2% is levied on the taxable income of Australian residents (who are eligible for Medicare benefits in Australia) to fund Medicare.

Hiring/retrenchment Issues

  • There is no statutory requirement for a written employment contract in Australia although it is common practice to do so.
  • Employers who dismiss an employee without a notice of termination to the employee in advance must pay the employee an amount equal to what the employee would have received had he/she worked during the notice period.
  • An employee dismissed due to their current role no longer being available (under certain criteria), known as a redundancy, can be entitled to a severance payment, which based on National Employment Standard under Fairwork legislation varies between four to 16 weeks’ pay, based on the employee’s years of service.

Foreign Personnel

  • A foreign worker may be employed temporarily or nominated for permanent migration to Australia only:
    • after the position is offered first to Australian residents
    • if the pay and working conditions are not inferior to those of Australians doing comparable jobs
    • when the employment does not affect long-term employment conditions and training opportunities for domestic employees.

Work Permits

  • The Temporary Business (Long Stay) Standard Business Sponsorship Visa (Subclass 457) is the most commonly used visa, which allows a foreign national to work for the sponsoring employer in Australia for up to four years.
  • Employees can also obtain permanent employer nominated work visas, such as the Employer Nomination Scheme visa (Subclass 186) or the Regional Sponsored Migration Scheme visa (Subclass 187).

Annual Leave

  • Employees are entitled to four weeks’ annual paid leave for each 12 months of service, and shift workers are entitled to five weeks’ annual paid leave for each 12 months of service.
  • To qualify for five weeks’ paid leave, an employee must be classified as a shift worker under the employment agreement. If not, the employee must fulfil the following requirements:
    • He/she is employed in an enterprise where shifts are continuously rostered 24 hours a day, for seven days a week
    • is regularly rostered to work in those shifts
    • regularly works on Sundays and public holidays.

Payroll Cycles

  • New minimum wage figures are announced on 1 July each year.  From 1 July 2016, the minimum wage is AUD$672.70 per week (AUD$17.70 per hour).

HR Legislation

Employment in Australia is governed by:

  • Common law: This includes regulations related to employment contracts between employers and employees
  • Industrial relations: All employers are governed by Fairwork Act 2009.
  • The Fair Work Act 2009 establishes 10 National Employment Standards (NES) that are statutory minimum terms and conditions of employment

Get in touch

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Note: This is only a short summary. We highly recommend to check any information in detail based upon the individual case.

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