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Employer of Record (EOR) in Australia

Employer Of Record In Australia

Skuad’s Australia EOR (Employer Of Record) solution makes it easier for your business to expand in Australia without the need for an institutional setup. Australia’s highly developed market economy, support for entrepreneurial growth, encouragement for new business development, and sound government initiatives make it an excellent choice for organizations looking to streamline their global expansion process. 

The legal business structures in Australia make it challenging to set up a business. This is where Skuad’s support as a tech-enabled HR platform proves to be valuable. Skuad handles all the legal formalities and other processes like hiring, onboarding, employee contracts, payroll and benefits, tax and local laws, leaving you to dedicate your time to business expansion. Skuad’s invaluable presence in Australia can help you speed up growth despite the complexities of launching a business remotely.

Australia At A Glance

Population: 25,757,558 (2021)

Currency: Australian Dollars (AUD)
Capital City: Canberra

Languages: No official language. Predominantly English (spoken by 80% of the population)

GDP: 4.5% (April, 2021)

Employment In Australia

The employment process in Australia seems complicated from the outside. This is due to a highly regulated employment system and a complex model of requirements varying across states and territories. 

The Fair Work Act is the key policy regulating employment and workplace relations in Australia. It applies to most Australian employers. As per the Fair Work Act, 2009, 10 minimum entitlements apply to all the employees in Australia, with some state public sector exceptions. These apply to both foreign employees and citizens as well.

Although all the employment laws are unified under the Fair Work Act, there are exceptions with some state legislation that govern public sector employees. Examples include Queensland, South Australia, and Tasmania. 

A thorough knowledge of all the labor laws and relevant exceptions save significant time and effort spent in the expansion process. Therefore, partnering with an EOR like Skuad would be an ideal plan of action.

Some of the provisions of employment laws to note before hiring in Australia are as follows: 

Fair Work Act 2009

This Act defines the relationship between an employer and an employee. It provides minimum entitlements like minimum wage, maximum hours of work, paid and unpaid leaves, etc.

State and Federal Anti-Discriminatory Law

Regardless of the employment status, all employees are protected from all forms of discrimination on the grounds of age, sex, marital status, race, and religion, both at the State and Federal level through anti-discriminatory laws.

Work Health And Safety Act 2011

This Act provides a balanced framework to protect employees’ health, safety, and welfare by minimizing risks through issue resolution, appropriate compliance, and enforcement measures.

Disability Discrimination Act 1992

The provisions of this Act aim to eliminate discrimination of disabled persons in areas of work, education, sports, existing laws, provisions of goods and services, etc. It promotes the right to equality, acceptance and recognition for disabled people within the community to have the same fundamental rights as other citizens.


Contractors vs. Full-time Employees

The law protects all categories of workers. But they are eligible for different entitlements based on the type of employment. Under the common law regulation, all employees have a contract of employment with their employer. Independent contractors (freelancers, consultants, portfolios, etc.) are distinguished by the nature of the relationship and based on them exercising their discretion only to produce an outcome. Therefore, they are not eligible for protection from breach of law (like full-time employees) or legal entitlements like minimum pay, wages rate, etc. Contractors can use the Independent Contractors Act 2006 in case of issues related to unfair or harsh contracts.

It is recommended to get into a contractual relationship with the employer to ensure protection and enjoy the associated benefits under the defined contract terms. 

Skuad helps organizations balance hiring full-time and contractual employees based on the organization’s current needs. Learn more to understand further when you should opt for contractors vs. full-time employees for your growing business. 

Hiring in Australia

The hiring process in Australia is quite similar to most other countries. The organizations identify the full-time opportunities or positions that need to be filled and advertise the job descriptions on several job platforms like Adzuna, CareerOne, CareerJet, Indeed Australia, etc. Organizations can use in-house recruitment teams or outsourcing agencies that help find suitable candidates for the job. Professional networking platforms like LinkedIn help hiring teams find the best talents in the market. In addition, businesses use job boards like SEEK, Jora, Gumtree, etc., that host people with zero or specific experience in specialized industries that aren’t well-represented on LinkedIn.

The applications that meet the required criteria are shortlisted for interviews after a quick background check. The shortlisted individuals then go through a series of interviews by a panel of technical experts, hiring managers, and others to understand if they are a good fit for the role and the organization’s culture. 

Once the individuals are finalized, the hiring team is responsible for ensuring they are legally eligible to work if they belong to a foreign country. All internationals have the same workplace rights and entitlements as citizens of Australia. Upon successful negotiation and an officially signed offer letter, they are considered to be rightful employees of the company.

Usage of social platforms and popular job boards like SEEK has many advantages, including access to a wide range of talent. Finding the right talent suitable for the opportunity can be quite a challenge. In addition, the process of complying with the law in the case of foreign nationals and contractors can be quite a tedious and time-consuming task for the hiring managers.

Probation & Termination

The Fair Work Act 2009 does not directly use the term ‘Probation’ but refers to the Minimum Employment Period, which is the amount of time the employee has worked in the business in relation to its size. This usually ranges from six to twelve months and can be extended based on the terms defined in the contract. 

If the employee does not meet the expectations set during the probation period, the employer has complete authority to terminate the employment by issuing a written notice as per the guidelines of the National Employment Standard. 

However, an employee can raise a general protection claim if the basis of termination breaches the workplace rights like discrimination on the grounds of gender, race, religion, etc. Therefore, it is recommended to take the help of an employer of record like Skuad, who can help you comply

EOR Solution

In overview, a tech-enabled HR platform like Skuad provides numerous benefits for businesses to manage remote employees across the globe. This includes discovering and onboarding exceptional talent irrespective of the geography, eliminating hassles of managing payroll, taxes, local compliance, etc., while hiring talent, and a seamless experience in creating legally sound labor contracts. 

All of this leads to a cost-saving and streamlined approach to an organization’s expansion across boundaries without establishing a separate entity, which comes with a high risk of legal challenges.

Outsourcing employment through an EOR

Opting for an employer of record like Skuad can prove invaluable as it saves time in setting up in-house teams for payroll, benefits, taxes, legal and local compliance, and other services. 

Customized contracts based on the needs, smooth approvals workflows and convenient e-signage of documents are some of the other additional features of Skuad. Book a demo here.

Types Of Visas In Australia

Visa Category Explanation

Employment Visa

There are two visas available:

Visa Explanation

Temporary Residence with Work Rights

This is mainly an employee sponsor visa. It grants permission to stay and work in Australia for up to 4 years.

Working Holiday Maker

People between 18-26 years of age who visit Australia for recreational purposes can apply for this visa to earn additional income during their trip. However, it is applicable only for citizens of Canada, Korea, Japan, Ireland, the Netherlands, Malta, and the United Kingdom.

Business Visa

This is a short stay visa that allows individuals to conduct business like conferences, negotiations, exploratory visits, and site visits for a period of 3 months without any limitations. The validity can be extended up to the life of your passport or 5 years, whichever is longer.

Temporary Entry Visa

This visa is required for potential immigrants who come to Australia for specific purposes that are beneficial to Australia, like skilled employment, social relations, cultural relations, and international relations. There are various sub-classes and requirements for this visa, details of which are posted on the website of the Department of Home Affairs, Australia.

Visitor Visa

This visa allows people to visit Australia for up to 3 months and is valid for 1 year from the date of issue. It does not allow for employment during the stay. The visitor visa applications are usually processed within 24 hours.

Work Permits

An EOR like Skuad has a local partner in Australia who can help process work permits for foreign nationals. Skuad’s platform enables smooth management of all the requirements and responsibilities of the employees while you get to see the overview of the individual’s activities and progress.

Skuad can help with the processing of work permits through the Skill Select program offered by the Australian government and can be initiated by employers to allow foreign nationals and serve the business needs.

Payroll & Taxes In Australia

Setting up payroll and taxes in Australia requires knowledge about local policies and regulations that bring risks and liabilities. While employing foreign nationals, the company must understand payroll tax, income tax, withholding tax, medicare costs, superannuation fund tax, etc. This can be achieved either with the help of an in-house finance team or through an employer of record like Skuad, who can save time and costs while you can focus on business expansion.

Payroll details

Employee details

Following are the details required in the process of setting up payroll.

  1. Proof of identity of citizenship (valid passport for citizens, valid permanent resident visa card + foreign passport for Australian permanent residents)

  2. Tax File Number (TFN)

  3. SuperAnnuation Form

Tax Registration

It is mandatory for employees to register for a TFN. Foreign nationals with appropriate work visas can apply for a TFN online.

Social Security

A 2% medicare is levied on the total taxable income and is deducted from the payroll in the name of PAYG (Pay As You Go). This is considered a form of social security, although not directly like in the US.

Taxation in Australia

Tax Details

Corporate Income Tax Rate

Corporations in Australia are usually taxed at 30% of their net income. Companies that have an aggregate turnover of less than $50 million are taxed at 26%.

Income Tax Rate

Taxable income Tax on this income

0 - $18,200

Nil

$18,200 - $37,000

19c for each $1 over $18,200

$37,001 - $90,000

$3,572 plus 32.5c for each $1 over $37,000

$90,000 - $180,000

$20,797 plus 37c for each $1 over $90,000

$180,000 and over

$54,097 plus 45c for each $1 over $180,000

Payroll Tax Rate

Payroll tax rates differ across various states and territories in Australia based on their minimum threshold. Please refer to the ARO website

for further information.

  • ACT - 6.85%

  • New South Wales - 5.45%

  • Northern Territory - 5.5%

  • Queensland - 4.75%

  • South Australia 4.95%

  • Tasmania - 6.1%

  • Victoria - 4.85%

  • Western Australia - 5.5%

Sales Tax

A broad GST of 10% tax is levied on most goods, services, and other items sold in Australia.

Withholding Tax

10% for Interest Payments

30% for Unfranked Dividends and Royalty Payments

Income Tax (Personal Allowance)

The tax-free income slab in Australia is $18,200.

Tax Year End Date

30th June

Tax Documents

  • PAYG payment summaries

  • Payment summary with salaries and deductions


Incorporation

The process of establishing incorporation in Australia is usually more involved and consists of various steps.

The first step is to identify what type of incorporation is to be set up. This dictates what documents are required by the Australian Securities and Investment Commission (ASIC). 

The second step is to have a proper internal governance structure in place. This minimizes the risks and helps in standardizing the decision-making process. All companies must adhere to the rules outlined in the Corporations Act, although there are exceptions for proprietary companies that have a single director and shareholder.

The third step asks for written consent from all the directors or company secretary (if applicable) involved while registering the company.

The fourth step involves registering a domain name with the Australian Securities and Investment Commission (ASIC). In addition, there must be a formal shareholders agreement in the case of multiple stakeholders. 

As the fifth step, an auditor must be appointed within one month of incorporation, and this must be formally recorded. Public companies must appoint a public offer within three months of incorporation to ensure the company is tax compliant. Additionally, the minute books must be maintained to record the member meeting notes. They must be officially signed and must legally verify the proceedings.

In the sixth step, incorporations are mandated to maintain up-to-date registers (either in digital or physical form) that consist of Option holders, Debenture holders, and shareholders.

As a final step, the incorporation must complete all tax-relevant registrations like Australian Bank Number (ABN) and Tax File Number (TFN). Critical responsibilities like compliance and reporting are integral parts of the process that vary based on the type of the company. 

The above process is challenging and has a huge impact on the company’s bottom line due to the risks and efforts involved in it. Skuad’s all-in-one platform can help you retain ownership of the organization without the actual leg work. It takes care of local employment tax guidelines and compliance risks without the actual need for a legal entity setup in Australia. Skuad does all of this by maintaining global security standards to protect sensitive information.

Professional Employer Organization (PEO)

A Professional Employer Organization (PEO) provides all HR functions like compensation and benefits, terminations, employee reviews, health insurance, tax and legal compliance, etc. It looks identical to what an Employer Of Record does but differs in one aspect. 

A PEO can take over the entire HR functions, but it shares responsibilities with the employer, whereas an EOR acts as the legal employer holding all the responsibilities and liabilities of the employees.

Based on the nature of the services provided, companies usually partner with a PEO when they need to improve the HR functions over a long period. On the other hand, EOR can serve as a good option for businesses looking to expand quickly or prefer employees as an expense instead of full-time personnel.  

Skuad provides EOR solutions that can be considered as a likely option based on the needs of the organization. Skuad’s EOR expertise enables hassle-free growth for companies looking to expand rapidly while tackling all liabilities and legal issues. 

Conclusion: What gives Skuad’s Australia EOR an edge?

Expansion of business and the establishment of new entities in other countries involves significant risks and challenges. It needs a solid understanding of local laws and how they impact the current business processes. Companies potentially spend hours comprehending the laws governing various employee types, states/territorial laws, tax rates, and finding a hold on payroll setup.

Over time, organizations realize that it’s not worth the effort since it consumes a lot of business time. Skuad’s expertise and globally distributed teams make it relatively easier to manage all the HR-related functions across geographies within no time while being compliant with all legal guidelines. Skuad has built expertise in growing remote team infrastructure in a short span and continues to improve its services multifold.

Join Skuad today to seamlessly expand without capacity restrictions and boost your business to the next level.

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