Australia Labor Law Guide for Hiring Employees and Contractors

Australia’s economy remained robust in 2023, with a GDP of approximately USD 1.5 trillion, making it one of the largest economies in the Asia-Pacific region.

The country’s economy is diversified, with significant contributions from sectors such as mining, agriculture, manufacturing, and services, particularly finance, education, and tourism.

The country’s currency is the Australian Dollar (AUD).

Australia

Minimum Wage

AUD 24.10 per hour

Overtime Wage

1.5 times the regular hourly rate for the first 2 hours, 2 times thereafter

Meal Breaks

30 minutes

Rest Breaks

Two 10-minute breaks

Working hours

8 hours per day, 38 hours per week

Salary Payment Cycle

Weekly, bi-weekly, or monthly

Payroll Taxes

Pay As You Go (PAYG) withholding, Superannuation

Paid Vacation

20 days

Overtime Hours

Beyond 38 hours per week

Night Shift Hours

1.5 to 2 times the regular hourly rate, depending on the industry and agreement

Holidays

10-12 days (varies by state)

No Work Days

Typically Saturday and Sunday

Hiring Laws

In Australia, businesses intending to hire workers must be registered locally and obtain an Australian Business Number (ABN). The cost of setting up a business entity varies depending on the type of structure, ranging from AUD 400 to AUD 1,000, and the process typically takes 1 to 2 weeks.

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Employers are required to provide written employment contracts, which should include details such as job title, duties, salary, benefits, working hours, and termination conditions. The Fair Work Act 2009 governs employment relations, and all contracts must comply with the National Employment Standards (NES). The NES outlines minimum entitlements such as maximum weekly hours, annual leave, and personal leave.

Labor laws in Australia differentiate between employees and independent contractors. Employees are entitled to various benefits and protections under the law, while contractors typically operate under different terms and are not entitled to the same benefits, making it important to distinguish between the two clearly.

Minimum Wage

Australia enforces a national minimum wage, which is AUD 24.10 per hour as of 2024. This rate applies to all full-time, part-time, and casual employees, although casual employees are entitled to a higher rate to compensate for the lack of benefits like paid leave.

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Some workers, such as apprentices or those in certain industries, may have a different minimum wage under specific awards or enterprise agreements. However, the minimum wage set by the Fair Work Commission applies uniformly across all states and territories, and no region can set a lower rate.

Employers must also pay penalty rates for work done on public holidays, Sundays, or outside regular working hours, depending on the applicable award or enterprise agreement.

Working Hours

The standard working hours in Australia are 38 hours per week, with 8 hours per day being the norm. Any work beyond these hours is considered overtime and must be compensated at a higher rate, typically 1.5 times the regular hourly rate for the first two hours and double time thereafter.

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Night shift work usually attracts a higher pay rate, ranging from 1.5 to 2 times the regular hourly rate, depending on the industry and specific agreements. The minimum age for employment is 15 years, although some states have different requirements, and strict laws prohibit child labor.

Payroll and Taxes

Employers in Australia are required to make several payroll deductions, including Pay As You Go (PAYG) withholding and superannuation contributions. PAYG withholding is the income tax withheld from an employee’s salary, and employers must remit this to the Australian Taxation Office (ATO).

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Superannuation is a compulsory retirement savings program, and employers must contribute a minimum of 11% of an employee’s ordinary time earnings to a superannuation fund.

Australia’s income tax regime is progressive, and the tax rates for 2024 are as follows:

Income Level (AUD)

Tax Rate

Up to 18,200

0%

18,201 – 45,000

19%

45,001 – 120,000

32.5%

120,001 – 180,000

37%

Over 180,000

45%

Employers are also required to deduct Medicare Levy and, in some cases, additional levies such as the Temporary Budget Repair Levy.

 

Statutory Leave Policies

Employees in Australia are entitled to various types of leave, including annual leave, sick leave, and parental leave. Full-time employees are entitled to 20 days of paid annual leave per year, while part-time employees receive leave on a pro-rata basis.

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Maternity leave entitles eligible employees to up to 12 months of unpaid leave, with the option to request an additional 12 months. Parental leave is also available for fathers and partners under similar terms. Sick leave, or personal/carer’s leave, provides 10 days of paid leave per year.

The following table lists the mandated public holidays in Australia:

Holiday Name

Date

New Year’s Day

January 1

Australia Day

January 26

Good Friday

Date varies

Easter Monday

Date varies

ANZAC Day

April 25

Queen’s Birthday

Date varies by state

Christmas Day

December 25

Boxing Day

December 26

Labour Day

Date varies by state

Additional state holidays

Date varies by state



 

Employee Benefits

Employers in Australia must provide various employee benefits, including compulsory superannuation contributions for retirement savings. Additionally, employees are entitled to healthcare benefits through the public Medicare system, which is funded by the Medicare Levy.

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Annual bonuses and other incentives are typically outlined in the employment contract or enterprise agreements. Some industries also mandate additional benefits such as long service leave, which provides extended paid leave after a specified period of continuous service with the same employer.

Employee Termination

Australia does not follow “At-Will Employment” laws. Employment termination is regulated by the Fair Work Act 2009, which requires employers to have a valid reason for dismissal and to follow a fair process. Termination must be based on reasons such as misconduct, poor performance, redundancy, or incapacity to perform the job.

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The notice period required for termination depends on the length of service, ranging from one to five weeks. In cases of redundancy, employees are entitled to redundancy pay, which is calculated based on their years of service.

Employees have the right to challenge an unfair dismissal through the Fair Work Commission, which can order reinstatement or compensation if the dismissal is found to be unjust. Legal grounds for termination include gross misconduct, failure to meet performance standards despite warnings, and operational requirements leading to redundancy.

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