Payroll and HR in: Australia

Known for its vibrant economy, diverse culture, and strong emphasis on work-life balance, Australia is an attractive destination for businesses and expatriates. Here’s what you need to know about Australian payroll and HR. 

payroll and hr in australia
Local currency


Dialling code


Pay periods

Monthly or Fortnightly 

World Bank Ease of Doing Business





AEST (GMT+10), ACST (GMT+9.5), AWST (GMT+8) 



Tax year

July 1st – June 30th



Company tax


Social security


Wages tax

19 – 45%

Getting started with Australian payroll

Australian Wages and Pay

There are a range of statutory pay requirements in Australia, governing minimum wage, sick pay, parental pay, redundancy pay. Let’s take a look at the core considerations for each: 

As of July 1, 2023, the national minimum wage in Australia is $23.23 per hour, which equates to $882.80 per week based on a 38-hour workweek. This represents an 8.6% increase from the previous rate of $21.38 per hour.  

Casual employees who are covered by the National Minimum Wage receive an additional 25% casual loading. This increase applies from the first full pay period starting on or after July 1, 2023.  

Full-time employees are generally entitled to 10 days of paid sick leave per year, which can carry over to the next year if not used. This sick leave is included in the personal leave entitlement, which also covers carer’s leave. Part-time employees receive a pro-rata amount of this entitlement based on their hours worked. 

If an employee exhausts their paid sick leave, they may take unpaid sick leave for up to three months, provided they can supply evidence of their illness or injury. Additionally, all employees are entitled to two days of compassionate and bereavement leave for each instance of a family or household member’s death or life-threatening illness or injury. 

As of July 1st 2023, significant changes were made to the parental leave system in Australia. The Parental Leave Pay (PLP) and Dad and Partner Pay (DAPP) were combined into a single 20-week payment. This means both parents can claim an equal amount of parental leave entitlements and they can now choose to share the 20 weeks of leave, with both being able to take their leave simultaneously. 

A new income threshold was also set at $156,647 for individuals and $350,000 for families. And in an attempt to improve the flexibility of the scheme, parents can take Parental Leave Pay in blocks as small as one day at a time, with periods of work in between, and this leave must be taken within 2 years of the child’s birth. 

Starting from July 1st 2024, the duration of parental leave pay will increase by two weeks each year until July 1st 2026, reaching a total of 26 weeks. 

In Australia, severance pay and redundancy pay are different forms of compensation provided to employees upon job termination. Severance pay is not legally required; it’s offered by employers as a goodwill gesture or in recognition of an employee’s service, especially in cases like restructuring. The amount varies based on employment contracts or enterprise agreements. Redundancy pay, however, is legally mandated when an employee’s job becomes redundant. It’s calculated based on length of service, age, and earnings, with minimum standards set by the National Employment Standards (NES). Generally, employees with at least one year of service are entitled to redundancy pay, which can range from 4 to 16 weeks of pay, depending on the duration of their employment.  

Payroll and Employment Deductions in Australia

In Australia, you’re responsible for making a number of deductions from an employee’s salary during payroll, as well as making your own contributions as an employer. Here, we’ll cover what you need to know about the Australian tax and social security system: 

In Australia, the income tax rates for the 2023-24 financial year for residents are as follows: 

Taxable income 

Tax on this income 

0 – $18,200 


$18,201 – $45,000 

19c for each $1 over $18,200 

$45,001 – $120,000 

$5,092 plus 32.5c for each $1 over $45,000 

$120,001 – $180,000 

$29,467 plus 37c for each $1 over $120,000 

$180,001 and over 

$51,667 plus 45c for each $1 over $180,000 


Note that these figures do not include the Medicare levy. Employees pay 2% in addition to their income tax, known as the Medicare levy, which funds Australia’s public health system known as Medicare. 

The payment deadline for Income tax varies depending on the following: 

  1. Within 6-8 days after the payment was issued to the employee – for large employers, i.e. those with an annual PAYG amount of over AUD 1 million.
  2. By the 21st of the month following the pay period (i.e. monthly) – for medium-sized employers, i.e. those with an annual PAYG amount of between AUD 25,000 and AUD 1 million.
  3. By the 28th of the month following the end of the respective quarter (i.e. quarterly) – for small employers, i.e. those with an annual PAYG amount of less than AUD 25,000.

In Australia, both employees and employers contribute to social security through the superannuation system rather than direct social security contributions. Employers are required to contribute a percentage of an employee’s earnings to a superannuation fund, which serves as a retirement savings plan. Employees may also make voluntary contributions to their superannuation. This system is distinct from social security in some other countries where direct contributions are made to fund specific social welfare programs. 

As of 2024, the superannuation guarantee rate is set at 10.5%. Employers are required to contribute this percentage of an employee’s ordinary earnings to their superannuation fund. Employees are not mandated to make contributions; however, they can choose to contribute additional amounts through salary sacrifice or personal contributions to their superannuation account. 

Student loan repayments are managed through the Higher Education Loan Program (HELP). Repayments are income-contingent and are collected by the Australian Taxation Office (ATO) through the tax system. Once an individual’s income reaches a certain threshold, HELP repayments are automatically deducted from their salary, similar to income tax, and employers facilitate this process through the payroll system. 

In Australia, for the 2023-24 financial year, the repayment rates and income thresholds for student loans like the Higher Education Loan Program (HELP) are structured as follows: 

Repayment income (RI) 

Repayment rate 

Below $51,550 


$51,550 – $59,518 


$59,519 – $63,089 


$63,090 – $66,875 


$66,876 – $70,888 


$70,889 – $75,140 


$75,141 – $79,649 


$79,650 – $84,429 


$84,430 – $89,494 


$89,495 – $94,865 


$94,866 – $100,557 


$100,558 – $106,590 


$106,591 – $112,985 


$112,986 – $119,764 


$119,765 – $126,950 


$126,951 – $134,568 


$134,569 – $142,642 


$142,643 – $151,200 


$151,201 and above 


These rates ensure that repayments are scaled according to income, allowing for a manageable repayment process for borrowers. 

Australia’s pension system includes three main types: 

  • Age pension: Provided by the government to eligible older residents who have reached the pensionable age and meet income and assets tests. 
  • Disability support pension: Designed for residents who cannot work due to a permanent physical, intellectual, or psychiatric condition. 
  • Superannuation pension: A retirement pension funded by compulsory employer contributions and optional personal contributions throughout an individual’s working life, accessible upon reaching preservation age. 

Australian Payroll and HR Compliance

Moving onto to the key areas you need to consider to make sure you stay fully compliant with Australian employment law, now, we’ll cover the various rules and legislation governing payroll and HR compliance in Australia: 

Payroll tax

Payroll tax in Australia is a state or territory-based tax assessed on your monthly total wage bill. It’s only payable if your wages exceed the state-specific tax-free threshold, which differs across regions. Depending on your wage bill’s size and location, registration for payroll tax in each applicable state may be necessary. The current thresholds are as follows: 

Territory Tax rate Threshold
ACT – Australian Capital Territory 6.85% Annual $2,000,000
Monthly $166,666.66
NT – Nothern Territory 5.5% Annual $1,500,000
Monthly $125,000
Weekly $28,846
NSW – New South Wales 5.45% $1,200,000 per year
QLD – Queensland 4.75% $6,500,000 or less
4.95% more than $6,500,000
Annual $1,300,00
Monthly $108,333
South Australia Variable from 0% to 4.95% exceeds $1,500,00
4.95% exceeds $1,700,00
Annual $1,500,00
Monthly $125,000
Weekly $28,846
Tasmania 4% $1,250,001 - $2,000,000
6.1% $2,000,001 or more
Annual $1,250,000
Weekly $24,038
Victoria 4.85% Annual $700,000
Monthly $58,333
Western Australia 5.5% Annual $1,000,000
Monthly $83,333

Australia Employee Benefits

Mandatory employee benefits in Australia

Australia is known for offering comprehensive statutory benefits, which are generous by global standards. The benefits you must offer employees in Australia are:

Common supplementary benefits

Benefits vary from business to business and will be outlines in an employment contract. Overall, the following are considered common employment benefits in Australia:

Australia Statutory Leave and Time Off

In Australia, employees are entitled to a minimum of 20 paid holiday days per year, plus 7 public holidays, varying by state. Some employers, particularly for shift work, may offer more than the statutory minimum to prevent burnout. The holiday entitlement accrues weekly, including during annual, sick, and long service leave, and starts from the first day of employment. Unused annual leave is carried over to the next year and paid out upon termination. Public holidays depend on the employee’s primary work location, which is usually stipulated in their employment contract. 

The people of Australia celebrate 7 national holidays: 

  • New Year’s Day
  • Australia Day
  • Good Friday
  • Easter Monday
  • Anzac Day
  • Boxing Day
  • Christmas Day

In addition to the national holidays there are holidays individually declared by the state and territory governments. 

Legally, employees are eligible for up to 12 months of unpaid maternity leave if they have worked for their employer for at least 12 months before the expected birth. They can also request an additional 12 months of leave, and this can only be refused on reasonable business grounds. Employers must keep the job available for the employee’s return.  


Additionally, Australia offers a government-funded Paid Parental Leave scheme—covered earlier in “Australian Wages and Pay”—providing financial support for up to 20 weeks. This scheme is separate from an employer’s leave provisions and it is down to you as the employer to decide if you offer your teams more than the statutory minimum requirements. 


Casual employees employed on a regular and systemic basis for at least 12 months are also entitled to unpaid parental leave.  

Pregnant employees can also have rights to be provided with a safe job or unpaid special maternity leave in certain circumstances. 

The leave must start and end within 24 months of the birth of the child. 

As mentioned earlier, Parental Leave Pay (PLP) and Dad and Partner Pay (DAPP) have now been combined into a single payment, giving fathers greater access to paid time off following the birth of a child. 

They can take up to 12 months of unpaid parental leave, with the possibility to request an additional 12 months. Eligibility requires a minimum of 12 months’ employment before the child’s birth or adoption. 

The leave must start and end within 24 months of the birth of the child. 

Surrogacy rights 

If a surrogate has responsibility for the care of the child, she is entitled to the same maternity rights set out above. However, when this responsibility for the child ends then her entitlement to unpaid leave also ends. The parents of a child conceived via surrogacy are only entitled to parental leave if they adopt the child.  

Adoption rights

Employees that adopt a child under 16 years of age are entitled to parental leave. They are also entitled to up to two days of unpaid pre-adoption leave to attend interviews or examinations required for the adoption. 

NES extends the parental leave provisions to apply to same-sex couples.  

Circumstances in which leave can be paid:  

  1. If the employer has their own paid leave scheme, where longer serving employees will be granted paid leave for a period. This type of entitlement is purely contractual. 
  2. Limited entitlements to government funded leave (Paid Parental Leave Scheme). 

Additional types of leave include: 

  • Bereavement leave: typically two days per occasion, available to employees, including casuals, immediately upon starting employment. 
  • Jury duty: for the duration of the jury service. Employers are not required to pay for this leave beyond the first 10 days. 
  • Long service leave: 8.67 weeks of paid leave after 10 years of service, accruing from the fifth year of employment. 

Setting up a legal entity in Australia

When setting up your business in Australia, you have two choices. You can open a branch of your existing business. This means that, while the practices of your branch must comply with Australian law, your company will still be recognised as an international business based elsewhere. Alternatively, you create a subsidiary company. 

An Australian branch of your business will require more administrative work. You’ll need to provide significant financial data that proves solvency and legal compliance. You will not automatically be subjected to an audit by the Australian Securities Investment Commission, but this may be requested. Once approved, you will be provided with an Australian Registered Body Number (ARBN). 

A subsidiary company will be an entirely new company that trades exclusively in Australia. Typically, your existing business will own the shares of this company. A subsidiary company can be owned by an overseas business, but at least one director position must be held by an Australian national. 

It’s the tax implications that really separate a branch from a subsidiary company. If you open an Australian branch of an overseas business, you will only pay business tax on profits generated in the country. However, any losses to the bottom line of an Australian branch will be absorbed by the overseas business. This can impact profit margins. 

If you create a subsidiary company, your global profits will be assessed by the Australian tax authorities. This, naturally, can lead to greater tax repayments. However, there’s also an element of security to this approach. Losses incurred by an Australian subsidiary business are the sole reserve of this company. 

Weigh up these pros and cons and decide whether an Australian branch of your existing company or a new subsidiary business will meet your needs best. 

Entity set-up FAQs

There is no minimum share capital required to set up a business in Australia, as long as you providesomething. This could be as little as AU$1. 

We recommend allowing 10 weeks for a fully managed incorporation of a local entity.The exception to this is when the Australian Securities Investment Commission needs to review your application. If you are opening a branch of an overseas business, you will also be asked to provide more data to the ASIC. 

Australian law protects employees from unfair dismissal. Underperformance or undesirable behaviour are rarely grounds for instant termination of employment. The employee will need to be considered guilty of serious misconduct. Examples of this include: 
• Theft 
• Fraud 
• Physical or verbal assault on colleagues, customers or clients 
• Intoxication at the workplace 
• Wilful refusal to follow instruction 
Serious misconduct must be proved to be deliberate, harm the reputation or profitability of the employer, risk the health or security of others, and make continuing employment untenable. If a misdemeanour does not meet these criteria, an employer could be sued for unfair dismissal. 

For an international business to open an Australian branch, it must first register as a foreign company, as per the Corporations Act of 2001. This is achieved by supplying legal and financial data to the Australian Securities Investment Commission (ASIC). Once this branch has been registered, at least one Australian resident must be employed as a local agent.  This individual will be responsible to ensuring the branch complies with the Corporations Act. 

If your business is a proprietary company, at least one Australian resident must act as a director. For a public company, a minimum of three directors are required, no less than two of which must be Australian residents. 

Country nuances

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