One of the most important things to verify before hiring workers, is whether the employee can legally work in Australia. This is because an employer who takes on a worker that cannot legally work in Australia may face legal consequences, including penalties and fines. To legally work in Australia a worker must:
Be an Australian Citizen, Permanent Resident or New Zealand Citizen
Or, Have an Australian Visa. Australian Visa holders may work in Australia but some
visas may specify the type of work they can and cannot do. There are different kinds of Visas that are specific to or allow for different roles (e.g. Work Visa for engineer or Student Visa that limits working hours).
The following are workers that cannot be legally hired in Australia:
Australian Visa holders in which the visa specifically does not allow the person to work in Australia.
Non-Australian citizens without their Permanent Residency and without a Visa.
People whose Visas have expired or are no longer valid for any reason.
It is always the employer’s responsibility to verify whether the employer can legally work in Australia, including workers sourced from a contractor or labour hire company.
Tax and Superannuation Entitlements
As an employer it is your duty to ensure Tax and Super obligations are being met.
An important aspect to clarify is whether the person you’re hiring will be an employee or a contractor. It is important to make this distinction because it will directly affect your tax, superannuation and other employer obligations. The status of your hired workers for tax purposes is important, as employees and contract workers have different entitlements and obligations. The legal specifications of ’employee’ and ‘contractor’ can vary across government regulations and by state and can have different consequences for you as employer depending on the location of the organisation.
An employee is a worker you employ into your business – in most circumstances you’ll have to withhold tax from payments you make to an employee.
A contractor is a self-employed worker and has a contract with you to provide the services they offer – in most circumstances you won’t have to withhold tax from payments to contractors, unless a prior agreement has been made by the two parties in regards to taxation.
Pay As You Go (PAYG) withholding is the employer’s legal requirement to withhold amounts of the employee’s pay for income tax purposes. If you have employees, your obliged to withhold tax from each payment you make to them. Depending on the circumstances, you may also be obliged to withhold tax from payments to other workers, such as contractors. Any new employer or organization must register with the Australian Taxation Office (ATO).
Tax File Number Declarations
In order to tax your employees, you must ask them to complete a Tax file number declaration, which tells you their Tax File Number and whether they are an Australian citizen or foreign resident for tax purposes. The information provided by the TFN declaration will allow you to work out how much tax to withhold from an employee’s pay. You should also provide their TFN to their superannuation fund so it can accept superannuation contributions and pay the correct tax.
Superannuation is the retirement savings system implemented by the Australian government. Employers should pay super contributions for all their eligible employees including permanent and temporary Australian residents. All employees are covered by the superannuation guarantee legislation, regardless of whether they work full-time, part-time, or casual hours. Employers are required to contribute payments to a super fund on the employee’s behalf provided they are paid A$450 (before tax) or more in a calendar month and they are either:
18 years or older, or
under 18 and work more than 30 hours per week.
As outlined by the Australian government, business owners and employers must:
“pay super contributions for eligible employees by the cut off dates each quarter
pay at least the minimum 9.50% contribution amount of the earnings base (generally ordinary
check if any employees are eligible for a choice of super fund
provide eligible employees with a Standard choice form
pass on employee tax file numbers (TFN) to their super fund within 14 days of receiving a TFN
declaration form (if you don’t make contributions during that period, you can provide the tax file
numbers when you make the contributions)
pay super contributions for any eligible contractors
keep records of super contribution payments and that a choice of super fund has been offered to
While these things are pertinent to hiring workers in Australia, there are many other obligations to fulfill as an employer which can be applied anywhere. For instance, wages, when taking on a new employee wages and entitlements must be considered and agreed upon and should discuss worker’s insurance (e.g. compensation or safety insurance). You must also carefully understand and adhere to the employee’s rights (e.g. OH&S compliance and rights or their rights to work in an environment free of bullying and harassment) a breach of these rights may lead to legal implications. Further, it is the employer’s duty to educate and induct the hired workers on the job, the organisation and any relevant policies. The induction process can be achieved quickly and effectively by conducting an online induction. Contractor inductions can also be achieved online.