Employment, Payroll & Superannuation: Hiring Your First ANZ Team

Australia's employment landscape is governed by the Fair Work Act 2009, which establishes a nationally consistent set of minimum conditions for the vast majority of private-sector employees. As a foreign employer operating in Australia — whether through a local subsidiary, a registered foreign company, or an employer of record — you are subject to this framework from the day your first employee starts work. There is no grace period for new entrants, and ignorance of the rules is not a defence.

The two pillars you must understand immediately are the National Employment Standards (NES) and modern awards. The NES comprises 11 minimum entitlements that apply to all national system employees regardless of any agreement: maximum weekly hours (38 ordinary hours plus reasonable additional hours), flexible working arrangements, parental leave (including, from 1 July 2025, government-funded Parental Leave Pay that now attracts 12% superannuation), annual leave (four weeks per year for full-time employees), personal and carer's leave, community service leave, long service leave, public holidays, notice of termination, redundancy pay, and a Fair Work Information Statement that must be given to every new hire.

Modern awards sit above the NES and prescribe industry- or occupation-specific minimum pay rates, penalty rates for evenings and weekends, overtime rules, and allowances. Australia has more than 120 modern awards currently in force. Tech employers most commonly deal with the Professional Employees Award (covering software engineers and IT professionals above a certain seniority threshold), the Clerks — Private Sector Award, and the Banking, Finance and Insurance Award. If your employees' total remuneration significantly exceeds the award rate — a common situation in tech — you may be able to satisfy award obligations through "annualised salary" clauses, but you must still audit that the arrangement does not leave any employee worse off over a 12-month period.

Unfair dismissal protections apply to employees once they pass a minimum employment period of six months (or twelve months for small businesses with fewer than 15 employees). Dismissal must be for a valid reason related to conduct or capacity, and a fair procedure must be followed. Foreign founders accustomed to at-will employment in the US or more flexible arrangements elsewhere should treat Australian dismissal law with particular seriousness — claims are cheap to lodge, can be resolved within weeks, and reinstatement is a genuine remedy.

Many early-stage tech companies assume they can simply pay a market salary and ignore award coverage. This is a risky approach. Modern award obligations are not just about minimum pay — they also govern overtime, rest breaks, rostering, and annualised salary reconciliations. The Fair Work Commission conducts annual wage reviews, and rates typically increase each July. Award non-compliance is one of the most common forms of wage theft prosecuted in Australia, with civil penalties of up to A$94,000 per contravention for corporations (and higher for serious contraventions under the criminal wage theft provisions that took effect in January 2025).

Practically, your first step should be to classify every role against the relevant modern award using the Fair Work Commission's award finder tool. Where employees are clearly award-free — typically highly paid managers and professionals — document that determination. For anyone who could fall within award coverage, either pay above the award rate with a clear "offset" clause in the employment contract, or conduct an annual reconciliation to confirm no shortfall. Many Australian payroll software platforms (including Xero, MYOB, and Employment Hero) maintain award rate libraries that update automatically following the annual wage review.

The Superannuation Guarantee (SG) is Australia's compulsory employer retirement contribution scheme, and it is one of the most significant payroll obligations you will face. From 1 July 2025, the SG rate reached its final legislated level of 12% of ordinary time earnings (OTE). This was the last step in a phased increase that began at 9% in the early 1990s, and the 12% rate is now permanent unless Parliament legislates otherwise. All employers — including newly arrived foreign companies — are required to contribute from the first pay run for any eligible employee. ATO Key Super Rates and Thresholds publishes the current and historical rates.

Ordinary time earnings is a defined term and does not simply mean base salary. It includes base salary, commissions, shift loadings, and allowances paid for ordinary hours of work. It excludes overtime payments (where the overtime rate is separately identifiable), some travel and expense reimbursements, and certain termination payments. Getting the OTE calculation wrong — in either direction — creates SG shortfalls that attract a non-deductible Superannuation Guarantee Charge (SGC), nominal interest, and an administration fee.

The maximum contribution base for 2025–26 is A$62,500 per quarter (A$250,000 per year). Above this threshold, you are not required to pay SG on the excess, so the effective cap on employer super contributions under the SG regime is A$7,500 per quarter (12% × A$62,500). High-earning executives may negotiate salary-sacrifice arrangements to direct additional pre-tax income into super, but that is a separate voluntary mechanism.

A noteworthy development from 1 July 2025: government-funded Parental Leave Pay now attracts a 12% super contribution for children born or adopted on or after that date, increasing the cost of parental leave for employers who top up government pay and a direct benefit for employees on statutory leave. Mercer's superannuation guidance covers the transition and its practical implications for employers.

The most significant structural change to Australian superannuation in decades takes effect on 1 July 2026: the introduction of Payday Super. Under the current regime, employers have until the 28th day after the end of each quarter to remit super contributions. From July 2026, contributions must be paid to an employee's nominated super fund within 7 days of the payday on which the related wages are paid. Late payments will attract the SGC with interest calculated from the day the contribution was due.

For a foreign company setting up payroll in Australia now, Payday Super should be treated as the default design target rather than the future exception. The practical requirements are considerable: your payroll system must be capable of generating a super payment instruction on every pay run; your payroll processing timetable must include a 7-day remittance window; and your cash flow management must ensure funds are always available — fortnightly payroll means up to 26 super remittances per year instead of four. ATO Key Super Rates and Thresholds confirms the July 2026 commencement date.

You will also need to implement the SuperStream standard — the electronic data and payment standard through which employers remit contributions to super funds. SuperStream requires an employer to send a data message and a payment simultaneously to the fund's electronic service address (ESA). Compliant payroll platforms handle this automatically; if you are using a manual or custom payroll process, build SuperStream capability into your specification before go-live.

Pay As You Go (PAYG) withholding is Australia's income tax withholding system. As an employer, you are required to withhold tax from employees' wages and remit it to the Australian Taxation Office (ATO) on their behalf, either monthly or quarterly depending on the amount withheld. Before you pay your first employee, you must register for PAYG withholding through the ATO's Business Portal or via your tax agent — this is separate from and additional to your ABN registration.

Withholding amounts are determined by the ATO's tax withheld schedules, which take into account an employee's annual salary, any tax file number (TFN) declaration they have provided, and their residency status. Employees who have not provided a TFN must have the top marginal rate (currently 47% including the Medicare levy) withheld from all payments. It is important to obtain a completed TFN Declaration from every new employee before their first pay run — this is both a practical requirement and a payroll hygiene issue.

Foreign employees on working visas are typically treated as Australian residents for tax purposes once they are in Australia for 183 days or more, but this is a facts-and-circumstances test and you should seek advice for workers who may be on short rotations or who have not clearly established residency. Working holiday makers (subclass 417 or 462) are taxed under a separate schedule (15% on the first A$45,000 of Australian-source income).

Single Touch Payroll (STP) is the ATO's real-time payroll reporting framework, and it is mandatory for all employers regardless of size. Under STP Phase 2 (which has been in force since 2022), employers must report each employee's gross earnings, tax withheld, and superannuation information to the ATO on or before each payday — not monthly, not at year-end. The STP report is transmitted automatically by your STP-enabled payroll software each time you complete a pay run. ATO Single Touch Payroll guidance sets out the full reporting requirements and approved software providers.

The practical implication for a new employer is that your payroll software selection is a compliance decision, not just an operational one. You must use ATO-approved STP-enabled software. The major options suitable for foreign companies entering Australia include Xero (cloud, widely used by accountants), MYOB (strong local support), Employment Hero (popular with tech companies for its HR and payroll integration), and KeyPay. When combined with the Payday Super requirement from July 2026, these platforms will need to handle super remittances and STP reporting simultaneously for every pay run.

At year end, you finalise your STP submission rather than issuing paper payment summaries. Employees access their income statement directly through myGov. This eliminates the traditional end-of-year PAYG Payment Summary process — a welcome simplification for employers, but one that requires your payroll data to be accurate throughout the year rather than corrected at year-end.

Payroll tax is a state and territory-based tax on the wages paid by an employer. It is entirely separate from federal income tax and PAYG withholding, and it is one of the most commonly overlooked costs for foreign companies establishing their first Australian team. There is no federal payroll tax in Australia — each of the eight states and territories administers its own scheme with its own rate, threshold, and definition of "wages." The Australian Business Register's state-by-state payroll tax guide provides a useful comparative overview.

The three states most relevant to tech companies in 2025–26 are:

• New South Wales (NSW): 5.45% on annual wages above A$1,200,000. The threshold is reduced for groups with wages above A$10M. Source: Revenue NSW — Payroll Tax Thresholds and Rates.
• Victoria (VIC): 4.85% on annual wages above A$900,000 (with an additional mental health and wellbeing surcharge of 0.5% applying to employers with national wages above A$10M).
• Queensland (QLD): 4.75% on annual wages above A$1,300,000.

Rates across all states and territories range from approximately 4.0% to 6.85%, with the ACT and Tasmania at the lower end and the Northern Territory and Western Australia varying by threshold structure. The "wages" definition is deliberately broad and typically includes salaries, allowances, superannuation contributions, fringe benefits (grossed up), and certain contractor payments where the contractor is deemed to be an employee for payroll tax purposes — a significant trap for companies that engage workers as contractors rather than employees.

Payroll tax grouping is one of the most consequential — and most poorly understood — aspects of Australian payroll tax for foreign companies. Under the grouping rules that apply in every Australian state, related entities are treated as a single employer for the purpose of determining whether the payroll tax threshold is exceeded. "Related" is broadly defined and captures entities that share common ownership (typically 50%+), entities that have a controlling interest in one another, or entities that are otherwise commonly controlled.

The practical effect for a foreign company is stark: if your global parent employs 2,000 people worldwide and has wages well above any Australian threshold, your new Australian subsidiary may have no access to the free threshold at all from its first day of operation, even if it has only two or three local employees. The threshold is shared across the group, and where the group's Australian wages alone are negligible, the overseas wages are irrelevant — but where the group has any Australian payroll at all, the threshold allocation rules apply.

Each state has slightly different grouping rules and different mechanisms for applying the threshold across group members, but the core principle is consistent. Before hiring your first Australian employee, have your tax adviser confirm whether your entity will be grouped with related domestic or foreign entities, and what proportion (if any) of the threshold you will be entitled to claim. Registration for payroll tax in the relevant state is generally required within 7 days of the month in which your wages first exceed the monthly equivalent of the annual threshold.

If you want to relocate an existing overseas employee to Australia — a common strategy for tech companies that want their most trusted senior hire to establish the local operation — the primary pathway is the Skills in Demand (SID) visa, subclass 482. This visa replaced the Temporary Skill Shortage (TSS) subclass 482 on 7 December 2024, introducing a restructured three-stream model designed to better target Australia's genuine skills shortages. Department of Home Affairs — Skills in Demand Visa is the definitive source for current criteria and processing information.

The three streams are:

• Specialist Skills stream: For highly paid specialists in any occupation. The income threshold is A$141,210 per annum to 30 June 2026, rising to A$146,717 from 1 July 2026. This stream has no occupation list requirement — if your candidate earns above the threshold, most tech roles will qualify. Visa duration is up to four years; this stream provides a pathway to permanent residence via the Employer Nomination Scheme (ENS) subclass 186.
• Core Skills stream: For occupations on the Core Skills Occupation List (CSOL). Income threshold is A$76,515 per annum to 30 June 2026, rising to A$79,499 from 1 July 2026. Software engineers, cybersecurity analysts, and data scientists are typically on the CSOL.
• Labour Agreement stream: Available where a Labour Agreement has been negotiated between an employer and the Department of Home Affairs, typically for industries or roles not covered by the other streams.

Income thresholds are confirmed by Fragomen's Australian immigration updates, one of the leading immigration law firms in the market. Salary must also meet the Annual Market Salary Rate (AMSR) — broadly, you cannot pay a visa holder less than an equivalent Australian worker would receive for the same role in the same location.

English language proficiency is a standard requirement for the Skills in Demand visa, usually demonstrated by an IELTS score of 5.0 in each band (or equivalent in PTE Academic, TOEFL iBT, or Cambridge C1 Advanced). However, a number of nationality-based exemptions apply. Irish passport holders are exempt from the English language test requirement — a meaningful advantage for Irish tech companies relocating staff to Australia. Citizens of the United Kingdom, United States, Canada, and New Zealand are similarly exempt.

Beyond the language requirement, the 482 visa process requires the sponsoring employer to first be approved as a Standard Business Sponsor (SBS). This involves a separate application to the Department of Home Affairs demonstrating that the business is lawfully operating and has a genuine need to employ overseas workers. Sponsor approval typically takes two to eight weeks for new sponsors and is valid for five years. Once sponsorship is approved, the nomination (the specific role and salary package) and the visa application (the individual worker) are lodged — often concurrently to save time. Total processing time from initial sponsor application to visa grant currently ranges from two to six months depending on stream and individual circumstances.

Sponsors have ongoing obligations: you must pay the Skilling Australians Fund (SAF) levy (A$1,200/year for small businesses or A$1,800/year for larger businesses, per worker, per year), ensure the visa holder is employed in the nominated role, and not pass the cost of sponsorship on to the worker. Breaching these obligations can result in cancellation of sponsorship approval and bar you from sponsoring future workers.

An Employer of Record (EOR) is a third-party organisation that employs workers on your behalf in a jurisdiction where you do not yet have (or do not wish to establish) your own legal entity. In Australia, this means the EOR holds the employment contracts, runs the payroll, remits PAYG withholding and superannuation, manages workers' compensation insurance, and handles HR administration — while you direct the day-to-day work of the employees. The EOR charges a fee (typically 10–20% of employment cost, or a flat monthly fee per employee) in exchange for carrying the compliance burden.

The EOR model is widely used by foreign tech companies for their first one to three hires in Australia. Providers active in the Australian market include Deel, Remote, Rippling, and Velocity Global, among others. The key advantages are speed (you can have an employee working in Australia within days rather than months), reduced upfront cost (no need to incorporate, open a bank account, or register for payroll tax before a single employee starts), and risk mitigation (the EOR's compliance team stays current with Fair Work obligations, award updates, and payroll tax changes, reducing your exposure).

The disadvantages become material once your Australian team reaches a certain scale. EOR fees accumulate; at five or more employees, the annual cost differential between EOR and running your own entity typically exceeds the cost of establishing and administering the subsidiary. There are also commercial and cultural constraints: Australian clients, enterprise customers, and government counterparties often require a locally-incorporated entity for contract purposes; employment contracts under an EOR may be less flexible than direct contracts; and your employees know they are employed by a third party, which can affect culture and retention.

The inflection point for transitioning from EOR to a wholly-owned subsidiary with direct employment varies by company, but common triggers include: reaching three to five local employees (at which point EOR fees typically exceed subsidiary running costs); winning a significant Australian contract that requires a local entity; seeking to engage an Australian co-founder or senior executive who expects an employment contract from the operating company; or beginning to recruit locally at volume where the EOR model creates friction in the candidate experience.

The transition process itself requires careful sequencing. You will need to incorporate your Australian entity (typically a Pty Ltd subsidiary), obtain an ABN, register for PAYG withholding and GST, open a business bank account (allow four to eight weeks for KYC clearance at a major bank), register for workers' compensation insurance in each relevant state, set up your payroll platform with STP capability, and register for payroll tax if your wages will exceed the relevant state threshold. Employees transitioning from the EOR will need new employment contracts and will typically carry over their continuity of service for leave and unfair dismissal purposes — confirm this in the transition deed with the EOR.

For companies that want to hire in both Australia and New Zealand simultaneously, running an EOR for the first few hires in each country in parallel — before establishing separate subsidiaries — is a common and practical approach. New Zealand EOR providers include the same global platforms as Australia, though local specialists with deep New Zealand employment law knowledge can be valuable given the differences in the two systems.

New Zealand's employment and payroll system is structurally similar to Australia's but distinct in its detail, and the two should not be conflated. The governing legislation is the Employment Relations Act 2000, which requires all employment agreements to be in writing and to include a minimum set of terms. The equivalent of Australia's Fair Work Act, New Zealand's framework is administered by the Employment Relations Authority (ERA) and enforced by the Labour Inspectorate.

New Zealand's tax and payroll obligations are administered by Inland Revenue (IRD). Employers must deduct PAYE (Pay As You Earn) tax from wages and remit it to IRD on a regular schedule (twice monthly for most employers). All employers must register with IRD before paying their first employee. Unlike Australia's STP, New Zealand uses the Payday Filing system: employers must file employee earnings information with IRD on or before each payday, along with the PAYE deducted. Payday Filing has been mandatory for all employers since 2019 and is equivalent in concept to Australia's STP Phase 2.

KiwiSaver is New Zealand's voluntary (opt-out) workplace retirement savings scheme and is the closest equivalent to Australia's Superannuation Guarantee. Employers must contribute a minimum of 3% of an employee's gross earnings for enrolled members (compared with Australia's 12%). Employees contribute a minimum of 3% by default, with options to increase. New employees are automatically enrolled unless they opt out within the first 56 days of employment. KiwiSaver contributions are remitted to IRD alongside PAYE rather than directly to a fund — a key administrative difference from Australia's SuperStream model.

New Zealand has no workers' compensation insurance market in the traditional sense. Instead, the Accident Compensation Corporation (ACC) provides universal no-fault accident insurance covering all workers and residents for personal injuries. The scheme is funded partly by an earner levy that employees pay (withheld by employers through PAYE) and partly by a work levy that employers pay directly to ACC.

From 1 April 2026, the ACC earner levy rate is NZD 1.75 per NZD 100 of liable earnings (i.e., 1.75%). The maximum liable earnings for 2026/27 are NZD 156,641 per annum, meaning the maximum earner levy per employee is approximately NZD 2,741 per year. These figures are confirmed by ScaleSuite's New Zealand subsidiary guide. The employer work levy varies by industry and is billed annually by ACC based on the industry classification of your business.

For New Zealand payroll administration, your payroll software must handle both KiwiSaver deductions and ACC earner levy calculations automatically. The major platforms used in New Zealand include Xero (dominant market position), MYOB, and FlexiTime (rebranded as PayHero). New Zealand's Employment New Zealand website provides the statutory minimum wage (reviewed annually each April), leave entitlements (four weeks annual leave, sick leave of ten days per year for employees with six months' tenure), and public holidays. Minimum wage as of April 2025 is NZD 23.15 per hour for adults.

Work through the following checklist before and around the time of your first hire in Australia or New Zealand. Items marked (AU) apply to Australia; (NZ) to New Zealand; (BOTH) to both.

• ☐ (AU) Incorporate Australian entity (Pty Ltd) and obtain ABN, or engage an EOR.
• ☐ (AU) Register for PAYG withholding with the ATO before first payday.
• ☐ (AU) Select and configure an ATO-approved STP-enabled payroll platform (Xero, Employment Hero, MYOB, KeyPay, or equivalent).
• ☐ (AU) Identify the relevant modern award for each role (or confirm the role is award-free and document that determination).
• ☐ (AU) Draft employment contracts that comply with NES minimums and include offset/annualised salary clauses where applicable.
• ☐ (AU) Obtain a signed TFN Declaration from every new employee before their first pay run.
• ☐ (AU) Confirm employees' nominated superannuation fund or apply the ATO stapled super fund rules for employees without a nomination. Set up SuperStream-compliant remittances.
• ☐ (AU) Register for workers' compensation insurance in each state where employees work (state-based, not federal).
• ☐ (AU) Determine payroll tax grouping status and register for payroll tax in the relevant state(s) if wages will exceed the monthly equivalent of the annual threshold. See Revenue NSW thresholds for NSW.
• ☐ (AU) Apply for Standard Business Sponsor approval if you intend to sponsor any 482 visa holders — allow two to eight weeks for processing.
• ☐ (AU) Prepare for Payday Super (from 1 July 2026): ensure payroll system can generate super remittances on each payday, within 7 days.
• ☐ (NZ) Register the New Zealand entity with the Companies Office and obtain an IRD number.
• ☐ (NZ) Register as an employer with IRD and configure Payday Filing in your payroll platform.
• ☐ (NZ) Enrol employees in KiwiSaver (minimum 3% employer contribution); configure automatic deduction in payroll.
• ☐ (NZ) Confirm ACC work levy classification and note that earner levies (NZD 1.75/$100 from 1 Apr 2026) are withheld through PAYE.
• ☐ (BOTH) Issue a Fair Work Information Statement (AU) or Employment Agreement (NZ) to every new employee before or on day one.
• ☐ (BOTH) Set up a process for annual leave accrual tracking — four weeks per year in both countries.
• ☐ (BOTH) Establish a compliant expense reimbursement policy to avoid inadvertently creating taxable fringe benefits.

Q: We want to hire a contractor, not an employee, to keep things simple. Is that possible?
A: Possibly, but with significant caveats. Australian law applies a "sham contracting" doctrine: if a working arrangement looks like employment in substance — the worker works set hours, uses your equipment, cannot sub-contract, and is economically dependent on you — courts and the Fair Work Commission will treat it as employment regardless of what the contract says. The same applies for payroll tax purposes, where "deemed employee" provisions can make contractors caught in the wage base. Genuine independent contracting is viable for project-based, specialist work with multiple clients, but should be reviewed by an employment lawyer before you rely on it.

Q: Can we pay our Australian employees in US dollars or euros?
A: No. Australian employment law requires wages to be paid in Australian dollars and into an Australian bank account nominated by the employee. Similarly, superannuation must be remitted in AUD. You may compensate employees with equity or bonuses in foreign currency as supplementary arrangements, but the base employment remuneration must be in AUD.

Q: Our superannuation is at 12% — do we pay it on top of salary or is it included?
A: This is one of the most common contract drafting errors for new market entrants. Whether super is "on top of" or "inclusive of" salary depends entirely on what your employment contract says. In Australia, the market norm for professional roles is to quote salary as a "total cost to company" (TCTC) package that includes super, or as "base + super." Never quote a salary without clarifying the super treatment — an employee who expects A$120,000 base plus super has a significantly different cost to you than one who expects A$120,000 inclusive of super (which would be approximately A$107,143 base).

Q: How quickly can we get a Skills in Demand 482 visa processed?
A: Processing times vary significantly by stream and circumstances. New sponsor applications add two to eight weeks before nomination and visa lodgement. For established sponsors, Specialist Skills stream visas targeting highly paid candidates have recently processed in six to twelve weeks in priority cases; Core Skills stream can take three to six months. Department of Home Affairs publishes current processing times monthly.

Q: Does payroll tax grouping mean we owe payroll tax from day one even with one employee?
A: It depends on your group structure. If your Australian entity is part of a group whose combined Australian wages exceed the relevant state threshold, then yes — you may have payroll tax obligations from the first payday. In practice, many newly arrived foreign companies with only one or two local employees fall below the threshold even after grouping, because the grouping rules focus on Australian wages of related entities, not the global workforce. However, you must confirm this with your tax adviser, as each state applies grouping differently. See the Australian Business Register's payroll tax guide for a state-by-state summary.

Q: Is the KiwiSaver 3% employer contribution comparable to Australia's 12% super?
A: No — this is a meaningful structural difference between the two countries. Australia's 12% SG is one of the most generous compulsory employer retirement contribution rates in the world; New Zealand's 3% KiwiSaver employer minimum is substantially lower. For talent attraction purposes, particularly when relocating Australian employees to New Zealand or vice versa, this difference in total compensation package should be explicitly addressed in offer letters.