Hiring employees in Australia is not simply a matter of agreeing on a wage and starting work. There is a comprehensive legal framework governing employment that every small business owner needs to understand. Getting it wrong — even unintentionally — can result in back pay claims, penalties, and significant stress.
Here are the fundamentals.
The Fair Work Act and National Employment Standards
Most Australian employees are covered by the Fair Work Act 2009 and the National Employment Standards (NES). The NES sets 11 minimum entitlements that apply to all employees, regardless of what their employment contract says. These include:
- Maximum weekly hours (38 hours for full-time employees)
- Annual leave (4 weeks per year for full-time employees)
- Personal/carer's leave and compassionate leave
- Parental leave
- Community service leave
- Long service leave
- Public holidays
- Notice of termination and redundancy pay
- The right to a Fair Work Information Statement
You cannot contract out of the NES. A clause in an employment contract that gives an employee less than their NES entitlement is void.
Modern Awards
Most employees are covered by a Modern Award — an industry or occupation-specific document that sets minimum pay rates, penalty rates, allowances, and conditions on top of the NES. There are over 100 Modern Awards in Australia covering everything from the Building and Construction Award to the Restaurant Industry Award.
It is your responsibility as an employer to identify which award applies to your employees and pay them correctly. The Fair Work Ombudsman's Pay and Conditions Tool (PACT) can help you find the right award and check pay rates.
Superannuation
You must pay superannuation for all eligible employees at the current rate (11.5% in 2026, rising to 12% in July 2025). Super must be paid at least quarterly — and from 1 July 2026, it must be paid on the same day as wages (payday super). Late or unpaid super attracts the Superannuation Guarantee Charge, which is more expensive than the original obligation.
PAYG Withholding
As an employer, you are required to withhold tax from employees' wages and remit it to the ATO. You report and pay this through your BAS or through Single Touch Payroll (STP), which is now mandatory for all employers.
Workers Compensation Insurance
Every state and territory requires employers to hold workers compensation insurance for their employees. The policy must be in place before an employee's first day of work. Premiums are based on your wage bill and industry risk.
Record Keeping
You are required to keep employment records for each employee for at least seven years. This includes time and wages records, pay slips, and leave records. Pay slips must be issued within one working day of each pay period.
Where to Get Help
The Fair Work Ombudsman (fairwork.gov.au) is an excellent free resource with tools, guides, and templates for small business employers. For more complex situations, a workplace relations lawyer or HR consultant can provide advice tailored to your circumstances.
Getting employment right from the start protects your business, your reputation, and — most importantly — the people who work for you.