Good employees can be your greatest asset, and possibly your greatest cost. Recruiting and keeping the right people can play a big role in achieving business success, so it’s important to plan ahead when taking on employees.

When you take on an employee, you’ll need to meet government requirements related to pay, leave, super and tax. Use the below checklist to help guide you through the federal and state requirements that may apply when you become an employer.

Did you know that sole traders can employ people? In fact, all businesses can employ people, no matter what business structure they are.


Whether you’re starting, running or growing your business, you can take on an employee.

It doesn’t matter whether you operate as a sole trader, partnership, company or trust. You can employ people under all business structures.

Before you begin recruiting, you should consider how busy the job you need to fill will be, and how long you think you’ll need to employ someone for.

Depending on the requirements of the job, you might consider taking on:

  • permanent employees, whether full-time or part-time
  • casual employees
  • trainees or apprentices
  • contractors
  • temporary employees through an employment agency or labour hire firm.

Employing people using different working arrangements can keep your workplace flexible while also meeting your business needs. Read more about the types of employment.

Download the Guide to hiring new employees (PDF, 308KB) 

To work out what your obligations will be as an employer, it’s important to know whether your workers are employees or independent contractors.

The definitions of ’employee’ and ‘contractor’ can vary across government regulations and also from state to state, and can have different consequences for you as employer.

To make sure you’re doing the right thing as an employer, check the following:

For wages and entitlements

  • Read the Fair Work Ombudsman’s advice on contractors and employees – what’s the difference? 
  • Make sure you know the rules about sham contracting arrangements. Sham contracting is where an employer attempts to portray an employee as an independent contractor. This is unlawful under theFair Work Act 2009 and can attract a penalty of $54,000.
  • Use the ATO’s Employee/contractor decision tool  to find out whether your worker is an employee or contractor for tax and super purposes. There are penalties if you don’t meet your pay as you go (PAYG) withholding and superannuation obligations for a worker.

WA sole traders and partnerships in the WA industrial relations system  should refer to types of employment arrangements in WA .

For workers’ compensation insurance

Visit your state or territory’s workers’ compensation insurance authority to find out your obligations:

Workers are still eligible for workers’ compensation even if their employer is uninsured or under-insured. Compensation for the worker will be paid and then recovered from you.

As an employer, it’s your responsibility to make sure your workers can legally work in Australia. This includes employees you source from a contractor or labour hire company, for both paid and unpaid work.

Employers may face penalties for taking on an illegal worker, even if they didn’t know the worker was not allowed to work in Australia.

Providing a tax file number (TFN)  is not proof of permission to work in Australia.

Can legally work

  • Australian citizens, permanent residents and New Zealand citizens are legally allowed to work in Australia.
  • Australian visa holders are also legal workers if their visas allow them to work. Some visas only allow certain kinds of work. They may only be able to work for a certain employer, for a certain number of hours, or for a certain time period.

Can’t legally work

  • Some visas don’t allow the visa holder to work at all.
  • Foreign nationals who don’t have a valid visa aren’t allowed to work in Australia. This might include a person whose visa has expired or been cancelled.

How to check

To check whether someone is allowed to work in Australia, you can register with the Department of Immigration and Border Protection’s free Visa Entitlement Verification Online  (VEVO) system.

You can also ask the foreign national to email his or her current visa details directly from the VEVO website  or the myVEVO app.

For more information, check out the employer guide and fact sheet on the employing legal workers page.

All people working in Australia have basic rights and protections in the workplace, including minimum pay and conditions.

The Australian Human Rights Commission can help you meet your anti-discrimination obligations when deciding to take on an employee.

Their Employer Hub  has resources to you:

  • identify job requirements
  • create job advertisements
  • develop job application and selection processes
  • write interview questions
  • undertake medical assessments.

You can also get information about protections from discrimination at work  under the Fair Work Act 2009 from the Fair Work Ombudsman website.

Remember that anti-discrimination laws apply to both employees and contractors.

As an employer, you can be held legally responsible for acts of discrimination or harassment that occur in the workplace or in connection with a person’s employment.

As an employer, you must understand your record keeping requirements.

Penalties may apply for failing to meet your record keeping and pay slip obligations.

Employment records and payslips

Keep all employee records for seven years (Fair Work Act 2009).

You can download the Fair Work Ombudsman’s record keeping and payslips fact sheet  to help you. There are also a number of employment record and payslip templates  available.

WA sole traders and partnerships in the WA industrial relations system  should also keep employee records for seven years. Refer to WA record keeping requirements  for templates and more information.

Tax purposes

All employee and contractor records must be kept for five years.

The ATO provides a free, interactive record keeping evaluation tool  that will help you understand what records you need to keep, including those related to your workers. It also evaluates whether your record-keeping practices are adequate.

There are 10 minimum employment standards that you must provide to all employees. They are called the National Employment Standards (NES) .

The national minimum wage and the NES make up the minimum entitlements for most employees in Australia.

WA sole traders and partnerships in the WA industrial relations system  should refer to WA pay rates  and WA hours of work, overtime and penalty rates . The NES and national minimum wages don’t apply to you.

The minimum conditions

An employee’s minimum wages, including penalty rates and overtime, will come from the award or registered agreement that covers their employment. An award will automatically apply to an employee if:

  • it covers the business they are working for and the work they are doing, and
  • there is no registered agreement that covers the business.

You can’t use or include any conditions in an employment contract, enterprise agreement or otherregistered agreement  that:

  • provide a pay rate that is lower than the rate in the relevant award
  • are less than the national minimum wage or the NES
  • exclude the NES altogether.

If you fail to meet the NES in any way, you may face penalties.

How to find the right award and pay rates

Use the Fair Work Ombudsman’s Pay and Conditions Tool (PACT)  to easily calculate your employees’ pay rates, shift work and leave entitlements from awards.

You can also use PACT to help you find the correct award  if you’re not sure. By registering for the Fair Work Ombudsman’s My account  service, you can save your PACT results. You can also subscribe to the Fair Work Ombudsman email alerts to get updates to the awards.

Under the Pay as you go (PAYG) withholding  rules, you must collect tax from employee payments so they can meet their end-of-year tax liabilities.

You’ll need to withhold tax if any of the following apply:

  • you have employees
  • you have other workers, such as contractors, and you enter into voluntary agreements to withhold amounts from your payments to them
  • you make payments to businesses that don’t quote their Australian Business Number (ABN).

Penalties may apply if you don’t meet your withholding or reporting obligations.

The Tax withheld from individuals calculator  will help you work out how much tax to withhold from your employees.

Electronic record keeping  packages are also available that can automatically calculate the amount of tax you need to withhold.

Super is money you pay for your workers to provide for their retirement.

As an employer, you must:

  • offer eligible employees a choice of super fund. Temporary residents are not eligible for choice of fund.
  • pay the minimum amount – this is called the super guarantee (SG). Currently it is 9.5% of ordinary time earnings.
  • pay super by each of these dates – 28 July, 28 October, 28 January and 28 April.

If you don’t pay the super guarantee for your employees, you may have to pay the super guarantee charge. The charge is not tax-deductible.

WA sole traders and partnerships in the WA industrial relations system  should read choice of super in the WA system .

Which employees are eligible?

In general, workers are eligible if they are paid $450 or more (before tax) in a calendar month.

You pay super for all eligible employees, including employees who:

  • are full-time, part-time or casual
  • receive a super pension or annuity while still working – including those who qualify for the transition-to-retirement measure
  • are a temporary resident – when they leave Australia, they can claim the payments you made through a ‘departing Australia superannuation payment’
  • are a company director
  • are a family member working in your business – provided they are eligible for SG
  • are over 70 years of age.

You may have to pay super for some contractors even if they quote an ABN.

Useful tools

Use the Super guarantee eligibility tool to help you understand whether you need to make super contributions for your workers (including contractors).

If your employee’s award requires you to pay specific entitlements or allowances (such as overtime meal allowance) you can work out tax and super payments for employees  to find which payments are subject to tax withholding and/or super contributions.

For more information go to the Super for employers section on the ATO website.

As a business owner, you’re responsible for health and safety in your workplace. Under workplace health and safety laws, you must provide:

  • safe premises
  • safe machinery and materials
  • safe systems of work
  • information, instruction, training and supervision
  • a suitable working environment and facilities.

Maintaining a safe and healthy workplace should be part of your everyday business operations. Talk to your workers. They are the best source of safety information in your business.

For practical guidance on understanding and following work health and safety legislation in your state or territory, go to:

As an employer, you must have insurance to cover workers if they are injured at work or become ill due to their work. This is known as workers’ compensation insurance.

Workers’ compensation is covered by legislation in each state and territory.

It’s important to note that you may need to cover contractors in certain circumstances.

Visit the workers’ compensation insurance authority website for your state or territory to understand your requirements:

Workers in the building/construction and commercial cleaning industries may be eligible for portable long service leave.

If you employ eligible employees in these industries, you must register with the portable long service leave authority in your state or territory. You must also let them know when your eligible employees start and end employment.

Penalties may apply if you don’t meet these requirements.

Why these industries?

Long service leave is additional leave accrued by workers after extended periods of service with the same employer.

The building/construction and commercial cleaning industry schemes are different to other paid employment because it is unusual for someone to work with the same employer for 10 years. To ensure eligible workers in these industries can access similar entitlements, the Australian states and territories have set up schemes for them.

Portable long service leave will accrue whether or not they change employers.


SOURCE: https://www.business.gov.au/Info/Run/Employ-people/Recruitment-hiring-employees/Taking-on-an-employee-checklist