On this page (7 sections)
Overview and why companies expand from Germany to Australia
- Australia is a strong market for German engineering, renewable energy, automotive and industrial technology.
- Australian staff can cover Asia-Pacific customers in their own time zone.
- Australia's legal system and contract law are stable and predictable.
- Long-standing trade and investment links between Australia and Germany make it easier to find partners, advisers and customers.
Germany's employment system is built on strong statutory protection, social partnership and co-determination. Australia's is built on statutory minimums and industry awards, with fewer collective structures inside the workplace. German employers often find Australian dismissal law lighter, but are surprised by the detail of the award system and penalty rates.
Germany and Australia at a glance
| Topic | Germany | Australia |
|---|---|---|
| Employment contracts | Essential terms must be documented under the Nachweisgesetz (Evidence Act). Fixed-term contracts without an objective reason are limited to 2 years. Collective agreements and works council agreements often apply. | A written contract is not legally required but is standard practice. Employers must give every new employee the Fair Work Information Statement, plus the Casual or Fixed Term Contract Information Statement where relevant. A modern award or enterprise agreement usually sets minimum terms. Fixed-term contracts are generally limited to 2 years or 2 consecutive contracts. |
| Probation | Probation of up to 6 months is common, with 2 weeks notice during that time. Statutory protection against dismissal starts after 6 months in businesses with more than 10 employees. | No statutory probation. In practice the unfair dismissal "minimum employment period" works as one: 6 months, or 12 months for small businesses with fewer than 15 employees. |
| Working hours | The Working Hours Act limits work to 8 hours a day, extendable to 10 if the average over 6 months stays at 8. Employers must record working time. | Maximum 38 ordinary hours a week plus reasonable additional hours under the National Employment Standards. Awards set overtime rates. Employees have a right to disconnect outside working hours unless refusing is unreasonable. |
| Minimum wage | Statutory minimum wage of €13.90 an hour from 1 January 2026, rising to €14.60 in 2027. | National Minimum Wage of $26.44 an hour ($1,004.90 a week) from 1 July 2026. Most employees are covered by a modern award with higher minimum rates for their classification. |
| Annual leave | At least 24 working days a year based on a six-day week (20 days on a five-day week). Many employers and collective agreements give more. | 4 weeks paid annual leave a year for full-time employees (5 weeks for some shift workers), accruing progressively. Untaken leave is paid out on termination. Many awards add a 17.5% leave loading. |
| Sick leave | Employers continue full pay for up to 6 weeks per illness. After that, statutory health insurance pays sickness benefit. | 10 days paid personal/carer's leave a year for full-time employees, plus 2 days unpaid carer's leave and 2 days paid compassionate leave per occasion. All employees can also take 10 days paid family and domestic violence leave a year. |
| Parental leave | Maternity protection of 6 weeks before and 8 weeks after birth on full pay, funded by the health insurer and an employer top-up. Each parent can take up to 3 years of job-protected parental leave, with state-paid parental allowance. | Up to 12 months unpaid parental leave after 12 months of service, with the right to request 12 more. The government funds up to 26 weeks of Parental Leave Pay at the national minimum wage from 1 July 2026, paid through Services Australia rather than the employer. |
| Public holidays | 9 nationwide public holidays plus state holidays, so the total varies by state. | National public holidays such as New Year's Day, Australia Day, Good Friday, Easter Monday, Anzac Day, Christmas Day and Boxing Day, plus state and territory holidays. Employees who work on a public holiday are usually paid penalty rates under their award. |
| Retirement and social security | Social insurance is shared roughly equally: pension 18.6% on earnings up to €8,450 a month (2026), unemployment 2.6%, health 14.6% plus a fund supplement and long-term care insurance. Employers also fund statutory accident insurance. | Superannuation Guarantee of 12% of qualifying earnings, paid by the employer on top of wages. Since 1 July 2026 super must be paid each payday and reach the fund within 7 business days (Payday Super). There is no separate employer social security levy. |
| Payroll taxes | Employers withhold wage tax, solidarity surcharge for higher earners and church tax where it applies. There is no separate employer payroll tax. | Employers withhold PAYG income tax from wages. Each state and territory charges payroll tax once total Australian wages pass a threshold, for example 5.45% above $1.2 million in NSW and 4.85% above $1 million in Victoria. Workers' compensation premiums are also payable. |
| Notice periods | Statutory notice of 4 weeks to the 15th or end of a month, rising with service to 7 months after 20 years when the employer gives notice. Notice must be given in writing with a wet-ink signature. | Employer notice under the National Employment Standards: 1 week (up to 1 year of service) rising to 4 weeks (over 5 years), plus 1 week if the employee is over 45 with at least 2 years of service. Pay in lieu is allowed. Awards set employee notice. |
| Dismissal protection | In businesses with more than 10 employees, dismissals after 6 months must be socially justified on conduct, capability or operational grounds. Works councils must be consulted before any dismissal. | Unfair dismissal protection applies after the minimum employment period to employees covered by an award or agreement, or earning under the high income threshold of $190,100 (from 1 July 2026). General protections against adverse action apply from day one. Small businesses can follow the Small Business Fair Dismissal Code. |
| Severance | No general statutory severance, but settlements are common. A frequent benchmark is half a month's salary per year of service. | Statutory redundancy pay of 4 weeks (1 to 2 years of service) rising to 16 weeks (9 to 10 years), then 12 weeks at 10 years or more, when long service leave usually takes over. Small businesses with fewer than 15 employees are generally exempt. |
| Mandatory benefits | Social insurance, continued pay during sickness, statutory leave and works council participation rights. | Superannuation, workers' compensation insurance (state-based and compulsory), paid leave under the National Employment Standards and long service leave under state and territory laws, usually after 7 to 10 years of service. |
| IP and restraint clauses | Post-employment non-competes are limited to 2 years and are only binding if the employer pays compensation of at least 50% of the last remuneration for the restraint period. Employee inventions attract statutory compensation. | Post-employment restraints are only enforceable if reasonable to protect a legitimate business interest. Employers generally own IP that employees create in the course of employment. The federal government has proposed banning non-compete clauses for employees under the high income threshold from 2027; this was not law at the last review. |
| Visas and right to work | Non-EU hires usually need a residence permit for work, such as the EU Blue Card. Australians aged 18 to 30 can use the working holiday programme. | Every worker needs Australian work rights, which employers can check through VEVO. Sponsored skilled hires generally use the Skills in Demand (subclass 482) visa, which needs an approved sponsor. Some EORs can sponsor, many cannot. |
The differences that matter most
Awards instead of collective bargaining
In Germany, collective agreements are negotiated between unions and employer associations. In Australia, modern awards are made by the Fair Work Commission and set minimum pay and conditions for most employees, whether or not anyone is a union member. Enterprise agreements can replace awards at a workplace.
Probation and dismissal
German probation of up to 6 months matches the Australian minimum employment period of 6 months (12 for small businesses) in effect. After that, Australian employees can claim unfair dismissal, but there is no social selection, no works council hearing and no requirement for written notice with a wet signature.
Leave and sick pay
Australian full-time employees get 4 weeks of annual leave, similar to Germany's statutory minimum, although many German employers give more. Personal/carer's leave is 10 paid days a year, rather than Germany's continued pay for up to 6 weeks per illness.
Super instead of social insurance
Australian on-costs are simpler: 12% super, payroll tax above a state threshold and workers' compensation insurance. There are no employer health, pension, unemployment or care insurance contributions.
Working time
Australia has no statutory duty to record all working time in the German sense, but employers must keep time and pay records, and awards set overtime and penalty rates.
Common compliance traps
- Overlooking award coverage and penalty rates for evening, weekend or public holiday work.
- Paying for non-competes that may not be needed, or relying on restraints that won't be enforced.
- Expecting 6 weeks of paid sick leave, which isn't an Australian entitlement.
- Missing super payments, which must be made each payday.
- State-based obligations such as payroll tax and long service leave.
How an EOR works for German companies in Australia
An Australian EOR employs your hire under an Australian contract, sets the award classification, runs payroll with PAYG withholding, pays super each payday and holds workers' compensation insurance. You manage the work and pay one invoice, often in EUR. When the Australian team grows, a subsidiary (Pty Ltd) is the usual next step. See EOR vs setting up an Australian entity.
Frequently asked questions
Is it easier to dismiss employees in Australia than in Germany?
Generally yes. Australia has no works councils and no requirement for social selection in redundancies. But employees who have served the minimum employment period can claim unfair dismissal if the process or reason is unfair, so a valid reason and fair procedure still matter.
Does Australia have collective agreements?
Australia has enterprise agreements, which are negotiated at the workplace level and approved by the Fair Work Commission. Most employees, however, are covered by modern awards, which set industry-wide minimum conditions and work somewhat like a statutory floor.
Is there a works council requirement in Australia?
No. There is no equivalent of the Betriebsrat. Employers must consult employees about major workplace changes and redundancies under modern awards and enterprise agreements.
How does super compare with German social insurance?
Instead of shared pension, health, unemployment and care insurance contributions, Australian employers pay a single 12% super contribution into the employee's retirement fund. Health care is covered by Medicare, funded through the tax system.
Does Australia require paid non-compete compensation?
No. Unlike Germany, Australian post-employment restraints don't require compensation, but they are only enforceable if reasonable. The federal government has proposed banning non-competes for most workers.
Sources
Last reviewed:
Figures on this page were checked against these official sources on 8 October 2026. Rates and thresholds change, often on 1 January, 1 April or 1 July, so confirm current figures before relying on them.
- Federal Government: Minimum wage at €13.90
- Federal Leave Act (BUrlG)
- Working Hours Act (ArbZG)
- Continued Remuneration Act (EntgFG)
- Dismissal Protection Act (KSchG)
- Civil Code section 622 (notice periods)
- Commercial Code section 74 (non-competes)
- Deutsche Rentenversicherung
- Fair Work Ombudsman: National Employment Standards
- Fair Work Ombudsman: Annual Wage Review 2026
- Fair Work Ombudsman: Fair Work Information Statement
- Fair Work Ombudsman: Dismissal and notice
- Fair Work Ombudsman: Redundancy pay
- Fair Work Ombudsman: Unfair dismissal
- Fair Work Ombudsman: Right to disconnect
- ATO: Payday Super
- Services Australia: Parental Leave Pay
- Revenue NSW: Payroll tax
- State Revenue Office Victoria: Payroll tax
- Department of Home Affairs: Skills in Demand visa (subclass 482)
Related guides
New to the model? Start with what an Employer of Record is, then compareEOR costs and pricing models.