Glossary

The terms you'll meet when hiring through an Employer of Record or employing people in Australia, in plain English.

A

Annual leave loading: An extra payment, usually 17.5% of base pay, that many Australian modern awards require on top of normal pay while an employee is on annual leave.
Award: Short for modern award.

Casual employee: In Australia, an employee with no firm advance commitment to ongoing work. Casuals receive a casual loading (usually 25%) instead of paid leave and must be given the Casual Employment Information Statement.
Co-employment: An arrangement where two organisations share employer responsibilities for the same worker. Typical of a PEO, not an EOR.
Contractor: A person who runs their own business and provides services under a commercial contract rather than an employment contract. See employee vs contractor in Australia.

Employer of Record (EOR): A company that becomes the legal employer of workers on behalf of another business, taking on payroll, tax and employment law obligations while the client directs the work. See what is an Employer of Record.
Enterprise agreement: An agreement made at a workplace level between an employer and employees about pay and conditions, approved by the Fair Work Commission. It replaces the modern award for the employees it covers.
Entity: A legal business structure, such as an Australian proprietary limited company or a registered foreign company branch, that can employ staff and trade in its own name.

Fair Work Act 2009: The main Commonwealth law governing employment in Australia, including the National Employment Standards, modern awards, unfair dismissal and general protections.
Fair Work Commission (FWC): Australia's national workplace relations tribunal. It sets minimum wages and awards and hears unfair dismissal and other claims.
Fair Work Information Statement: A document employers must give every new employee in Australia before or as soon as possible after they start, explaining their basic workplace rights.
Fair Work Ombudsman (FWO): The Australian regulator that provides information on workplace rights and enforces compliance with workplace laws.

General protections: Fair Work Act protections against adverse action, such as dismissal, because a person exercised a workplace right or for discriminatory reasons. They apply from the first day of employment.

High income threshold: An annual earnings amount ($190,100 from 1 July 2026) above which an Australian employee not covered by an award or enterprise agreement generally cannot bring an unfair dismissal claim.

Labour hire: An arrangement where a provider supplies its workers to work in a client's business. Some Australian states require labour hire providers to be licensed.
Long service leave: Extra paid leave for employees with long service with one employer, set mainly by state and territory laws, usually after 7 to 10 years.

Misclassification: Treating a worker as a contractor when, legally, they are an employee. It can lead to back-payments of wages, super and penalties.
Modern award: A legal document setting minimum pay rates and conditions for employees in a particular industry or occupation in Australia, such as overtime, penalty rates and allowances.

National Employment Standards (NES): The minimum entitlements in the Fair Work Act that apply to almost all Australian employees, covering hours, leave, notice, redundancy and more.
National Minimum Wage: The minimum pay rate for Australian adult employees not covered by an award or agreement: $26.44 an hour from 1 July 2026.

On-costs: Employment costs on top of salary, such as superannuation, payroll tax, workers' compensation premiums and leave provisions.

Payday Super: The Australian rule, in force from 1 July 2026, that employers must pay superannuation each time they pay wages, with contributions reaching the fund within 7 business days.
PAYG withholding: Pay As You Go withholding: the system under which Australian employers withhold income tax from employees' pay and send it to the ATO.
Payroll tax: A state and territory tax on wages paid by employers once total Australian wages exceed a tax-free threshold. Rates and thresholds differ by state.
PEO: Professional employer organisation: a provider that co-employs a business's staff to share HR, payroll and benefits administration. The client usually needs its own local entity. See EOR vs PEO.
Permanent establishment (PE): A tax concept describing a fixed place of business or dependent agent that can make a foreign company liable for income tax in a country. Using an EOR does not by itself remove PE risk.
Probation: An initial period of employment used to assess suitability. In Australia there is no statutory probation, but the unfair dismissal minimum employment period works in a similar way.

Redundancy pay: A payment owed when a job is no longer needed. Under the NES it ranges from 4 to 16 weeks' pay depending on service, with an exemption for small businesses.
Restraint of trade: A contract clause limiting what an employee can do after leaving, such as working for a competitor or soliciting clients. In Australia it is enforceable only if reasonable.
Right to disconnect: An Australian employee's right to refuse to monitor, read or respond to work contact outside working hours unless the refusal is unreasonable.

Sham contracting: Misrepresenting an employment relationship as an independent contracting arrangement. It is prohibited under the Fair Work Act.
Skills in Demand visa: Australia's main employer-sponsored temporary skilled visa (subclass 482), which replaced the Temporary Skill Shortage visa in December 2024.
Superannuation Guarantee (SG): The compulsory employer contribution to an Australian employee's retirement fund, 12% of qualifying earnings.

Unfair dismissal: A dismissal that the Fair Work Commission finds was harsh, unjust or unreasonable. Employees must have served the minimum employment period to claim.

Workers' compensation: Compulsory state and territory insurance that covers employees for work-related injury and illness. Employers, or their EOR, must hold a policy.