Australian employment essentials

How the system fits together

Australian employment law has several layers. For most private sector employers they stack up like this:

1. The Fair Work Act 2009 sets the framework, including the National Employment Standards, unfair dismissal, general protections and the role of the Fair Work Commission and the Fair Work Ombudsman.
2. The National Employment Standards (NES) are minimum entitlements that apply to almost every employee.
3. Modern awards set minimum pay rates and conditions for particular industries and occupations.
4. Enterprise agreements can replace the award for a workplace, but must leave employees better off overall.
5. The employment contract sets the individual terms. It can be more generous than the minimums but never less.

Alongside the Fair Work system, employers deal with tax law (PAYG withholding and fringe benefits tax), superannuation law, state and territory laws on payroll tax, workers' compensation, long service leave and work health and safety, and anti-discrimination law.

The National Employment Standards

The NES cover:

• Maximum weekly hours: 38 hours for full-time employees, plus reasonable additional hours.
• Requests for flexible working arrangements, for eligible employees such as parents, carers and people with disability.
• Casual employment: a pathway for eligible casuals to change to permanent employment.
• Parental leave and related entitlements: up to 12 months unpaid leave, with the right to request a further 12 months.
• Annual leave: 4 weeks paid leave a year for full-time employees, pro rata for part-time.
• Personal/carer's leave, compassionate leave and family and domestic violence leave: 10 days paid personal/carer's leave a year for full-time employees, 2 days compassionate leave per occasion and 10 days paid family and domestic violence leave a year.
• Community service leave, including jury duty.
• Long service leave, largely governed by state and territory laws.
• Public holidays: a day off on a public holiday, with pay, unless reasonably requested to work.
• Notice of termination and redundancy pay.
• Superannuation contributions.
• The Fair Work Information Statement and other information statements.
• Limits on fixed-term contracts, generally no more than 2 years or 2 consecutive contracts.

Modern awards

Modern awards are one of the most distinctive features of Australian employment. Each one covers an industry or occupation and sets:

• Minimum pay rates for each classification level.
• Overtime and penalty rates for evenings, weekends and public holidays.
• Allowances, such as for tools, travel or higher duties.
• Rules on hours, rostering, breaks and annualised salaries.

Award coverage depends on the industry and the work performed, not on job title or salary. Many professional, clerical, IT and sales roles are award-covered. If you hire through an EOR, the provider should identify the applicable award and classification for each employee. The Fair Work Ombudsman's website has tools to find the right award.

Minimum wages

From 1 July 2026:

• The National Minimum Wage is $26.44 an hour, or $1,004.90 for a 38-hour week, for award-free adult employees.
• Award minimum rates increased by 4.75% for most classifications.
• Casual employees receive a casual loading, usually 25%, instead of paid leave.

Minimum wages are reviewed every year, with changes usually starting on 1 July. See our article on the 2026 Annual Wage Review.

Superannuation

Employers must pay the Superannuation Guarantee of 12% of qualifying earnings into the employee's chosen super fund, or their "stapled" existing fund if they don't choose. Super is paid on top of wages unless the employment offer is expressed as a package that includes super.

From 1 July 2026, Payday Super requires contributions to be paid each time wages are paid and to reach the fund within 7 business days. Read Payday Super: what employers need to know.

Income tax withholding (PAYG)

Employers must:

• Register for PAYG withholding with the ATO.
• Withhold income tax from employees' pay using ATO tax tables.
• Report pay and withholding through Single Touch Payroll each payday.
• Pay withheld amounts to the ATO by the due dates.
• Collect a tax file number declaration from each new employee.

Non-cash benefits may also attract fringe benefits tax, which is paid by the employer.

Payroll tax by state and territory

Payroll tax is a state and territory tax on an employer's wages, payable once total Australian wages (including those of grouped businesses) exceed a tax-free threshold. Rates and thresholds for 2026-27:

Many states reduce the threshold gradually for larger employers and offer concessions for regional employers or apprentices. Check the relevant revenue office before relying on these figures.

Workers' compensation

Every employer must hold workers' compensation insurance in each state or territory where it employs people. Schemes are run by the states and territories, with premiums based on wages, industry and claims history. An EOR holds this insurance for the people it employs.

Leave and holidays

Beyond the NES entitlements above:

• Annual leave loading of 17.5% is required by many awards.
• Untaken annual leave is paid out when employment ends.
• Long service leave applies after long periods of service, usually 7 to 10 years, under state and territory laws.
• Public holidays include national days such as New Year's Day, Australia Day, Good Friday, Easter Monday, Anzac Day, Christmas Day and Boxing Day, plus state and territory holidays such as the King's Birthday and Labour Day, which fall on different dates in different places.
• Parental Leave Pay is funded by the government for up to 26 weeks from 1 July 2026, paid through Services Australia rather than by the employer, although employers may need to pass it on to long-term employees.

Hours and the right to disconnect

Full-time employees can be required to work 38 ordinary hours a week plus reasonable additional hours. Awards set overtime rates and rostering rules.

Employees also have a right to disconnect: they can refuse to monitor, read or respond to contact from their employer or a third party outside working hours, unless the refusal is unreasonable. Whether it is unreasonable depends on factors such as the reason for contact, the employee's role and level of pay, and whether they are compensated for being available. The right has applied to small businesses since 26 August 2025.

For overseas employers working across time zones, this is an important practical point. Build meeting schedules that respect Australian working hours.

Ending employment

Notice

Employers must give written notice of termination, or pay in lieu, based on continuous service:

Employees over 45 with at least 2 years of continuous service get an extra week. Awards and contracts can require more, and awards set the notice an employee must give.

Redundancy pay

When a job is no longer needed, employers with 15 or more employees must pay redundancy pay under the NES, from 4 weeks' pay after 1 year of service up to 16 weeks after 9 years, then 12 weeks at 10 years or more.

Unfair dismissal

Employees who have completed the minimum employment period (6 months, or 12 months for small businesses) can apply to the Fair Work Commission if they are dismissed in a way that is harsh, unjust or unreasonable. Employees earning above the high income threshold of $190,100 (from 1 July 2026) can only claim if they are covered by an award or enterprise agreement. Compensation is capped at the lower of 26 weeks' pay or half the high income threshold.

General protections

From the first day of employment, it is unlawful to take adverse action, including dismissal, because an employee exercised a workplace right, such as making a complaint or taking leave, or for discriminatory reasons. There is no minimum service period or salary cap for these claims.

Other rules worth knowing

• Pay secrecy clauses are generally prohibited, and employees can choose to share their pay information.
• Wage theft: intentional underpayment of wages and some entitlements has been a criminal offence since 1 January 2025.
• Positive duty on sexual harassment: employers must take reasonable and proportionate measures to eliminate workplace sexual harassment.
• Record keeping: employers must keep employee records for 7 years and issue payslips within one working day of payday.

The bottom line

Australia's employment system is more prescriptive than many others, especially for employers used to at-will employment. The essentials are: find the right award, pay at least the minimum, pay super every payday, withhold tax, insure your workers, respect hours and the right to disconnect, and follow a fair process when ending employment. An Employer of Record can handle most of this for you, but it is worth understanding the rules your team is employed under.