How to hire your first employee in Australia
Reviewed by Mellow Editorial Team, HR & payroll content team
Hiring your first employee in Australia means registering as a PAYG withholder, setting up superannuation, understanding your obligations under the National Employment Standards, and reporting every pay run through Single Touch Payroll. Do all of that before the person's first day and you start the relationship on solid legal ground.
1. Get your registrations in order
Before you pay anyone, you need two registrations with the ATO.
PAYG withholding registration — this authorises you to withhold income tax from wages and remit it to the ATO on the employee's behalf. You register through the ATO's Business Portal or via your tax agent. There is no fee.
Register for superannuation — strictly speaking there is no separate "super registration", but you need a complying fund or default fund arrangement ready to accept contributions. Many employers use a fund with an online employer portal to make this straightforward. You also need to know your obligations under SuperStream, the data and payment standard the ATO requires for all super contributions.
If you are not already registered for PAYG withholding and you hire someone without it, you are still liable for the amounts you should have withheld.
2. Nail the paperwork before day one
Tax File Number declaration — ask the employee to complete a TFN declaration (or submit one digitally through STP-enabled software). Without a TFN, you are required to withhold tax at the highest marginal rate.
Standard choice of fund form — employees are entitled to choose where their super is paid. Give them an ATO-approved Superannuation Standard Choice Form within 28 days of starting. If they do not nominate a fund, check whether they have a stapled fund via the ATO's online services before defaulting to your default fund.
Fair Work Information Statement — all new employees must receive this document, which Fair Work Australia publishes and updates. It is a legal requirement, not optional.
Written employment contract — while not always legally mandated, a written contract protects both parties. It should specify the applicable Modern Award or enterprise agreement (if any), the classification level, the pay rate, and ordinary hours of work. Most Australian employees are covered by a Modern Award even if they are paid above the award rate, so identify which award applies to your business.
3. Understand the National Employment Standards
The National Employment Standards (NES) are the floor of employment conditions in Australia. They apply regardless of what a contract says.
Key NES entitlements for a full-time employee include:
- Annual leave — 4 weeks paid leave per year, accrued progressively
- Personal/carer's leave — 10 days per year
- Parental leave — up to 12 months unpaid, with a right to request a further 12 months
- Notice of termination and redundancy pay — both scale with length of service; redundancy pay starts after one year of continuous service
- Maximum weekly hours — 38 ordinary hours, with reasonable additional hours permitted
A contract or award can provide more than the NES but cannot provide less.
4. Set up payroll and Single Touch Payroll reporting
Single Touch Payroll (STP) is the ATO's real-time payroll reporting framework. Every time you run a pay event — weekly, fortnightly, or monthly — your payroll software sends a report directly to the ATO containing each employee's gross wages, tax withheld, and super liability. You do not lodge a separate payment summary at year end. Instead, you submit an STP finalisation by 14 July each year, after which the ATO pre-fills employees' tax returns.
You must use STP-enabled software from your first pay run. The ATO maintains a list of compliant products, including low-cost options for employers with four or fewer employees. Manual spreadsheets are not compliant.
Superannuation — from 2026 the Superannuation Guarantee rate is 12% of ordinary time earnings. Contributions must be paid to a complying fund at least quarterly, though many employers pay more frequently to manage cash flow.
Medicare levy — employees pay a 2% Medicare levy, which is factored into the ATO's tax withholding tables. You do not calculate it separately; your payroll software handles it.
HECS/HELP repayments — if an employee declares a study debt on their TFN declaration, you withhold an additional amount according to the ATO's income-contingent repayment bands and include it in your STP reporting.
5. Ongoing compliance to keep on top of
Once the employee is set up, a handful of obligations recur throughout the employment relationship.
Award rate reviews — the Fair Work Commission reviews Modern Award minimum rates annually, typically with changes effective 1 July. Check that your rates remain at or above the new minimums each financial year.
Workers' compensation insurance — every state and territory requires employers to hold a workers' compensation policy before an employee starts work. The insurer and premium structure vary by jurisdiction.
Record-keeping — under the Fair Work Act you must keep pay records and time-and-wages records for seven years. Records must be legible, accessible to the employee on request, and not altered to be misleading.
Leave balances — track accrued leave from the first day. Accumulated untaken annual leave becomes a liability on your books and must be paid out on termination.
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