HR and payroll for construction in Australia
Reviewed by Mellow Editorial Team, HR & payroll content team
Running payroll and HR in Australian construction is more complex than most industries — you are dealing with multiple awards, site allowances, casual and contractor workforces, and strict reporting obligations all at once.
Awards and enterprise agreements
Most construction workers are covered by either the Building and Construction General On-site Award 2020 or the Joinery and Building Trades Award 2020, depending on the trade and work location. Some larger firms operate under a registered enterprise agreement, which may provide better conditions than the award but must still meet the National Employment Standards (NES) as a minimum floor.
Getting award coverage wrong is one of the most common and costly mistakes in construction payroll. Before you set a pay rate, confirm which award applies to each role — this depends on the classification, the work performed and the industry your business falls under. Fair Work's coverage tool is a practical starting point, but if you have mixed trade workforces, legal advice is worth the cost.
Allowances and site-specific pay
Construction awards include a range of mandatory allowances that inflate the true labour cost well above the base rate. Common ones include:
- Tool allowances — paid per week for employees required to supply their own tools
- Industry allowance — a flat weekly amount for the general nature of construction work
- Meal allowances — triggered when an employee works specified overtime
- Travel and fares allowances — where employees travel to and between sites
- Special rates — for working in confined spaces, at heights, with hazardous materials or in dirty conditions
These are not optional extras. They are prescribed in the award and must be reflected in payroll. A useful audit practice is to review each classification in your current workforce against the applicable allowance schedule at the start of each financial year, as award rates and allowances are updated by Fair Work on 1 July.
Casual and contractor workforces
Construction commonly mixes permanent, casual and subcontractor arrangements. Each has different payroll treatment.
Casuals attract a 25% casual loading on top of the base rate in lieu of annual leave and other entitlements. Under the NES, casual employees now have a clearer pathway to request conversion to permanent employment. Ignoring conversion obligations is a growing compliance risk.
Subcontractors engaged as sole traders or through their own entity are not employees and do not go through payroll. However, if a subcontractor is engaged under a contract that is primarily for their labour, the arrangement may still trigger Superannuation Guarantee obligations — the super rules look at substance, not just the contract label. Many construction businesses have been caught here by the ATO.
There is also the taxable payments reporting system (TPRS). If your business is in the building and construction industry and makes payments to contractors for building and construction services, you must lodge a Taxable Payments Annual Report (TPAR) with the ATO by 28 August each year. This applies even if you do not otherwise think of yourself as a "contractor employer".
Superannuation and PAYG
From 2026, the Superannuation Guarantee sits at 12% of ordinary time earnings, paid to a complying fund. In construction, the relevant default super fund is typically CBUS (the industry fund), and many enterprise agreements nominate it specifically. Employees can choose their own fund, but you need a process to manage this correctly.
PAYG withholding must account for any HECS/HELP repayment obligations flagged on an employee's Tax File Number declaration — these are withheld at banded rates depending on annual income. Income tax itself is withheld progressively, and the 2% Medicare levy is built into the withholding tables.
All payroll events must be reported via Single Touch Payroll (STP) at or before each pay run. EOFY finalisation is due by 14 July — for construction businesses running project-based payrolls with varying site allowances and overtime, it pays to reconcile payroll data against your STP submissions before that date rather than finding discrepancies after.
Leave and redundancy
Under the NES, permanent employees accrue four weeks of annual leave per year. Construction workers on annualised salary arrangements or rostered shift work may accrue leave at different rates depending on their award or agreement — check the specific terms rather than assuming the standard rate applies.
Redundancy pay is prescribed by the NES on a sliding scale based on years of service. In construction, where project end dates are common and headcount changes are regular, genuine redundancy provisions apply — but classification matters. A role made redundant at the end of a project must still satisfy the genuine redundancy test under the Fair Work Act, including redeployment considerations. Getting this wrong can expose the business to unfair dismissal claims even where the project genuinely ended.
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