HR and payroll for recruitment agencies in Australia
Reviewed by Mellow Editorial Team, HR & payroll content team
Recruitment agencies in Australia face payroll complexity that most businesses don't: a permanent internal workforce sitting alongside dozens or hundreds of placed contractors and temps, each with their own award, engagement type, and pay schedule. Getting both right — at the same time — is the practical challenge.
Two workforces, two sets of rules
Most agencies are running parallel payroll streams. Internal staff — recruiters, account managers, operations — are typically engaged under contracts and covered by the Clerks — Private Sector Award or the Professional Employees Award, depending on their role and classification. Placed workers are a different matter entirely.
Temporary workers supplied to a host employer are usually employees of the agency, not the client. That means the agency is the employer of record: it withholds PAYG, pays superannuation, accrues leave entitlements, and reports via Single Touch Payroll (STP) for every single one of them. The client pays the agency a margin; the agency carries the employment obligations.
Contractors engaged through their own company or trust are generally outside this — but misclassification is a real risk. If a worker is genuinely an employee under the common law tests, the agency wears the liability regardless of what the contract says.
Award coverage for placed workers
The award that applies to a placed worker is determined by the industry the host employer operates in — not the recruitment agency's own industry. A temp placed into a warehouse picks up the Warehousing and Storage Award. A temp placed into a law firm picks up the Clerks — Private Sector Award or possibly the Legal Services Award, depending on their duties.
This creates genuine complexity for larger agencies covering multiple sectors. You need to track:
- Which award applies to each placement
- The correct classification level within that award
- Penalty rates, allowances, and loadings that apply (evening shifts, weekend work, casual loading)
- Whether casual conversion obligations are triggered after a regular engagement pattern
Casual employees engaged on a regular and systematic basis accrue rights under the Fair Work Act, including the right to request conversion to permanent employment after a qualifying period. Agencies placing long-term casuals with the same host need to monitor this.
Superannuation for a high-volume workforce
The Superannuation Guarantee sits at 12% of ordinary time earnings from 2026, and it applies to every employee — internal staff and placed workers alike. For agencies running large temp books, the administrative load is significant.
Each placed worker nominates their own superannuation fund. Where a worker hasn't nominated a fund, you need to check whether they have a stapled fund via the ATO before defaulting to your own nominated default fund. Failing to follow the stapling rules correctly can result in inadvertently opening duplicate accounts — and the ATO notices.
Super must be paid at least quarterly (many agencies pay more frequently to manage cash flow risk), and it must go to a complying fund. STP reporting captures salary and wages; super obligations are reported separately through your clearing house.
STP reporting at scale
Single Touch Payroll requires you to report to the ATO at every pay event — not monthly, not quarterly. For a recruitment agency running weekly payroll across hundreds of casuals with variable hours, this means your payroll system needs to handle high-volume, high-variability reporting reliably.
PAYG withholding is calculated based on each worker's tax file number declaration and any applicable tax offsets. Workers with HECS/HELP study debts have additional withholding applied through a banded repayment scale — you pick this up from their TFN declaration and apply the correct withholding rate. Missing it creates a liability for the worker at tax time and can prompt complaints.
Payroll finalisation — marking all payment summaries as tax-ready — must be completed by 14 July each year. For agencies with hundreds of employees cycling through across the financial year, building a clean offboarding and finalisation process is worth the upfront effort.
Redundancy and leave for permanent employees
Your internal permanent employees have full National Employment Standards entitlements. That includes four weeks' annual leave per year (pro rata on separation), and redundancy pay on a scale that rises with years of service if you are not a small business employer.
For placed workers on casual engagements, the position is different: casual employees do not accrue annual leave, though they receive a 25% casual loading in lieu. If an agency incorrectly classifies a worker as casual when they meet the criteria for regular and systematic employment, back-payment of entitlements — including leave — becomes a risk.
Keeping clean engagement records for every worker, from start date to placement history, is the practical defence against misclassification claims. If you use a workforce management or payroll platform that can handle multiple engagement types and award interpretations, the record-keeping burden drops considerably.
Staying across legislative change
Modern award minimum wages are reviewed annually, with changes taking effect from the first full pay period on or after 1 July. For agencies with large casual workforces across multiple awards, the annual increase cycle means updating pay rates simultaneously across potentially dozens of classifications. Building a review process into your June calendar — before the new rates take effect — is how agencies avoid underpayment exposure at the start of each financial year.
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