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Hiring Remote Workers in Australia: A Guide for US Employers

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What to Consider When Hiring a Remote Worker in Australia

Working Style

The US and Australian cultures are quite similar. Both countries have a history of colonization from the United Kingdom, boast a multicultural society, and have an Indigenous population. Despite these similarities, there are still some significant differences in working styles that a US employer may benefit from knowing before hiring their Australian employees, to ensure no misunderstandings take place. 

Australians have a global reputation for being relaxed and easy-going, which also translates into how Australians communicate, and will often speak their mind in discussions. Though an Australian employee’s way of talking is more casual than an employee in the US, with a lot of slang, Australian’s are still very hard-working. They often start their day earlier than 9 am. Australian’s don’t always operate on a strict time to head for lunch every day, nor do they need to message the boss if they are running slightly late. This is not due to a lack of punctuality but rather, because Australian’s work very hard, this flexibility ultimately promotes a positive work culture. 

Similarly to the US, Australian’s tend to be more social with their colleagues. Though one’s private life is generally kept separate from work, it is not unusual to spend time with one’s colleagues after the working day is over. Though American’s may similarly share the concept of Friday night drinks, it is not odd for Australian’s to socialize any day of the working week.

Also, though employers generally frown upon office romance in US working culture, this similar disapproval does not exist in Australia. Furthermore, Australia has strict rules regarding discrimination and workplace bullying that can result in severe punishment for employers. More information about the protections in place for employees in Australia and advice for employers can be found here.

What is the time difference between Australia and the US?

lAs you can see, the standard 9 to 5 workday in Sydney, Australia, translates to late afternoon through to after midnight in the US. Perth on Australia’s West Coast is 3 hours further behind and has no crossover with the regular working hours of the USA.

How is this commonly dealt with? 

Employers should note that there is a two-three hour time difference from the East and West coast of Australia (depending on location and daylight savings), so the exact location of an employee has to be factored in when calculating the time difference. Australia’s daylight savings is not nationwide either and only affect certain states. Popular areas that incorporate daylight savings include Sydney, Melbourne, and Canberra. 

East Coast USA to East Coast Australia

This requires a late finish for the USA and an early start for Australia. During daylight savings in New South Wales (October to April), sunrise and sunset are one hour later. In contrast, the US’ daylight savings start in November and end in March. 

This means in November, 9 am in Sydney is 5 pm in New York, which allows a better time frame to communicate. However, when daylight savings is not in action, Sydney’s 9 am is New York’s 7 pm. 

West Coast USA to East Coast Australia

US employees on the West Coast find it easier to communicate with their Australian employees. 9 am in Sydney, Australia is 4 pm in San Francisco, which allows an hour of shared working hours. More extended periods of overlap are naturally possible if the Australian employee is willing to start earlier, or the US employer is happy to work later into the night. 

In November, once daylight savings ends, 9 am in Sydney is 2 pm in San Francisco, which allows for even more simultaneous working times. 

What are the typical working hours in Australia?

 The typical working hours in Australia are 38 hours per week, Monday to Friday. In Australia, an employer may allow their employee to ‘average’ their hours. For example, an employee can work 21 hours in Week 1, as long as they then work 55 hours in Week 2. This agreement has to be mutual and cannot be forced upon as a condition of employment by the employer. 

The average amount of hours worked in the US is 47 hours. An employee in Australia is allowed to work more hours, but they will be allowed to refuse if the request to work over-time is deemed unreasonable. 

US employers should know that Australia legislation has different types of Awards which set out specific conditions for certain industries, such as Nurses, Retail Workers, and even those classified as ‘Professionals’. Regardless of which Award may apply to your Australian employee (and they may not apply under any Award!), it would be wise of the US employer to adhere to the National Employment Standards, which exist as the overarching rules that apply to any form of employment. More information can be found here.

How do you recruit employees in Australia?

Australia has several popular recruitment websites that a US employer can utilize. The use of social media such as LinkedIn is growing, but jobs are still often found through websites such as Indeed and Seek. US employers may also be interested in hiring a recruitment agency for their needs. 

How do you interview remote workers in Australia?

The interview process is similar to the US, in that they can take place through phone, video, or in person. 

Are Australian resumes different from American resumes?

Australian and US resumes are very different. In the USA it is common for a resume to be limited to a single page. An Australian resume will typically be much longer and includes the applicant’s entire work history, educational history, and personal data like hobbies. Another thing to look out for is that Australian’s adhere to UK English, so some words may be spelled wrong to the US employer but still be technically correct. 

Is making an offer to an employee in Australia different from hiring in the US?

In Australia, employers always provide employees with a written contract. While it is not a legal requirement to have a written contract, it is highly recommended, especially as Australia has many laws that protect the business and employee if a dispute arises. Therefore, an employment contract can protect both the employer and employee. In addition, Australian employees will be much more familiar and comfortable with a written employment contract instead of a verbal offer.

More information can be found here.

How to Pay Remote Employees in Australia

Do Australian employees get paid differently to US employees?

Australian payroll is significantly more simple than the US. In Australia, the employer deducts federal income tax and social security from the gross salary and transfers the net salary to the employee. There are no state or municipal payroll deductions for employees. 

How often do Australian employees get paid/can we pay bimonthly?

Australian employees are usually paid monthly on a basis, but bi-monthly is also fairly common. 

Shield GEO prefers to pay our Australian employees monthly. 

What are some common benefits that foreign employers offer remote employees in Australia?

Remote work inherently provides many benefits, including increased productivity, shorter (if any) commute times, flexible work scheduling, and more savings for the employer and employee. Many foreign employers provide additional allowances to their employees such as payment of business expenses, internet and telecom allowances, and the ability to work from a co-working space if so desired. Employers regularly pay a stipend for reasonable expenses such as travel where necessary.

In Australia, it can be common to offer a car allowance (if the role involves travel), communications allowance (for internet and phone calls) and health insurance allowances.

The employer should reimburse all work travel and expenses. There are strict tax regulations for reimbursement of non-work related items, called Fringe Benefits Tax (FBT). Shield GEO will not process any reimbursements which might incur FBT. They can, however, be grossed up and processed as additional gross salary to deliver the same net benefit to the employee.

Can employers pay a stipend for expenses?

Employers can pay a gross stipend to employees for almost anything. This is treated as additional gross salary and subject to tax deductions. 

At Shield GEO, we provide our remote employees in Australia with a health and wellbeing allowance which primarily goes towards health insurance. We also provide our employees with a stipend for their internet expenses and pay for a co-working space, if they choose to use one. 

How is work equipment provided to remote employees in Australia?

Employers also commonly provide remote employees with the necessary work equipment such as a 

Laptop, cell phone and other peripherals. Some employees in Australia are allowed to choose their own equipment as well, provided their employer approves. In this case, employers can reimburse the full cost or only up until a budgetary limit with the employee covering the remaining cost themselves. Employers must remember to take note that electronics are more expensive to buy in Australia than the USA, and some items may be difficult to ship to Australian employees due to customs. 

At Shield GEO, we ensure our Australian remote employees have the correct equipment to complete their day-to-day tasks efficiently. We provide our employees with a laptop, keyboard and mouse, and a headset for conferencing. At our employee’s primary place of work, we also provide a monitor, desk, ergonomic chair, and desk lamp.

Can employers pay remote workers in Australia in USD?

No salary payments in Australia should be set and processed in US dollars. The net AUD salary could be converted into USD and paid into a US dollar account, but this would be a very unusual request from an Australian resident.

For more information, please read the related FAQ: Can we set the local salary in foreign currency? 

Australian Payslips Explained

Payslips are mandatory in Australia, and an employer must provide them within one working day of the payday either electronically or on paper. If payslips aren’t given in time or recorded incorrectly, US employers may face a fine. 

This link here can assist employers with all relevant record management with a free course and helpful templates. 

More information on what has to be listed in a payslip is found here.

Payslip Terms:

PAYG Tax: This section covers Medicare (the state-funded health insurance), and any additional taxes the Australian government will deduct based on how much an employee earns. The employee pays their taxes from their wage. 

Superannuation: An employer must contribute at minimum 9.5% of an employee’s earnings at least every three months if the employee earns more than $450 a month (before tax) and is over 18 (or under 18 but works more than 30 hours a week). 

Leave: Australian employees are legally entitled to four weeks (20 days) of annual leave for full-time workers, and that time is pro-rated for part-time workers. 

Personal/Carers Leave: In Australia, sick leave is combined with carer’s leave. This means employees can use this form of leave, not just when the employee is unwell, but also if an immediate family member is sick.

How PTO and Holiday Entitlements Work in Australia

How much PTO do remote employees in Australia get?  

Australia legislation covers a broad range of paid time off allowances for different reasons, including standard annual leave, sick and carer’s leave, compassionate leave and maternity leave (just to name a few!). The equivalent of paid time off in the United States is annual leave. 

Australian employees are legally entitled to four weeks (20 days) of annual leave for full-time workers, and that time is pro-rated for part-time workers. A US employer cannot offer less than this, but they can provide more and may be obliged to if their employee fits under a particular Award. Paid time off accumulates gradually over the year, and if the time is not used by the end of the year, it will roll over indefinitely. PTO cannot expire, but employees with a significant balance of accrued PTO can request to be paid out for some of their balance. Unused PTO is paid out upon the termination of the employment regardless of the reason for termination. The employer pays PTO days at the same rate as a normal workday

An employer cannot stipulate in the employment contract for an employee to use their leave by the end of the year or set a cap as to how much leave can roll over into the next. This is also the same for sick leave. 

Information on the various types of leave.

Information on annual leave.

Can we offer unlimited PTO in Australia? 

Yes, but it is not as common of a concept as in the US. This is because Australia already legally prescribes 20 days off. It is up to the US employer if they would like to implement a policy that allows more time off. 

For an Australian perspective, this link may be helpful.

Do I have to track PTO?  

It is a legal requirement for an employer to keep track of an employee’s employment record, including paid time off, and failure to do so can result in a fine. An employer can even be taken to court if records aren’t available and a matter such as a claim of underpaying your employee arises. 

This is especially important as an employer, and employee may agree to cash out the accumulated annual leave upon termination. If so, an employer must keep:

How does sick leave work in Australia?

In Australia, sick leave is combined with carer’s leave. This means employees can use this form of leave, not just when the employee is unwell, but also if an immediate family member is sick. A full-time employee accumulates ten days of paid sick leave per year, which is pro-rated for part-time workers. This leave also carries over indefinitely if unused, so a US employer needs to keep track of this section of leave. The employer pays sick leave days 100% at the same rate as a normal workday.

A US employer does have the right to ask for proof of illness in the form of a medical certificate, statutory declaration, or any other types of evidence that is reasonable for the employer to ask for and proves the employee’s sickness or need to care for others. 

For more information and examples, please click here.

What are the national public holidays in Australia? 

The relevant public holidays that a US employer needs to know about are New Year’s Day, Australia Day, Good Friday, Easter Monday, Anzac Day, Christmas Day and Boxing Day.

Australia Day falls on the 26th of January, and Anzac Day is on the 25th of April. Where a public holiday falls on a weekend, the following Monday is generally observed as the public holiday. The other dates are identical to the US. The employer pays public holidays 100% at the same rate as a normal workday. All employees have the right to be absent from work on a public holiday. If an employee agrees to work on a public holiday, they would normally be paid an overtime rate depending on their award.

Though there are National Holidays that apply to all States, each State has unique holidays that a US employer must also adhere to. The above link also includes the public holidays specific to each State. 

What happens if my employee works on an Australia public holiday?

Australian employees, especially office-workers, generally don’t work on working days which fall on a public holiday. A US employer will still, however, have to pay them as if they had worked that day. A US employer will not have to pay the employee if it is not a day that they usually would have worked. 

An employer is allowed to ask the employee if they can work, but an employee can refuse if they have reasonable grounds. 

More information can be found here.

How Social Security Works in Australia 

Does the employer have to pay S? What does it cover?

There are two main social contributions in Australian payroll: superannuation and the Medicare surcharge. The employee always covers Medicare, but the superannuation contribution of 9.5% is paid by the employer. Superannuation is effectively a savings account for the employee’s retirement. Employees can access their superannuation when they retire. Where it gets confusing is that some employers set their salaries to exclude superannuation and others set the salary inclusive of super.

Australian employers are required by law to pay superannuation contributions into the employee’s nominated fund on a monthly or quarterly basis. Employees will advise their employer of their nominated superannuation fund when they first start work by filling in a superannuation choice form. In addition, every Australian employer needs to have an “employer nominated fund” or “default fund” which is registered by the Australian Prudential Regulation Authority so that employees who don’t have a nominated fund can still receive contributions into the employer nominated fund. At Shield GEO we use Australian Super for our employer nominated fund.

Does the employee have to pay SS? What does it cover?

Medicare covers most general practitioner appointments and rebates on specialist doctor appointments. This 2% contribution is uncapped and based on the employee’s taxable income. It is deducted by the employer in the monthly payroll and remitted to the Australian Taxation Office. A Medicare Levy Surcharge (MLS) is also added if an employee earns over a certain limit and does not pay for private health insurance. 

Private health insurance is beneficial as Medicare does not cover dental, optical, chiropractic, physiotherapy, or alternative/complementary therapies. Therefore, it is common for Australians to have both forms of insurance. If an employee has private health insurance, they can get an exemption from the MLS and may also qualify for a private health insurance rebate. This is calculated in their annual tax return. 

What is the 401K equivalent for remote employees in Australia?

The 401K equivalent is called ‘superannuation’ (and often referred to as ‘super’) in Australia. An employer must contribute at minimum 9.5% of an employee’s earnings at least every three months if the employee earns more than $450 a month (before tax) and is over 18 (or under 18 but works more than 30 hours a week). Most employers, including Shield GEO, pay superannuation contributions monthly.

When negotiating salaries with Australian employees, US employers need to be very clear as to whether their salary is exclusive or inclusive of superannuation.

For example, for an employee that is paid $100,000 excluding super, this will mean that the employee gets $100,000 as a salary and the employer pays an additional 9,500 in super contributions. The cost to the employer is $109,500.

However, if the contract states that the salary is inclusive of Super, this will mean the employee gets $91,324.20 as their gross salary, and then 9.5% ($8,675.80) is paid into Super. So making the total cost to the employer is $100,000.00. 

Employers can pay more than 9.5%, and employees can also choose to increase their superannuation contributions via salary sacrifice. Both are subject to contribution caps and may incur higher rates of tax. More information can be found here.

Do Australia employees need health insurance? What does it usually cost?

As mentioned, Australians enjoy free healthcare from the Australian Government. However, many Australians will also opt for private healthcare as the government system does not provide for certain medical needs such as dental or optical. 

Whether a US employer would like to contribute to an employee’s private health insurance depends on the company’s internal policies. The average cost in Australia is significantly less than in the USA. An individual can get good private health insurance cover for less than AUD 200 per month.  

What to Know About Terminating Remote Employees in Australia

Are there probation periods in Australia?

Probation periods are common in Australia and range from 3 or 6 months probation period with one week’s notice during probation. This aligns with the six-month Minimum Employment Period that employees need to complete before they can claim for unfair dismissal. While on probation, an Australian employee still accrues annual and sick leave and retains the entitlement to either take this leave or have it paid out if their employment does not extend past the probation period. An employee is also entitled to a notice period if they are not kept on with the employer past the probation period, which is usually a week’s notice.

For more information, including templates to assist an employer during the probation period, click here.

Is there ‘at will’ termination in Australia?

No, employees must receive a notice period if their employment has lasted for more than six months. The minimum notice period is from 1- 4 weeks as determined by the period of continuous service. But it is common for all employees, especially more senior employees, to receive one month’s notice upon completion of their probation period. This can also vary depending on the industry award, which applies to the worker.

Period of continuous service 

Minimum notice period 

1 year or less

1 week

More than 1 year – 3 years

2 weeks

More than 3 years – 5 years

3 weeks

More than 5 years

4 weeks

Source: https://www.fairwork.gov.au/ending-employment/notice-and-final-pay/dismissal-how-much-notice

Do you have to pay for severance in Australia?

Yes, severance has to be paid in Australia if employees meet certain employment conditions. In Australia, this is more commonly referred to as redundancy pay. 

Redundancy pay is only required if an employee has worked for more than 12 months continuously, or their employment is not terminated for serious misconduct. More specific exceptions here.

If an employee is made redundant, the employer must pay any wages and holiday time owed as a severance. The employee receives an additional payment pending how long the employee has worked for your company. The redundancy amount depends on the position, but the below graph demonstrates the minimum that an employer must pay their employee. Some elements of redundancy pay are not taxed or taxed at lower rates.

Period of continuous service

Redundancy pay

At least 1 year but less than 2 years

4 weeks

At least 2 years but less than 3 years

6 weeks

At least 3 years but less than 4 years

7 weeks

At least 4 years but less than 5 years

8 weeks

At least 5 years but less than 6 years

10 weeks

At least 6 years but less than 7 years

11 weeks

At least 7 years but less than 8 years

13 weeks

At least 8 years but less than 9 years

14 weeks

At least 9 years but less than 10 years

16 weeks

At least 10 years

12 weeks

Source: https://www.fairwork.gov.au/ending-employment/redundancy/redundancy-pay-and-entitlements#2045-2046

Is it difficult to terminate an employee in Australia?

Termination is definitely more expensive than the US and may feel difficult in comparison to the “at-will” employment status commonly in place in the US. Australia has many legal protections for employees who think their termination is based on discrimination, a reason that is harsh, unjust or unreasonable, or because of another protected right (e.g. the employee feels the employer terminated them for asking about their pay or working conditions). It is relatively easy for an employee to contest their termination in a Labour Tribunal, and there is free legal assistance provided by the government. Employees also have access to many remedies, including (and not limited to) reinstatement or compensation. 

Despite the numerous protections for employees, the clear and comprehensive structure of the Fair Work Act means that the termination process is fairly structured and the costs for a normal termination are easy to calculate. If an employee does choose to contest their dismissal, they must lodge a claim with the Fair Work Ombudsman, and there are a few mediation steps before it can go to court.

Therefore, though it is not difficult to initiate a termination, the US employer must aim to follow the statutory requirements to avoid paying penalties or additional compensation. 

 

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