Employment options for international businesses in Australia

We have encountered several international businesses which considered expanding into the Australian market and hiring workers locally. Our team at ABN Australia can present several pathways to achieve this goal. Choosing the most suitable option depends on factors such as timing, cost, compliance requirements, risk tolerance and the business's overall strategic roadmap. If you seek to establish a company or branch in Australia and plan to hire local workers, this article is helpful for you as we have outlined below the main pathways for hiring workers in Australia and their associated requirements.

By Ro Elvinia

Pathways for hiring workers in Australia

International businesses expanding into or opening a business in Australia have several options for hiring local workers, each tailored to different operational needs and compliance requirements. Below are the key pathways:

Australian company formation
An Australian company formation involves the creation of a new Australian limited liability company registered with the Australian Securities and Investments Commission (ASIC), Australia's corporate, markets and financial services regulator. The Australian company formation is a popular option for international businesses planning to conduct commercial activities in Australia as it operates as a separate legal entity, allowing for direct hiring, tax registration and conducting commercial activities. We always notify our clients that while it offers full operational flexibility, it requires ongoing compliance with Australian corporate and tax regulations. Based on our experience, it typically takes two to three weeks to have an Australian company established and ready for hiring a worker.

Foreign Branch Registration
A foreign branch registration allows you to operate in Australia under your existing international structure while hiring employees directly. This option is ideal if you prefer not to create a separate legal entity but still wish to manage local operations and workforce.

We have been handling the registration process on behalf of non-resident clients and it can take one to three months and include obtaining tax and employment registrations with the Australian Taxation Office (ATO), the government agency responsible for administering and enforcing taxation laws in Australia. Although a foreign branch does not establish a new entity, it carries similar compliance obligations to an Australian company, including financial reporting, corporate secretarial requirements and tax compliance. Detailed records must be maintained and local regulations must be followed.

While this pathway suits companies with long-term plans for global branding and centralised operations, it is less popular than forming a new Australian entity due to the complexities of international compliance. Therefore, you should carefully assess how this structure aligns with your operational goals, particularly regarding taxation treaties and liability management.

Representative Office
A representative office offers a cost-effective solution if you want to establish a presence in Australia without engaging in commercial activities. It is ideal for market research, promotional activities or liaising with international operations without the requirement of a fully-fledged operational office or commercial activities. This pathway is lower-risk and flexible, suitable if you are looking to test the Australian market before committing to full operations.

In some cases, formal ASIC registration is not required if you can demonstrate that your business is not ‘carrying on a business’ in Australia, meaning no income or commercial activities are generated. However, you must still complete necessary tax and employment registrations with the ATO to hire workers.

Our team of experts can help in setting up a representative office. This typically takes eight to ten weeks to complete the required registrations and hire staff.

Employer of Record (EOR)
An EOR solution allows you to hire employees in Australia without establishing a legal entity. For example, ABN Australia can serve as your EOR entity, which will become the legal employer who will be managing all compliance requirements, including payroll, tax filings, benefits and employment contracts, while your international business retains operational control of the employee's day-to-day work.

The EOR model enables employees to start working within days, making it one of the fastest and most flexible pathways for hiring in Australia. This solution is particularly attractive for international businesses seeking a low-risk and low-administration option, as it eliminates the need to navigate Australia’s complex regulatory framework. The EOR option is well-suited for you if you have short-term projects, are testing the Australian market, or are needing to expand your workforce quickly without the overhead of establishing a local entity.

Mandatory registrations for employing workers in Australia

Regardless of the chosen pathway (except EOR), you must complete the following registrations before an employee’s start date:

PAYG withholding registration
PAYG Withholding registration ensures businesses withhold tax from employees' wages and remit it to the ATO, easing the tax burden on employees and supporting Australia's tax compliance framework. It is a legal requirement if you employ staff in Australia.

Superannuation
Businesses must register with the ATO Small Business Clearing House for reporting of employee super. You will also need to establish a default fund for superannuation. This default fund is required under Australian legislation and will be used if y employee does not or cannot nominate their own super fund.

WorkCover insurance
WorkCover insurance provides statutory protection for employees in case of work-related injuries or illnesses. Mandatory in Australia, employers must register with their state or territory’s authority, ensuring compliance with local occupational health and safety regulations.

Payroll tax
Payroll tax is a state-based tax your business must pay if your wages exceed the local threshold. Rates and thresholds vary by jurisdiction, and you must register and pay accordingly to avoid penalties.

These registrations are crucial for ensuring compliance with Australian labour laws and tax obligations. Failing to complete them before an employee’s start date can result in fines, penalties and legal complications. Each registration helps you fulfil your obligations, protecting both the company and its employees while contributing to the smooth functioning of Australia’s employment and tax systems.

Key considerations for choosing an employment pathway

Before selecting a pathway, you should evaluate the following factors:

Timing
Timing plays a critical role in determining the feasibility of a chosen pathway. Some pathways may take several weeks while others can facilitate hiring much faster. Delays in employee onboarding may disrupt operations, delay projects, or lead to the loss of key talent.

Key questions to ask:

When does the employee need to begin work?
Are there urgent deadlines for client deliverables or project milestones?
How quickly can payroll systems be implemented?

Costs
Understanding both initial and ongoing costs is essential for your business’s budgeting and financial planning. Employment pathways vary significantly in cost implications, from the upfront expense of company incorporation to the ongoing fees for compliance and payroll services.

Key considerations:

Initial setup costs include registration fees for an Australian company or foreign branch, legal and accounting support and any necessary permits.
Ongoing costs or regular expenses such as corporate secretarial fees, taxation compliance, payroll administration and insurance premiums.
Unexpected costs may arise, such as penalties for non-compliance or employee benefit adjustments.

Compliance
Compliance with Australian employment, taxation and business regulations is non-negotiable. Non-compliance can lead to fines, legal action or reputational damage, especially for you who is unfamiliar with local laws.

Key considerations:

What level of expertise is needed to manage compliance?
Does the chosen pathway require in-house resources or third-party support for ongoing compliance?
How complex are the reporting requirements for payroll, tax filings and corporate governance?

Risk
Each employment pathway comes with inherent risks, such as compliance failures, operational disruptions or employee-related liabilities. As a non-resident business operator, you must weigh these risks against your ability to manage them effectively.

Key risk factors:

Non-compliance with tax or labour laws may lead to penalties.
Delays in setup may hinder business growth or service delivery.
Directly employing workers through a company increases exposure to workplace disputes or claims.

Roadmap
Your choice of employment pathway should align with your business's long-term goals in Australia. This ensures that short-term staffing decisions support overall growth and operational plans.

Key questions to ask:

Is the focus solely on hiring, or does your business plan to expand operations?
Will future workforce needs require additional legal structures or registrations?
How does the chosen pathway accommodate scalability or changes in workforce size?

Business activities
Employment decisions are often intertwined with broader business operations. Beyond hiring, you may need to engage in activities such as opening bank accounts, signing contracts or conducting sales in Australia, all of which may influence the ideal employment pathway.

Key considerations:

Will your company engage in commercial transactions?
Is there a need for a physical presence, such as an office or warehouse?
How will revenue generated in Australia be managed and reported?

Take the next step with ABN Australia

ABN Australia has been in the industry since 1976 and we have been a trusted partner by international businesses. We understand that every international business is unique, and the best solution for hiring workers in Australia depends on your specific needs. Whether you are considering forming a new Australian company, registering a foreign branch, setting up a representative office or using an EOR, we provide a broad range of compliance, accounting, registrations (e.g. ABN and GST registration), employment and payroll services tailored to your business.

Our holistic and flexible approach means that we can assist you at every stage, from initial setup to ongoing compliance management. We recognise that business needs evolve, and we are here to help you navigate the complexities of hiring and managing staff in Australia.

To ensure you stay compliant and simplify your business operations, reach out to our team. We can provide a comprehensive guide on the registration and compliance obligations related to hiring workers in Australia. Let ABN Australia handle your compliance and payroll administration, so you can focus on growing your business.

Published: 12^th Mar 2025 | Last updated: 12^th Mar 2025