What do I need to do to hire my first employee in Australia?

Work out the true cost (wage plus roughly 20-30% on-costs), confirm they're an employee rather than a contractor, find the award and set a legal pay rate, put the offer in writing, then register for PAYG withholding, set up STP-enabled payroll software and a default super fund, and take out workers compensation before they start. On day one, give them the Fair Work Information Statement, collect a TFN declaration and super choice, and run the first pay through STP.

How much does it cost to employ someone in Australia on top of their wage?

Budget about 20-30% on top of the base wage. Super guarantee alone is 12% of qualifying earnings (as at September 2026), workers compensation typically adds 1-3% of wages depending on your industry, and you carry the cost of paid annual and personal leave, payroll software, equipment and training. Payroll tax only applies once your total wages pass your state's threshold, which is $1 million or more in NSW, Victoria and Queensland, so a first hire won't trigger it.

What paperwork does a new employee need to fill out in Australia?

A Tax file number declaration, a Superannuation standard choice form (or the equivalent online New Employment form in myGov), bank account details and, if they're not an Australian citizen, evidence of their right to work. You must also give them the Fair Work Information Statement before or as soon as possible after they start, plus the Casual Employment Information Statement if they're casual.

Do I need workers compensation insurance for just one employee?

Almost always yes. Workers compensation is compulsory in every state and territory once you employ someone, and you need the policy in place before their first shift. NSW and Victoria exempt very small employers paying $7,500 or less a year with no apprentices or trainees, and Queensland requires a policy within 5 business days of employing anyone; other states have their own rules, so check your regulator.

Do I need to register for PAYG withholding before hiring an employee?

Yes. You must register for PAYG withholding with the ATO before you make the first payment you need to withhold tax from, even if the amount withheld turns out to be nil. If you have an ABN you can add the registration in Online services for business in minutes, or your BAS agent can do it for you.

Hiring Your First Employee in Australia: The Complete Checklist

To hire your first employee in Australia you need to confirm you can afford the true cost, check the person is genuinely an employee, find the award and set a legal pay rate, put the offer in writing, get your registrations sorted (PAYG withholding, STP payroll, super, workers compensation), then hand over the right paperwork on day one and run a compliant first pay. None of it is hard, but the ATO and the Fair Work Ombudsman each own half the list and neither tells you about the other half.

Step 1: Work out whether you can afford it

A realistic budget adds 20-30% to the wage for on-costs.

Cost	What it is	Rough size
Super guarantee	12% of qualifying earnings, received by the fund within 7 business days of payday (as at September 2026)	12% of wages
Workers compensation	Compulsory state insurance, priced on your industry and wages	Typically 1-3% of wages; more for physical trades
Paid leave	4 weeks' annual leave and 10 days' personal/carer's leave a year for full-timers; some awards add 17.5% leave loading	Weeks you pay for but don't get worked
Payroll software	STP-enabled payroll, often bundled with accounting software	Free to about $10 per employee per month
Payroll tax	State tax on total wages above a threshold	Nil for a first hire: thresholds are $1 million in Victoria, $1.2 million in NSW and $1.3 million in Queensland (as at September 2026)

On a $60,000 salary, super adds $7,200 and workers compensation at about 1.75% adds roughly $1,050, so you're at $68,250 before software, equipment, training and covering leave. Cost out a casual (25% loading, no paid leave) against a part-timer (leave pro rata, predictable hours) before you decide. Then stress-test it: if paying this wage in your two quietest months depends on a hoped-for sales lift, start with a casual or wait.

Step 2: Confirm they're an employee, not a contractor

If your plan is "get them an ABN and have them invoice me", stop. Employee or contractor is decided by the real substance of the working relationship — who controls the work, supplies the tools and carries the risk — not by an ABN or a contract label. Someone working your roster, on your equipment, under your direction is an employee, and misclassifying them means back pay, super, penalties and possibly a sham contracting case. Our guide to employee vs contractor in Australia walks through the test.

Step 3: Find the award and set the pay rate

Almost every small business employee is covered by a modern award setting minimum pay rates, penalty rates, allowances, hours and breaks for their industry or occupation. Use the Fair Work Ombudsman's Find my award and Pay and Conditions Tool to identify the award, then pick the classification level that matches the job — wrong classification is the most common underpayment mistake first-time employers make.

The floors you can't go under, from the first full pay period on or after 1 July 2026:

National minimum wage: $26.44 an hour, or $1,004.90 for a 38-hour week, for award-free adult employees.
Casual minimum: $33.05 an hour, including the 25% casual loading.
Award rates: rose 4.75% in the 2026 Annual Wage Review. Your award's rate for the classification is the real minimum, usually above the national minimum wage.

Rates change every July, so diarise your award's pay guide. On top of the award sit the National Employment Standards — minimum leave, hours, notice and public holiday entitlements — which since 26 August 2025 include the right to disconnect for small business employees.

Step 4: Put the offer in writing

A written contract isn't strictly required, but it settles every future argument about hours, pay and duties. The Fair Work Ombudsman's free letter-of-offer and contract templates suit most first hires. Cover the employment type (and agreed regular hours for part-timers), award, classification and pay rate, pay frequency, start date, location, a plain description of the role, probation and notice periods, and any policies that apply.

Two traps. A probation clause doesn't switch off unfair dismissal rights; that's governed by the Fair Work Act's minimum employment period, which is 12 months for a small business employer (fewer than 15 employees) and 6 months for everyone else, after which the Small Business Fair Dismissal Code applies. And if the person isn't an Australian citizen, check their right to work through the Department of Home Affairs' VEVO system before they start; employing someone without work rights attracts serious penalties.

Step 5: Registrations before the first payday

Get all four done before the first shift.

Registration	Who runs it	Deadline	How
PAYG withholding	ATO	Before the first payment you withhold tax from	Online services for business (needs an ABN), or your BAS agent
STP-enabled payroll software	ATO	Reporting starts with your first pay run	Choose software and connect it to the ATO
Super: default fund and payment method	ATO / your fund	Before the first contribution is due	Nominate a default fund; pay through your payroll software or a clearing house
Workers compensation	Your state regulator or insurer	Before the employee starts	icare (NSW), WorkSafe Victoria, WorkCover Queensland, WorkCover WA, ReturnToWorkSA, WorkSafe Tasmania, WorkSafe ACT, NT WorkSafe

PAYG withholding lets you take tax out of wages and pay it to the ATO. You must be registered before the first payment you withhold from, even if the amount ends up nil.

Single Touch Payroll has been mandatory for every employer since 1 July 2019, with no minimum headcount and no paper alternative: each pay run, your software reports wages, tax withheld and super to the ATO on or before payday. Our Single Touch Payroll guide explains how it works, and our comparison of the best payroll software for small business covers costs, including free options for a single employee.

Super runs on a new clock. Since payday super started on 1 July 2026, each employee's 12% super guarantee must be received by their fund within 7 business days of payday; a new employee's first contribution gets 20 business days from their first payday. Nominate a default fund now in case they don't choose one.

Workers compensation is compulsory in every state and territory once you employ someone, and the policy must be in force before they start. A couple of states exempt the very smallest employers and a couple give you a few days' grace, so don't assume — our business insurance guide sets out the thresholds and deadlines regulator by regulator.

Payroll tax can wait: it only applies once total annual wages pass your state's threshold.

Step 6: Day-one paperwork

Documents you give them

Fair Work Information Statement, before or as soon as possible after they start. Download the current version from fairwork.gov.au (email is fine) and record that you gave it.
Casual Employment Information Statement for casuals, at the same time and again after 12 months for a small business employer; fixed-term contracts get the Fixed Term Contract Information Statement.
Their signed contract or letter of offer, plus any policies it refers to.

Documents they give you

Tax file number declaration, on paper or through the New Employment form in myGov. STP Phase 2 software sends the details to the ATO for you; otherwise lodge it within 14 days of signing. No TFN and no valid exemption means withholding at the highest marginal rate.
Superannuation standard choice form, or the super section of the same myGov form, offered within 28 days of their start date and kept for 5 years. If they don't nominate a fund, request their stapled fund details through Online services for business before any contribution; use your default fund only if the ATO reports none.
Bank details, emergency contact, and copies of any licences or qualifications the role needs.

Things you set up

Enter them in payroll with the correct award, classification, employment type, pay cycle and leave accruals, and check the hourly rate against the pay guide before the first run.
A safety induction (hazards, first aid kit, emergency exits, how to report an incident) and a record of hours worked. Work health and safety duties apply from day one.

Step 7: Run the first pay properly

Your first pay run is the template for every one after it.

Calculate gross pay from hours worked at the award rate, including penalty rates, overtime or allowances.
Withhold PAYG using your software's tax tables and the employee's TFN declaration choices.
Pay them and report through STP on or before payday.
Issue a pay slip within 1 working day, showing your ABN and name, their name, pay period, payment date, gross and net pay, rate and hours, deductions, and super paid and to which fund.
Pay super so it reaches the fund within 20 business days for this first contribution and 7 business days for every one after. Authorise it on payday; the clock runs until the fund receives it.
Remit the tax withheld to the ATO through your activity statement when it falls due.
Keep the records for 7 years, legible and in English.

The penalties for the boring bits are real: failing to give a compliant pay slip or keep proper records carries maximum penalties of $21,840 per contravention for an individual and $109,200 for a company (based on the $364 penalty unit, as at September 2026), and each pay period can be a separate contravention. One more date: lodge your STP finalisation declaration by 14 July each year so your employee's income statement is ready for tax time.

Key takeaways

Budget 20-30% on top of the wage for on-costs: 12% super, workers compensation, paid leave and software. A $60,000 salary costs roughly $68,000 before equipment and your time.
Find the award and classification first. From 1 July 2026 the national minimum wage is $26.44 an hour ($33.05 casual) and award rates rose 4.75%, but your award rate is the real floor.
Four registrations before the first shift: PAYG withholding, STP-enabled payroll software, a default super fund with a way to pay it, and workers compensation.
Day one: give the Fair Work Information Statement (plus the casual statement if relevant), collect the TFN declaration and super choice, and request a stapled fund if they don't nominate one.
First pay: report through STP on or before payday, pay slip within 1 working day, super received within 20 business days for the first contribution and 7 after that, records kept for 7 years.

Where to get help

Fair Work Ombudsman (fairwork.gov.au, 13 13 94): Find my award, the Pay and Conditions Tool, pay guides, contract templates and the information statements. Employers with fewer than 15 employees can use the free Employer Advisory Service for tailored written advice; follow it in good faith and the Ombudsman won't pursue penalties if it turns out to be wrong.
Australian Taxation Office (ato.gov.au): the "Before you hire your first worker" and "Hiring a new worker" pages, PAYG withholding registration, the STP product register, stapled fund requests and payday super guidance.
business.gov.au: the hiring checklist with links to every state workers compensation regulator and revenue office.
Your state workers compensation regulator for who must register and what it costs, and the Department of Home Affairs (VEVO) for right-to-work checks.
Your accountant or BAS agent: to register PAYG withholding, set up payroll and run the first pay with you. An employment lawyer or HR adviser is worth an hour if the role is unusual or you're unsure which award applies.