Australia has a rich talent pool, particularly in the fields of STEM, energy and manufacturing. Despite lockdowns and economic restrictions in COVID-19-induced 2021, the country saw a rise of more than 64,000 workers in the field of technology. Deloitte’s Australia Digital Pulse report forecasts that the number of technology workers will grow to 1.2 million by 2027. There has been a slow and steady rise in the enrollment for degrees in STEM fields. This translates into a growing pool of tech talent in Australia, making it a lucrative destination for tech outsourcing and collaboration. Such an environment is conducive to fostering talents proficient in current technologies and adaptable to new and emerging trends.
The government also recognizes the need to optimize IT infrastructure. A Gartner report highlights that Australian CIOs will expand funding towards cybersecurity, cloud platforms, data and analytics and application modernization this year. Moreover, Australia's economy is characterized by steady growth and political stability, harboring a safe environment for foreign companies to invest in and collaborate with Australian IT professionals. Its thriving market, competitive talent and collaborative business culture make Australia a prime opportunity for hiring new and reliable talent.
However, is hiring in Australia similar to hiring in other Western countries? Let us know some key facts about the country. Every foreign employer should first know the basic details about the native language, currency, business environment and taxation of the country they wish to hire from.
Key Facts About Australia
Things Employers Must Know About Hiring in Australia
It is imperative to be aware of the local labor laws of a foreign country to avoid any lawsuits later on. Before you begin searching for candidates, acquaint yourself with the local labor laws of Australia.
Labor Laws of Australia
The federal Fair Work Act (2009) and its amendments are the principal laws governing employment relationships in Australia. Employers must know that some of its provisions differ with each state and territory. Here are some things that all employers recruiting from Australia should know
Labour Contracts
In Australia, all employment contracts must provide the minimum entitlements in the National Employment Standards (NES). A contract can be in writing or verbal, although it is recommended to have a formal written agreement. The main types of employment contracts in Australia are:
- Permanent Contract: This contract is mostly for full-time employees and states the period of employment, working hours, and work conditions
- Fixed-Term Contract: An employee who works for a set period of time (can be part-time) must enter into a fixed-term contract with the employer. The working hours may differ, but the employees are entitled to the same benefits hourly.
- Casual Employment Contract: This work contract has no end date. The working hours can fluctuate and depend on the demand. There is no secured continuity of employment for casual workers.
Another important aspect of Australian contracts is they are based on an Enterprise Agreement or Awards. Here’s what these terms mean:
Enterprise Agreement: Also known as Workplace Agreement, it is a statement of rights and obligations agreed between an employer and employees. Employers can decide the working conditions tailored to their business needs.
Awards: These legal documents outline minimum pay rates and working conditions for some industries and occupations. These conditions must fulfill the minimum requirements in the NES. You can check out the List of Awards here.
Working Hours
In Australia, the working hours are 38 hours per week, which is typically 7.6 hours each day. Employees should have at least one day off in a week. Flexible working schedules are common in Australia, where certain employees can avail of flexible timings.
Minimum Wages
The National minimum wage provided by the Fair Work Act is reviewed each year. As of July 1, 2023, it is $23.23 per hour or $882.80 per week. The wages differ on employment type, age and work capacity. The award sets the minimum wage for most industries and occupations.
Payroll Cycle
As per Australia’s payroll policies, employees are paid bi-monthly. The employer can decide this frequency of pay.
Employee Benefits and Social Security
Familiarise yourself with the employee benefits and social security measures drafted by the local government of Australia.
Leaves
All full-time employees are entitled to 4 weeks of paid holidays annually. Pending leaves are usually compensated with pay when the employment ends.
Here are the other types of leave that Australian employees are entitled to:
- Public holidays: There are 7 national public holidays in Australia. Some states and territories could have additional holidays. Employees who consistently work on Sundays get an extra week of annual leave per year.
- Sick leaves: Employees can take up to 10 days per year of paid leaves for sickness or taking care of family.
- Bereavement leave: Employees can take up to 2 days of unpaid leave in circumstances of the death of a family member.
- Parental leaves: Parental leaves are covered by the government's Parental Leave Pay (PLP) scheme. This scheme provides 20 weeks of paid maternity leave to new mothers. Employers must register with the PLP scheme for employees to avail of it.
On the other hand, female employees working with a company for more than a year can take unpaid maternity leave of 12 months. Some employees can request for additional 12 months of leave.
New fathers are granted 5 days of unpaid paternity leave during childbirth or adoption. Fathers can register with the government scheme for additional paid leaves.
- Family and domestic violence leave: All employees are entitled to 10 days each year of paid family and domestic violence leave. This includes full-time, part-time and casual employees.
Overtime
Overtime cannot exceed 38 hours per week. The compensation is calculated and mentioned in the awards and enterprise agreements. There could be special rates for shift workers. Generally, the overtime rate is based on the number of hours worked.
First two hours: 1.5x of the standard hourly rate.
After two hours: 2x of the standard hourly rate.
Termination
The terms for termination must be stated in the employment contract. Any non-compliance with termination requirements can attract hefty penalties. However, in case of serious misconduct, employers have the right to terminate employees without notice.
The termination rules differ for small businesses (less than 15 employees). Employees wishing to terminate their employment voluntarily should give an advance notice as per the agreement (usually a month).
Social Security
Social Security in Australia is a bit complicated, especially for foreign employers as the system is based on residence and financial circumstances.
Superannuation: The Superannuation Guarantee system is the main social security contribution that employers must make for all their employees. It is similar to a retirement savings plan. Employers must pay super contributions of 11% of an employee's earnings. This is also eligible for temporary workers. Super is to be paid every 3 months.
Some employees can also contribute to their superannuation fund, which is currently capped at AUD 110,000 annually. You should consult the Australian Taxation Office (ATO) for details about Super.
Medicare: This universal health program for all Australian residents covers basic medical and hospital care free of charge. All residents are charged a 2% of their monthly salary levy towards this insurance. There is a surcharge of 1-1.5% for high-income taxpayers.
Some state-specific regulations can require employers to take additional workers’ compensation insurance.
Taxation
The payroll tax is levied on any income of total taxable Australia-wide wages if it exceeds a certain threshold. The payroll taxes are a bit complicated as they vary between states and territories of this continent country. They range from 4% to 6.85%. You can check out the latest rates and thresholds here.
Value-added tax (VAT)
A 10% standard VAT is levied on the sale of goods and services.
Income Tax
Australia has a Pay As You Go (PAYG) for personal income taxes.
Business Culture in Australia
Understanding the business culture of a different country is essential before hiring people from there. The business culture in Australia is quite unique due to the country's historical, geographical and societal influences. Here are some things to know before hiring in Australia:
Communication Style: Australians are known for their straightforward and direct manner of communication. There might be less 'beating around the bush' than other cultures. While this might seem blunt to outsiders, it is just their way of ensuring efficiency and clarity. They value honesty and openness.
Egalitarianism: Australian society is profoundly egalitarian. The hierarchy is flat and less visible. Leaders are typically accessible and subordinates are encouraged to speak their minds. The concept of a 'fair go' (respect for all individuals) is integral to Australian culture.
Collaborative approach: Australians prioritize collaboration in work. Decision-making involves consulting with most members of a team and can be thus time-consuming.
Flexibility and Adaptability: Employees typically expect adaptable and flexible work arrangements. Things like flexible hours, remote work and adaptive management styles are very prevalent.
Compliance Risks in Australia
The biggest challenge when establishing setup and hiring from Australia is the diverse rules and regulations across its states and territories. For a foreign employer, navigating the regulatory compliances in the regions you are based or hiring from only gets tougher. While the mandatory benefits, minimum wages and insurance have to be provided, here are some other areas of compliance that you should be aware of.
Data Breaches: Australia has introduced the most stringent penalties for data breaches at $2.2 million! It is a big compliance risk for businesses. Organizations thus need to step up to safeguard their staff and workspace. Changes in laws around data breaches require being updated with all compliance rules.
Occupational Health and Safety: As highlighted in the NES, you must provide safe working conditions. The fines imposed for lack thereof are also different in territories.
Privacy of Employees: Handling employees’ personal information must be done carefully. Any misuse, loss or disclosure from third parties with whom the information is shared can attract serious fines.
Australia also has laws regarding discrimination at work. The Respect@Work Act is in place to stop sexual harassment and create equitable workspaces. With many such legislations, regulatory compliance risks expand in the country.
Hiring in Australia Vs. Hiring in India
Australia has an attractive talent pool, but US companies can benefit from another prime destination for IT talent - India. If we compare hiring between these two locations, here is why India gains an advantage:
More Talent Availability: India has a vast tech talent pool thanks to its population size and strong focus on STEM education. Indian universities graduate millions of engineers and IT professionals every year. This highly educated workforce ensures a steady availability of skilled tech workers.
Low Labor Cost: One of the significant advantages of hiring from India is the substantial cost savings due to lower labor costs. Compared to India, the hourly minimum wage is almost 10x more in Australia. By resorting to Indian talent, you can save significant labor costs.
Time Zone: India's time zone (IST) can be an advantage for US companies. It allows for a nearly 24-hour work cycle, with the Indian team working through the US night. This ensures that projects can continue around the clock, increasing productivity and accelerating project timelines.
Australia follows a different time zone, nearly 12-20 hours ahead of the US, depending on which region you are based in. It can make coordination a little challenging.
Overall Hiring Costs: With a lower standard of living, the price of rentals and hiring teams is much lower in India. Recruitment processes, employee onboarding and training can be more cost-effective.
Indian tech talent offers an excellent resource for US companies looking to globalize talent while keeping costs in check. Consider the competitive advantage of hiring from India as you strive to innovate and lead in a global tech landscape.
Trust Rapid To Simplify Hiring in India
Still unsure if you can source talent from India? You must contact Rapid EOR to drive away all your hiring woes. With nearly two decades of experience in the dynamic Indian market, our team has qualitative insights into the challenges and opportunities of recruiting in this diverse country.
Rapid offers all-integrated HR support and also offers tailored services to meet your specific business objectives. We can help you frame customized employee benefits and contractual agreements targeting the Indian diaspora. You don’t need to worry about compliance issues; we have trained experts to guide you through every step. Whether you want to establish a branch office or set up a team of remote developers in India, Rapid can serve all your needs. Our trusted partners offer all the additional services like deep background checks, health insurance and more.
To know more about our services book a demo.
.svg)
.webp)
.svg)