Hiring Your First Employee in Australia: Every Obligation in One Place

Hiring your first employee drops you into a regulatory framework designed with much bigger companies in mind, and you're expected to get it right from day one. The reassuring truth is that the obligations are finite and they arrive in a knowable order. Here they are, in roughly the sequence you'll meet them.

Before you advertise

Identify the award and classification first. Most SME roles in Australia sit under a modern award, and the award, not your offer letter, sets the floor: minimum rates, penalty rates, overtime, allowances and rostering rules. Work out the likely award and classification before you set the salary, because discovering after the offer that the award minimum for the hours you actually need exceeds your budget is a miserable conversation. The Fair Work Ombudsman's pay and classification tools are the starting point; for a genuinely borderline role, pay for an hour of advice, since choosing the wrong award is among the most expensive mistakes an employer can make.

Choose the employment type deliberately. Full-time, part-time and casual carry different entitlements and cost structures: casuals receive a loading in place of paid leave, part-timers receive leave pro-rated to agreed hours. Don't default to casual because it feels lower-commitment; for regular, predictable hours it's often neither the cheapest nor the legally safest fit.

Between offer and day one

• A written employment contract. Practically non-negotiable. It should cover the role, employment type, hours, pay, probation, notice, confidentiality and your policies. A well-drafted template, properly adapted, is fine for a first hire; silence on key terms is what's dangerous.
• Register for PAYG withholding with the ATO, because you'll be withholding tax from the very first pay.
• Set up payroll software with Single Touch Payroll. STP reporting to the ATO on every pay run is mandatory even with one employee, and modern platforms handle it automatically. Spreadsheet payroll is no longer viable.
• Superannuation setup. Offer fund choice; if no choice comes back, request stapled-fund details from the ATO. Under payday super, contributions travel with each pay run, so this must be working before the first payday.
• Workers' compensation insurance. Compulsory in every state and territory from your first employee, regulated state by state and priced on your industry and wages. Arrange it before they start, not after.

In the first week

Give them the Fair Work Information Statement, plus the casual-specific statement if they're casual; both come from the Fair Work Ombudsman and providing them is a legal requirement, not a courtesy. Collect the tax file number declaration and super paperwork, usually through your payroll platform's onboarding flow. Confirm and record their right to work in Australia. Cover anything safety-related properly: work health and safety duties apply from the first hire, and a genuine induction is both a legal expectation and plain good sense.

Every pay run after that

Pay at or above the award, on time, with a compliant pay slip issued promptly after payday. Report through STP each run. Release super with each pay run. Accrue and track leave. And when award rates change, as they routinely do at the start of a financial year, apply the new minimums from the correct date; this is exactly where set-and-forget payroll gets caught.

The record-keeping that protects you

Employment records must be kept for years, and in a dispute the absence of records is held against the employer, not the employee. Keep contracts, timesheets, pay records, leave balances, super payment confirmations and any variations in writing. The habit costs minutes each week; its absence can cost you the entire argument.

None of this requires heroics, just sequence and a checklist, and much of it is one-time setup that your payroll platform then carries for you. There's a broader tour of the employment side of running a business in our people hub. One note in fairness to your future self: rates, thresholds and statement versions move around, so when you actually hire, confirm the current details with the Fair Work Ombudsman and the ATO rather than trusting anything written earlier, this article included.