EOR.net.au
| Employer of Record | PEO (co-employment) | Independent contractor | Your own entity | |
|---|---|---|---|---|
| Who is the legal employer? | The EOR | Shared; you need your own entity | Nobody: it is a business relationship | You |
| Do you need an Australian entity? | No | Yes | No | Yes |
| Time to start | Days | Weeks, after entity setup | Days | Weeks to months |
| Ongoing cost | Employment costs plus a monthly fee | Employment costs plus a fee | Contractor's rate only | Employment costs plus your own overheads |
| Misclassification risk | Low | Low | High if the person works like an employee | Low |
| Control over the work | Full day-to-day control | Full | Limited: you control outcomes, not methods | Full |
| Employee benefits and protections | Full employment rights | Full | None as an employee | Full |
| Best for | 1 to 20 hires, new markets, fast starts | Rare in Australia | Genuine independent businesses, short projects | Stable or growing local teams |
Employer of Record
The EOR is the legal employer and you direct the work. It is the fastest way to employ someone properly without an entity. You pay a fee for the convenience, and the fee scales with headcount. Read what an EOR is for the detail.
PEO
A Professional Employer Organisation shares employer responsibilities with you under a co-employment model. It is common in the United States, where it lets small businesses access group benefits. Australian law has no co-employment concept, and a PEO still needs you to have your own entity, so you will rarely see one here. If a provider calls itself a PEO in Australia, ask exactly who signs the employment contract.
Independent contractor
Engaging a contractor is simple and cheap on paper. The risk is that the label does not decide the relationship. Courts look at the real substance of the arrangement: who controls how the work is done, whether the person can delegate, who provides tools, whether they carry commercial risk and whether they run their own business. If the answers point to employment, you may owe back pay, leave, super and penalties. Sham contracting is a breach of the Fair Work Act. See contractor or employee? for the tests.
Your own entity
An overseas company can register an Australian subsidiary or register as a foreign company with ASIC, then register with the ATO, a state revenue office for payroll tax and a workers' compensation insurer. It gives full control and is usually cheapest per person for larger teams, but it brings fixed costs and ongoing compliance work from day one.
Combining them
Many businesses mix models: a genuine contractor for a short specialist project, an EOR for the first few permanent hires, then their own entity once the team is established. The important thing is matching each person to the model that fits how they actually work.
Quick decision tool
Answer five questions for a suggested starting point. This is general information, not advice.
Frequently asked questions
Is an EOR the same as labour hire?
They are closely related. Both involve one business employing a worker who works for another. EOR usually describes arrangements where the host has found the person itself and the role is long term.
Can I switch from contractor to EOR later?
Yes, and it is a common way to reduce misclassification risk. Converting does not erase past exposure if the person was really an employee, so get advice if that is a concern.
