Employer of Record questions answered

An Employer of Record (EOR) is a business that legally employs someone on your behalf. It handles the contract, payroll, tax, super and compliance, while you manage the person's day-to-day work.

No. That is the main reason overseas businesses use one. The EOR uses its own Australian entity and registrations.

You pay the full employment cost (salary, super, payroll tax and workers' compensation) plus a service fee, usually a fixed monthly amount per employee. Our calculator estimates the employment cost.

If the person works like an employee, an EOR removes the misclassification risk. A genuine independent contractor running their own business can still be engaged directly.

For an Australian citizen or permanent resident, often within a few business days once the service agreement is signed. Visa sponsorship takes much longer.

The EOR, as legal employer. You should raise concerns with the EOR early and never end the employment yourself.

Legally the employee belongs to the EOR, which signs the contract and pays them. Practically they work in your team and you direct their work.

Most EORs can employ in every state and territory. Check that the provider holds workers' compensation insurance and any labour hire licence needed in the state where your hire will work.

The employment contract should assign intellectual property created in the job to the EOR, which then assigns it to you under your service agreement. Check both documents.

Yes. The EOR will employ them on a new contract. Agree how their prior service is treated, because it can affect leave and notice.

Australia has no statutory probation, but contracts often include one. The unfair dismissal minimum employment period of 6 months (12 months for small businesses) is what really matters. An EOR is usually not a small business employer, so 6 months is the period that normally applies.

Usually the host provides equipment directly. Some EORs can buy and ship equipment and invoice you for it.

Usually not. Super is an employment cost passed through at cost. The fee is what the EOR charges on top.

An Australian EOR will generally charge GST on its supply to an Australian business. Overseas clients should get advice on whether the supply is GST-free for them.

Yes. Health insurance, extra leave, salary packaging or bonuses can usually be arranged. They add to the employment cost and some carry fringe benefits tax.

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.

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.

No. An ABN is a tax registration. It says nothing about the real nature of the working relationship.

Since 26 August 2024 some higher-income workers can opt out of the new "real substance" test if they earn above the contractor high income threshold and choose to have the written contract decide. This is limited and needs careful handling.

To employ directly you generally need to be registered with the ATO for PAYG withholding, which requires an ABN. An EOR uses its own registrations, so you do not.

Australian employees are commonly paid weekly, fortnightly or monthly. Awards may set the pay frequency for award-covered roles.

Either can work. A global provider is convenient if you hire in many countries. A local specialist may know awards and state rules better. The checks on this page apply to both.

Two or three itemised quotes at the same salary and location is usually enough to see what is normal.