Employing your first worker, in the order it happens

Before the offer

Work out what you are offering

Start with the kind of worker you are taking on. business.gov.au says you are responsible for classifying a worker correctly as an employee or an independent contractor for tax and super, that it is not as simple as whether they have an ABN or send invoices, and that getting it wrong can bring penalties and charges. Employees themselves come in several kinds: full-time, part-time, fixed-term, casual, and trainees or apprentices, and the type you choose changes your obligations.

The minimum pay and conditions come from an award or registered agreement, the employment contract, and the National Employment Standards, and a contract or registered agreement can’t provide less than those standards. The Fair Work Ombudsman’s Find my award tool finds the award, and its Pay and Conditions Tool finds the pay rates, penalties and allowances under it. Each award also lists classifications, the descriptions of roles and the experience or qualifications each needs, usually near the end of the award.

Two more checks belong before the offer. A job ad can’t include pay rates that breach the Fair Work Act or an award or agreement. And once you have chosen someone, you are responsible for making sure they can legally work in Australia; business.gov.au points to the Department of Home Affairs’ free online service for checking a visa’s work conditions, and notes that migrant workers have the same workplace rights and pay rates as other workers. Recruiting is covered by discrimination law too: business.gov.au lists the attributes you must not discriminate on, including race, sex, age, disability, pregnancy, religion and family or carer’s responsibilities.

Offer to first payday

The first weeks, in time order

Most of the setting up happens once. After that, each payday brings the same few jobs.

1. When you make the offer

   Put the offer and the contract in writing. business.gov.au’s Employment Contract Tool creates a contract for an employee who is full-time, part-time or casual, covered by an award and paid an hourly or weekly wage; the Fair Work Ombudsman says it can’t be used for someone on a salary, an apprentice or trainee, a seasonal worker, a contractor, or anyone covered by a registered agreement.

2. Before the first pay run
   • Register for PAYG withholding. You do it once for the business, not once per employee, and before you pay anyone for the first time.
   • Ask the employee to complete a tax file number declaration. If they don’t give you their TFN, you must withhold tax at the highest rate.
   • Set up Single Touch Payroll: either STP-enabled payroll software or a service provider, such as a tax agent, who reports for you.
   • Give the employee a Standard choice form so they can name their super fund; business.gov.au says to do this within 28 days of them starting. If they don’t choose, you can ask the ATO for their stapled super fund, and if they have none, you pay into your default fund. The ATO asks you to give a new employee’s TFN to their fund more than 14 days before the first contribution.
   • Arrange workers compensation insurance. business.gov.au says employers must get it from an authorised insurer, and that the laws vary between states and territories (the regulators are listed below).
3. Before, or as soon as possible after, day one
   • Give the Fair Work Information Statement. A casual employee also gets the Casual Employment Information Statement, and someone on a fixed term contract gets the Fixed Term Contract Information Statement before, or as soon as possible after, signing it.
   • If an award covers them, make it easily available, in print or digitally, and tell them which award applies and their classification under it.
   • Agree usual hours and rostering in advance with a full-time or part-time employee, and check the award’s rules for casuals, which may set a minimum number of paid hours each day they work.
   • Talk about contact outside working hours. Employees have the right to refuse it, unless refusing is unreasonable.
   • Give health, safety and emergency information: hazards and how they are controlled, safe ways to do the job, evacuation procedures, where the exits and first aid kits are, and who the fire wardens and first aid officers are.
4. Every payday
   • Pay at least monthly; some awards require you to pay more often.
   • Give a pay slip within one working day of paying wages.
   • Withhold PAYG tax, worked out with the ATO’s tax withheld calculator or tax tables.
   • Report the pay, tax and super through STP each time you pay.
   • Work out the super guarantee: since 1 July 2026 it is 12% of the employee’s qualifying earnings, a new term that takes in ordinary time earnings and other payments.
5. Within 7 business days of payday

   Under Payday Super, the contribution must be received by the employee’s fund within 7 business days after payday. For a new employee, the first contribution has longer: it must be received within 20 business days after that first payday. If super arrives late, the super guarantee charge applies, and from 1 July 2026 the ATO assesses it rather than the employer lodging a statement.

6. When each BAS is due

   Report the PAYG tax you withheld on your business activity statement and pay it to the ATO at the same time. How the BAS itself works is on board 2, BAS and GST.

7. By 14 July each year

   Check your STP information and make the end-of-year finalisation declaration, so your employees can get what they need for their tax returns.

Pay rates move too. The National Minimum Wage and award minimum rates are reviewed each year, with changes usually taking effect around 1 July, and an employee’s rate can also change on a junior’s birthday, at an apprentice’s or trainee’s milestone, or when the role changes.

Keeping it

Records, and how long they stay

business.gov.au says you must keep records of a staff member’s employment for 7 years, including their details, pay, hours worked, leave taken and accrued, and super contributions, and that the ATO needs tax and super records kept for 5 years. The Fair Work Ombudsman has record-keeping and pay slip pages with the detail of what each must show.

Two state and federal taxes may also arrive with staff. Payroll tax is a state or territory tax, payable once the wages you pay pass that state or territory’s tax-free threshold, and thresholds and rates differ between them. Fringe benefits tax may apply if you give employees benefits beyond salary or wages, such as private use of a work car.

Insurance

Workers compensation, by state and territory

Workers compensation covers you and your employees against financial hardship if they are injured or become sick because of work. business.gov.au lists one regulator for each state and territory, and says to check with yours how to comply and how to get the insurance.

One gap is worth knowing if you run the business as a sole trader: business.gov.au says workers compensation doesn’t cover you, and points you to personal insurance instead.

If you are unsure

Getting a written answer about pay

The Fair Work Ombudsman’s Employer Advisory Service gives small business employers free written advice, tailored to the business, about pay and conditions. It names planning to hire a first employee as one of the times to use it. You can ask through an online enquiry form, by emailing the form, or by calling the Fair Work Ombudsman and asking to be referred. Details are on the Employer Advisory Service page.

Other places to ask, by kind of question, are gathered on board 6, free help for small business.