Accountancy in Australia

>> Employment in Australia

The Australian labour market is generally flexible, however there are a number of specific rules and regulations that are peculiar to Australia especially around the dismissal of employees. A summary these are detailed below:

Social security contribution

Employers are required to make an after-salary contribution to a retirement fund (superannuation fund) for each employee. These contributions are held in an account in the name of the employee with any after-tax income generated by the fund being attributed to each member. Upon retirement from the work force, the employee is entitled to be paid the balance standing in their account in the superannuation fund. This may be paid by way of a pension or lump sum.

Generally, the employers do not control the retirement fund or exert any influence over where the funds are to be invested. The current rate of contribution is 9.5% of the employee’s earnings. Depending upon the employee’s personal circumstances at retirement from the workforce they may also be entitled to a Federal Government Pension (the age pension).

Employee pay rates

Whilst the rate that employees are paid is subject to negotiation, there are certain minimum entitlements that must be paid. These minimum entitlements are determined by the nature of the employee’s occupation and are covered  in Industrial Awards.

Employee entitlements

All employees are entitled to receive a certain amount of paid annual (holiday) leave (generally 4 weeks), paid personal leave (generally 10 days), and long service leave (generally 8 weeks leave after 10 years’ continual service). These entitlements are cumulative if not taken by the employee during the year. Upon termination, any unused annual leave and unused long service leave must be paid to the terminating employee.

Termination of employees

The Australian labour market is generally flexible and transient in nature, however there are substantial legal procedures that must be adhered to when terminating an employee, especially where their dismissal is not amicable.

Worker insurance

Every employer in Australia is required to take out an insurance policy for injuries sustained by an employee whilst performing their employment duties. This type of insurance is commonly referred to as Workers Compensation Insurance. Each Australian State and Territory has their own Workers Compensation legislation and where an employer has employees in a State or Territory they are required to take out Workers Compensation Insurance in that State or Territory.

The premiums levied are calculated by reference to the remuneration paid to employees and the nature of the industry in which the business operates.

Employment of foreign personnel

Foreigners seeking to work in Australia must hold a relevant visa which allows work. During the first-year foreigners are generally taxed at non-resident tax rates and then revert to resident tax rates in subsequent years. Foreign workers are entitled to have superannuation (social security) contributions made on their behalf in the same manner as resident employees.

Upon permanently exiting Australia they can cash out that superannuation, but taxes will apply to that payment. Foreign workers changing tax residence to Australia should seek advice about the deemed acquisition rules that may impact on their assets.

Medical

Australia runs a Federally funded basic health system known as Medicare with contributions made by taxpayers at 2.0% of taxable income. Individuals can also choose to supplement this system with private health insurance. High income resident individuals without such private health insurance pay a higher Medicare levy.

Non-residents will need to obtain private health insurance.


Latest version updated 31st October 2017

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Population

$

Australian Dollar

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