Hiring your first employee in Australia — full 2026 guide
The moment you go from sole trader to employer is one of the most compliance-loaded transitions in Australian business. Twelve things to set up, four different regulators to register with, three insurance products to consider, one award to identify. This hub anchors every FairWork Mate tool you need to do it right — faster and cheaper than the FWO discovering you didn't.
AIFirst-hire question not covered here? Ask FairWork Mate AI →Tools for first-time employers
First Employee Hire Checklist + Cost Calculator
12-step compliance checklist + realistic weekly cost (usually 14-22% over gross).
Full Cost of Employment Calculator
Annual true cost including super, workers comp, leave, payroll tax.
Award Finder
Identify the correct modern award for your industry + role.
Contractor or Employee Check
The 2024 ABCC v Personnel Contracting test — get it right before you hire.
Superannuation Calculator
12% SG plus OTE inclusions — what you actually owe per pay run.
Cash Payment Legality Checker
Cash is legal IF you do 6 things — test your setup.
FAQ
Do I need an ABN to hire someone?
Yes — you need an ABN before you can register for PAYG withholding or lodge Single Touch Payroll. If you're a sole trader trading under your own name or a registered business name, you can hire employees using your existing ABN. You don't need a company structure (Pty Ltd) to hire — about 30% of AU SMEs hire as sole traders.
How much does it actually cost to hire one person in Australia?
On top of gross wages: 12% superannuation guarantee, 1-2% workers' compensation premium (varies by state and industry), and for permanent employees an extra 7.7% in accrued leave entitlements. Total typical on-cost is 14-22% above gross wage. Payroll tax only triggers if your annual wages bill exceeds the state threshold (NSW $1.2M+).
Casual or permanent for my first hire?
Casual is cheaper upfront (no leave accrual, 25% loading instead) and easier to end. Permanent gives commitment and stability. For genuinely irregular work patterns, casual is right. For regular ongoing hours (e.g. 3 days a week every week), the 2024 Closing Loopholes 'no firm advance commitment' test means you may be required to treat them as permanent regardless of the label.
What if my first employee is also my partner / family member?
Legal, but the same compliance applies — TFN Declaration, PAYG, super, STP, payslips, records, workers comp. The ATO scrutinises related-party employment for tax-avoidance markers (e.g. paying a non-working spouse). Pay must reflect actual work performed. The Family-Owned Small Business super exemption is narrow — most family hires owe super.
Do I have to use payroll software?
STP is mandatory since 2021 for ALL employers. Free micro-employer STP options exist (Reckon Payroll Free). Paid options (Xero, MYOB, QuickBooks) start at $15-50/month for one employee and handle STP + payslips + super + leave automatically. For your first hire, paid software is usually worth it.