First Employee Hire Checklist + Cost Calculator
Sole trader becoming an employer? Pick your state, employment type and weekly wage. Get the 12-step compliance checklist and the realistic on-cost (usually 14-22% more than wage). Built for first-time AU employers.
Last verified: 16 May 2026FIRST EMPLOYEE COMPLIANCE
About to hire your first employee? Here's the 12-step compliance checklist + the realistic weekly cost (more than just the wage). Set aside 2-3 hours to set everything up; doing it right costs less than the FWO discovering it wasn't.
Realistic weekly cost
Gross wages
What you pay before withholding tax + super.
$800.00
Superannuation Guarantee (12%)
12% of OTE from 1 July 2025. Paid to their fund quarterly (or fortnightly under Payday Super from 1 July 2026).
$96.00
Workers' compensation (NSW)
Average premium ~1.4% of wages. Actual depends on industry classification. Mandatory in every state.
$11.20
Payroll tax (NSW)
Well under threshold ($1,200,000). One employee at $42k/yr doesn't trigger payroll tax.
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Total weekly cost
≈ $47,174/year
$907.20
12-step compliance checklist
TFN + ABN check
Confirm your business has an ABN. Employee needs to give you a TFN Declaration form (don't pay without it — you'd have to withhold 47%).
Register for PAYG withholding
Free, instant on ATO Business Portal. You'll withhold income tax from their gross pay each cycle.
Set up Single Touch Payroll (STP)
Mandatory since 2021 for all employers. Most cloud accounting tools (Xero, MYOB, QuickBooks) include free STP. Micro-employer free options also available (e.g. Reckon Payroll Free).
Choose a super fund + register with their fund
Employee can nominate their own super fund (or use stapled fund from ATO). You need fund details before first super payment. Pay via SuperStream-compliant clearing house.
Get workers' compensation insurance
Mandatory in NSW. Buy through your state insurer (icare NSW, WorkSafe VIC, WorkCover QLD, etc.) before the employee starts.
Identify the correct modern award
Use our Award Finder to identify the correct award. Most industries are covered by one of 122 modern awards. Award sets minimum pay, hours, breaks, allowances, penalty rates.
Write an employment contract
Must cover: position, hours, rate, type (casual/permanent), notice period, probation, leave (for permanent). Doesn't have to be fancy — must align with award + NES floor.
Provide the Fair Work Information Statement
Mandatory — give before or on first day of work. Free PDF from fairwork.gov.au. New casuals also get the Casual Employment Information Statement.
Set up payslip generation
Payslips must be issued within 1 working day of payment. Must include: employer name + ABN, employee name, pay period, gross + net pay, deductions, super contributions. Xero/MYOB/Reckon auto-generate.
Display your workplace insurance details
Workers' comp certificate must be visible at workplace (or accessible to employee on request).
Register for FBT if you provide benefits
Only if you give the employee fringe benefits (car, gym, accommodation, entertainment). Most first-hires are pure-cash + no FBT.
Keep records for 7 years
Time + wages records, super contributions, tax records, leave balances, contracts, payslips. Per Fair Work Regs 3.31-3.40.
Related Articles
Straightforward Fair Work compliance guide for Australian small businesses with fewer than 15 employees. Covers the small business fair dismissal code, casual conversion, simplified record keeping, common mistakes, free resources, and when to seek legal advice.
Payroll Tax Australia 2026: State-by-State Thresholds & Rates for EmployersComplete 2026 guide to payroll tax in Australia. State-by-state thresholds (NSW $1.2M, VIC $900K, QLD $1.3M) and rates (4.85-6.85%), what's included in taxable wages, grouping rules, and how to register — everything employers need to know.
Sole Trader Tax Rates Australia 2026: How Much Tax Will You Pay?Sole traders pay the same individual tax rates as employees — but also owe Medicare levy, GST (if turnover exceeds $75K), and get no employer super. Here's what you'll actually pay on $120K with $30K in deductions.
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General information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.