Hiring Your First Employee in Australia: A Step-by-Step Guide

Last reviewed: October 2026.

What to know before hiring your first employee

Hiring your first employee is a turning point for any small business. It frees up your time and helps you grow, but it also makes you an employer under the Fair Work Act 2009, with legal obligations from the first day. Setting things up properly now is far easier than fixing an underpayment or a dispute later.

This step-by-step guide explains what Australian employers need to do before, during and straight after hiring their first employee: choosing the right type of employment, finding the award that sets the minimum pay, registering with the ATO, recruiting fairly, writing the employment contract and getting the first pay run right. It applies to businesses in the national workplace relations system, which covers most private sector employers.

Step 1: Decide what kind of worker you need

Start with the work itself. How many hours are needed, will the work be ongoing, and how much control will you have over how it is done? Your answers decide the type of engagement.

Employee or independent contractor? Since 26 August 2024, the Fair Work Act looks at the real substance, practical reality and true nature of the whole working relationship, not just the label in the contract. If the person works in your business, under your direction and at the times you set, they are almost certainly an employee. Calling an employee a contractor can be sham contracting, which carries civil penalties. Our guide to employee versus independent contractor explains the test.

Types of employment

• Full-time: ongoing work of up to 38 ordinary hours a week, plus reasonable additional hours (Fair Work Act s 62).
• Part-time: ongoing work of fewer than 38 hours a week, usually on a regular pattern. Many awards require the agreed hours to be recorded in writing.
• Casual: there is no firm advance commitment to continuing and indefinite work, and the employee is paid a casual loading (25% under most awards). The test looks at how the job really works (s 15A).
• Fixed-term: employment that ends on a set date or when a task or season ends. Since 6 December 2023, most fixed-term contracts cannot run for more than 2 years including extensions (s 333E).

Step 2: Check which modern award applies and the minimum pay

Most employees are covered by a modern award, which sets minimum pay, classifications, penalty rates, overtime, allowances, breaks and rostering rules for an industry or occupation. Find the award that covers the role, then work out the right classification level from the duties the employee will actually perform.

Rates current from 1 July 2026.

• National minimum wage: $26.44 an hour, or $1,004.90 for a 38-hour week, for employees who are not covered by an award or agreement.
• Casual national minimum wage: at least $33.05 an hour, which includes the 25% casual loading.
• Award example: a shop assistant covered by the General Retail Industry Award 2020 at Retail Employee Level 1 (adult) must be paid at least $27.81 an hour ($1,056.80 a week).

Minimum wages and award rates usually rise from the first full pay period on or after 1 July each year, so diarise a pay review every June. When you advertise the job, do not advertise a rate below the award or minimum wage: that is itself a breach of the Fair Work Act (s 536AA).

Step 3: Register your business as an employer

Before your employee's first payday, set up the systems an employer needs:

1. PAYG withholding: register with the ATO so you can withhold tax from wages and pay it to the ATO.
2. Single Touch Payroll (STP): use payroll software that reports wages, tax and super to the ATO each time you pay your employee.
3. Superannuation: since 1 July 2026, Payday Super has required you to pay 12% of the employee's qualifying earnings with every pay run. The contribution must reach the fund within 7 business days of payday (up to 20 business days for a new employee's first contribution). There is no minimum earnings threshold; employees under 18 are covered if they work more than 30 hours in a week.
4. Workers compensation insurance: compulsory for most employers and arranged through your state or territory scheme. Check the rules where your employee will work.
5. Record keeping: you must make and keep employee records for 7 years and give a pay slip within one working day of each pay (ss 535 and 536).

Step 4: Recruit fairly and lawfully

Write a job ad that describes the role, hours, location and pay. Keep the selection criteria about the job: the general protections in the Fair Work Act protect prospective employees, so you must not refuse to hire someone because of a protected attribute such as pregnancy, age, disability, race, sex or family or carer's responsibilities (s 351). State and federal anti-discrimination laws also apply.

• Interviews: ask every candidate the same job-related questions and keep brief notes of why you chose the successful applicant.
• Work trials: the Fair Work Ombudsman's view is that an unpaid trial is lawful only if it is needed to show the skills for the job, lasts no longer than needed (for example, one hour up to one shift) and is directly supervised. If in doubt, pay for the trial.
• No hiring fees: you must not unreasonably require a job applicant to spend or pay money for your benefit (s 325).
• Right to work: check that the person is allowed to work in Australia, for example through the Department of Home Affairs' VEVO service. Our guides to right to work entitlements and visa holders and migrant workers explain what to check.
• References: with the candidate's consent, speak to recent employers about the skills the role needs.

Step 5: Make a written offer and employment contract

A written employment contract sets clear expectations and protects both of you. It cannot give the employee less than the National Employment Standards (NES) or their award. A good contract for a first employee covers:

• the position, employment type, start date and place of work
• the award and classification level that apply (or that the role is award-free)
• pay, how often it is paid and how super is paid
• ordinary hours of work and how rosters are set
• any probation period, notice periods and the policies the employee must follow
• confidentiality and ownership of work produced

Leave out pay secrecy clauses: employees have a right to discuss their pay, and including a pay secrecy term in a contract can attract a penalty (s 333D).

Probation. A probation period is a useful check-in point, but it does not reduce the employee's NES or award entitlements. What matters legally is the unfair dismissal minimum employment period: 6 months, or 12 months if you are a small business employer with fewer than 15 employees (s 383). Small business employers should also read our guide to the Small Business Fair Dismissal Code.

If you want a contract and policies tailored to your business, our HR policies and procedures service can prepare the employment contracts and HR policies your first employee needs.

Step 6: Prepare for your new employee's first day

Some documents must be given to every new employee, and others start your payroll obligations. Before or on day one, give your employee the Fair Work Information Statement (s 125), plus the Casual Employment Information Statement for a casual or the Fixed Term Contract Information Statement for a fixed-term employee. Collect a tax file number (TFN) declaration and bank details, and give them a super standard choice form within 28 days of starting.

Our new employee onboarding checklist sets out every form, deadline and induction step in order.

Step 7: Pay your first employee correctly and keep records

Pay at least the award or minimum wage for all hours worked, including any penalty rates, overtime and allowances, and pay at least monthly (s 323). Pay super with each pay run and issue a pay slip within one working day.

Getting this wrong is costly. For conduct from 1 July 2026, the maximum civil penalty for an underpayment or a pay slip breach is $21,840 for an individual and $109,200 for a small business company per contravention, and since 1 January 2025 intentional underpayment of wages can be a criminal offence. A simple monthly check of hours, rates and super, and an HR compliance audit once a year, keep you on track.

A plain-English example

Mai runs a small online homewares store and wants help three days a week to pack orders and answer customer emails. Because the work is ongoing on set days, she employs a part-time employee rather than a casual or a contractor. She checks the award that covers the role and confirms the classification, records the agreed days and hours in a written contract, registers for PAYG withholding and sets up STP payroll. On day one she gives the Fair Work Information Statement, a TFN declaration and a super choice form, and she books a 3-month check-in to discuss how the role is going.

Common mistakes when hiring your first employee

• Treating a worker as a contractor when the relationship is really employment.
• Using the wrong award or classification, or paying a flat rate that doesn't cover penalty rates and overtime.
• Forgetting that super is now due with every pay run, not quarterly.
• Not giving the Fair Work Information Statement, or giving an out-of-date version.
• Relying on a verbal agreement instead of a written contract.
• Running long unpaid trials.

If you're not sure about any step, talk to us before you make the offer. It is much easier to get the foundations right than to unwind a mistake.

Need help with your situation? Call our 24/7 HR advice line on 1300 144 002 for free initial advice.

Hiring your first employee: frequently asked questions

What do I need to do before hiring my first employee in Australia?

Decide the type of employment, find the award and minimum pay, register for PAYG withholding, set up STP payroll and super, arrange workers compensation insurance and prepare a written employment contract.

Should I hire an employee or a contractor?

If the person will work in your business, under your direction and on hours you set, they are likely to be an employee. The label you use does not decide it: the Fair Work Act looks at how the relationship works in practice.

How much does it cost to hire an employee?

Budget for wages at or above the award rate, 12% super on qualifying earnings, workers compensation insurance, paid leave (such as 4 weeks of annual leave a year for full-time employees, pro rata for part-time) and any payroll software. Casuals receive a loading instead of paid leave.

Can I put my first employee on probation?

Yes. A probation period helps you assess fit, but the employee still gets their full NES and award entitlements. Unfair dismissal protection starts after 6 months, or 12 months if you employ fewer than 15 people.

Do I have to pay super for a part-time or casual employee?

Yes. Super is payable on the qualifying earnings of every eligible employee, whatever they earn. Employees under 18 are eligible if they work more than 30 hours in a week.

What must I give a new employee on their first day?

The Fair Work Information Statement, plus the casual or fixed-term information statement if relevant, a TFN declaration, a super standard choice form (within 28 days) and your key policies. See our onboarding checklist for the full list.