Expanding your business into Australia? You’re not alone. With its strong economy, skilled English-speaking workforce, and gateway status to Asia-Pacific markets, Australia is a top destination for global companies looking to hire remotely. But navigating Australia’s employment regulations, taxes, and local compliance can be complex — especially for foreign businesses.
In this guide, we’ll break down two popular hiring models for international companies: setting up your own legal entity vs. using an Employer of Record (EOR). Whether you’re planning a long-term presence or simply want to test the Australian market quickly, this article will help you determine the right path.
Introduction to Remote Hiring in Australia
Hiring remote employees in Australia offers global businesses a unique opportunity to tap into a highly educated and reliable workforce. However, setting up operations from abroad is not always straightforward. Establishing a legal entity comes with regulatory hurdles, tax obligations, and ongoing compliance requirements that can take months to manage.
That’s where an Employer of Record (EOR) can help. An EOR enables companies to hire and pay Australian employees legally, without setting up a subsidiary. The EOR acts as the legal employer, handling HR, payroll, benefits, taxes, and local compliance, while you control day-to-day work and performance. This model dramatically reduces your time-to-market and shields you from employment-related risks.
EOR vs. Setting Up an Entity in Australia
When expanding into Australia, businesses often compare the EOR model with setting up a proprietary limited company. Both approaches come with their advantages and trade-offs.
If you’re looking to build a long-term, deeply integrated business presence in Australia, forming a legal entity may make more sense. You’ll have full control, direct relationships with employees, and ownership over all operations. But this comes at a cost—setting up takes time, involves paperwork, and you’ll be responsible for maintaining ongoing compliance.
On the other hand, if you’re entering the market quickly, testing a new region, or hiring a few remote employees, using an EOR offers speed, simplicity, and cost-efficiency. The EOR handles all backend legal responsibilities, leaving you free to focus on your business objectives.
Factors to Consider When Choosing EOR or Entity Establishment
Key factors influencing your decision include:
- Speed of hiring: EORs can onboard employees within days, while entity formation can take 6–8 weeks or more.
- Cost: Incorporation, legal consultation, and compliance can be expensive. EORs offer predictable monthly pricing with minimal upfront investment.
- Risk exposure: EORs absorb legal liability for employment, while owning an entity means you assume all risks.
- Flexibility: For short-term or pilot projects, EORs offer scalability and easier exit strategies.
- Long-term vision: If you plan to scale significantly in Australia or raise local funding, forming an entity might be the strategic choice.
Why Time to Market Matters for Global Companies
Speed is often critical in global expansion. Being first to market, especially in fast-growing sectors, can define your competitive advantage. Setting up a legal entity in Australia can delay hiring and operations for months due to regulatory approvals, tax registrations, and local banking setup.
With an EOR, you can begin onboarding talent almost immediately. This enables you to test the market, support new clients, or launch products in Australia without waiting for bureaucracy to catch up.
Cost Implications of Entity vs. EOR in Australia
Setup and Maintenance Costs
Establishing a legal entity in Australia comes with initial setup costs, including ASIC (Australian Securities and Investments Commission) registration, ABN (Australian Business Number), TFN (Tax File Number), and GST registration. You may also need to appoint a local director, lease an office space, and retain local legal or tax consultants. These expenses can easily exceed thousands of dollars.
In contrast, EOR solutions have no incorporation or registration costs. You simply pay a monthly fee (usually a percentage of employee payroll), which includes all backend employment services such as taxes, payroll, and statutory benefits. This model is highly cost-effective for companies hiring fewer employees or testing the market.
Compliance Costs
Running an entity in Australia means staying compliant with:
- Fair Work Act and Modern Awards
- PAYG (Pay As You Go) tax withholding
- Superannuation Guarantee obligations
- Payroll tax (varies by state)
- Workers’ compensation and occupational health & safety requirements
Failure to meet any of these obligations can result in fines or legal action. EORs take over this burden, providing peace of mind through 100% local compliance management.
Time Savings
Time is money. While forming a legal entity may take several weeks to months, EORs can onboard employees within a week. This is particularly helpful for project-based hiring, time-sensitive market entries, or when hiring before the end of a fiscal quarter.
Compliance and Legal Exposure: Entity vs. EOR
Australian employment law is one of the most structured and employee-friendly in the world. Companies must comply with the National Employment Standards (NES), industry-specific Modern Awards, health and safety mandates, and local tax requirements.
When you set up your own entity, you are fully liable for compliance. This includes drafting contracts that meet local standards, ensuring accurate tax deductions, managing payroll reporting, and handling employee disputes or claims.
Using an EOR significantly reduces your legal exposure. The EOR is listed as the legal employer, responsible for adhering to labor laws, paying benefits, and managing all reporting obligations. Your business benefits from local expertise without assuming legal risk.
Foreign Compliance: Setting Up a Legal Entity vs. Using EOR in Australia
Setting Up a Legal Entity
To establish a local company in Australia, foreign businesses must:
- Register with ASIC as a proprietary limited company
- Appoint a resident director
- Open a local bank account
- Apply for ABN and TFN
- Register for GST (if applicable)
This is a time-consuming process that also includes annual reporting and tax filing obligations.
Using an Employer of Record (EOR)
EORs provide a fast-track alternative. They take care of everything—employment contracts, payroll, taxes, superannuation, and even benefits like health insurance. You get all the advantages of hiring in Australia without the administrative burden or regulatory exposure.
Switching from EOR to Entity Establishment in Australia
Many companies start with an EOR and later transition to their own entity once operations grow. This approach allows businesses to minimize risk while testing new markets.
Once you’re ready to establish an entity, the EOR can help you:
- Transition employee contracts smoothly
- Transfer payroll and tax responsibilities to your new entity
- Ensure compliance throughout the handover process
This hybrid strategy is cost-efficient and de-risks your expansion.
Why Choose Asanify as Your EOR Partner in Australia
At Asanify, we make international hiring seamless, fast, and fully compliant. Our EOR solution in Australia offers:
- End-to-end onboarding in 5–10 business days
- Fully compliant employment contracts
- Accurate payroll processing, PAYG withholding, and super contributions
- Automated tax filings and payslip generation
- Access to local HR, tax, and legal experts
- Easy transition to entity model if your needs scale
We are your trusted partner for expansion into Australia — allowing you to hire top talent with zero headaches.
FAQs
1. What is an Employer of Record (EOR) in Australia?
An EOR is a third-party service provider that hires employees on your behalf, managing all legal, payroll, and compliance responsibilities.
2. How does an EOR help with labor law compliance in Australia?
An EOR ensures compliance with the Fair Work Act, NES, superannuation rules, and tax obligations, shielding you from legal risks.
3. What are the costs of using an EOR in Australia?
EORs charge a monthly service fee (usually 10–15% of payroll), which includes payroll processing, taxes, super, and HR support.
4. What benefits do employees receive under an EOR model?
Employees are entitled to minimum wage, superannuation, paid leave, public holidays, and sometimes optional private health insurance.
5. Can an EOR handle independent contractors in Australia?
Yes, most EORs can onboard, pay, and manage compliance for contractors while ensuring correct classification.
6. Is a written employment contract mandatory in Australia?
Yes, employment contracts must meet the requirements of the Fair Work Act and outline entitlements clearly.
7. How long does it take to set up a legal entity in Australia?
Entity setup typically takes 6–8 weeks, including regulatory registrations and opening local accounts.
8. Does Asanify provide EOR services across all Australian states?
Yes, Asanify ensures multi-state compliance, including differences in payroll tax thresholds, public holidays, and local labor practices.
9. What are the rules for superannuation in Australia?
Employers must contribute at least 11% of the employee’s ordinary earnings to a registered super fund.
10. Can I switch from an EOR to my own entity later?
Absolutely. Asanify supports full employee migration, contract re-issuance, and payroll transfer when you’re ready.
Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.