Australia’s thriving economy provides your business expansion with access to opportunities in many sectors. Undoubtedly, mining, tourism, financial services, manufacturing and agriculture are all large and lucrative industries in Australia. The Australian government welcomes productive foreign direct investment and supports foreign businesses establishing local operations. These are just a few reasons to consider expanding your business operations to Australia.
Australia’s educated population has a labour pool of multilingual, skilled and experienced staff. If your firm is considering expanding to the South-Pacific region, hiring local staff could give your firm a competitive advantage. Read on to find out how you can hire an Australian national for your business from abroad by using an International PEO.
What is an International Professional Employer Organisation?
An International Professional Employer Organisation (PEO) provides outsourcing solutions for human resources. PEO provides business payroll services, human resources support and legal and tax employee requirements.
A PEO co-employs your staff member as specified in their contract. The client service agreement dictates the PEO’s specific responsibilities. The staff’s business continues to maintain control over everyday business activities and operations, with the human resources responsibilities outsourced to the PEO.
Step 1: How can a PEO employ an Australian worker from abroad?
An International PEO can help you employ an Australian national to work for your company while you are abroad, outside Australia. This means you can hire a staff member in a country where your company has not yet established a legal entity. Subsequently, the employee is hired according to Australian employment laws and comply with all relevant regulation.
The employee signs a co-employment agreement with the parent company and the PEO. When choosing your PEO, make sure to look at their previous clients, human resource systems and any extra employee benefits. Ultimately, they need to be a good fit for your firm.
Step 2: What things will a PEO will take care of?
The exact responsibilities of the PEO will be determined in the client service agreement between the parent company and the PEO.
In terms of human resource requirements, Australia has well-regulated employment laws. Failure to comply can result in large penalties. The following are payroll requirements and employee entitlements in Australia:
- There are minimum statutory standards an employer must follow, stated in the Fair Work Act 2009.
- There are 7 national public holidays, as well as additional days that are given by individual states.
- Full-time employees are entitled to a minimum of four-week vacation per year.
- Full-time employees are entitled to 10 days sick or caregiver leave.
- Employers must pay quarterly superannuation payments (9.5% of gross salary).
- Employees with a salary above the indexed level pay 2% to Medicare, Australia’s public health care system.
- Each state/territory determines their own payroll taxes, which range from 4.75%-6.85%.
Step 3: How can my firm benefit from outsourcing human resource functions?
Some small companies may not even have a human resources department, so using a PEO would be a cheaper way of providing this service. Furthermore, using a PEO means small businesses can offer their employees the benefits larger companies offer.
That’s because PEOs can pool large numbers of staff and access services and discounts usually only offered to corporations with a large workforce. Such services help attract and retain better employees.
Using an International PEO to hire staff abroad makes the process a lot easier. Experts in recruiting and hiring, they are familiar with the country’s business culture, laws and regulations. Whatsmore, they have the economies of scale to complete the onboarding process much faster and cheaper than businesses abroad. Many firms experience setbacks during the recruitment process due to incorrect paperwork. Outsourcing this process leaves businesses more time to focus on their core activities. Using a PEO means you can get your Australian employee set up and working quicker..
Step 4: How can using a PEO mitigate the risk of expanding abroad?
Hiring an employee abroad, through a PEO, mitigates the risk and cost of setting up a new entity in a foreign country. Instead, by hiring staff, they can start business operations first and test the market, before your company makes a bigger investment. However, a PEO cannot mitigate all business risk but rather operate in an advisory role in regards to tax and employee obligations. Additionally, given that the PEO operates in the country of expansion, they are constantly monitoring changes to national and state labour laws and employer obligations.
Finally, once your PEO onboards the employee, they can now work in Australia. You can rest assured they are receiving all of their employee entitlements and that the PEO is on call to provide any HR support. An Australian employee is the first step in your business expansion to Australia.
There are endless commercial opportunities for Latin American businesses wishing to operate in Australia, with key agriculture, energy, and tourism industries topping the list. Biz Latin Hub provides Professional Employer Organisation services which can help you hire staff in Australia, before establishing a legal entity.
To maximize your chances of success, we highly recommend hiring back-office support services from a business with local expertise. You can contact the team today for personalized support.