The First Employee Checklist: Australian Legal Requirements for New Bosses

Hiring your first employee is a milestone worth celebrating, but it also comes with a stack of legal obligations that can trip up even the most prepared business owner. Get it wrong, and you’re looking at penalties, compliance headaches, and a new hire who’s already disengaged before they’ve settled in.

Before You Even Post the Job

Work Out If You’re Actually Ready to Hire

Before writing a job description, ask yourself whether the timing is right. Common signs include turning away work because you’re stretched too thin, spending too much time on tasks that aren’t your core focus, or needing skills your business doesn’t have. Hiring too early can strain cash flow; too late, and you’ve already lost revenue.

Write a Clear Job Description

A solid job description does more than attract candidates; it sets the legal and operational foundation for the role. At minimum, include the specific skills and experience required, a competitive salary range benchmarked to your industry, a clear outline of key responsibilities, and a sense of your workplace culture. Keep notes on each candidate during the process, including their strengths, expectations, and interview performance. This documentation matters if a hiring decision is ever challenged.

Decide Who Handles Recruitment

Don’t underestimate the time cost. Recruitment involves writing ads, managing applications, screening, interviewing, conducting reference checks, making offers, and notifying unsuccessful candidates. For a first hire, most small business owners handle this themselves, but if time is short, outsourcing initial screening to a recruiter while making the final call yourself is a practical middle ground.

Before Their First Day: Legal Groundwork

Verify Their Right to Work in Australia

Every employer must verify work rights for every employee, not just those who appear to be from overseas. Use the Visa Entitlement Verification Online (VEVO) system before employment starts. Failing to do this exposes your business to civil penalties of up to $93,900 per worker if you unknowingly employ someone without valid work rights. Save the VEVO result as part of your records. If a visa has conditions (such as hour limits for students), document them and put monitoring systems in place.

Conduct Background and Reference Checks

Background checks are legal in Australia, provided you have the candidate’s informed consent first. You’re also responsible for protecting the information gathered and maintaining confidentiality. For roles with specific requirements, healthcare, childcare, construction, transport, verify the relevant credentials before the start date:

• AHPRA registration for health professionals.
• Working With Children Check for child-related roles.
• White card for construction site access.
• RSA certificate for hospitality roles.
• Driver’s licence class for transport roles.

For reference checks, contact at least two former employers, document who you spoke with and what was discussed, and keep records.

Find the Applicable Modern Award

Australia has over 120 modern awards that set minimum pay rates, overtime rules, allowances, and leave entitlements for different industries and job types. Applying the wrong award or misclassifying an employee’s level within an award creates underpayment liability that can be backdated for years. The Fair Work Ombudsman has a free online tool to help you identify the right award for your hire’s industry and role type.

This matters more than ever in 2026. Since 1 January 2025, intentional underpayment of wages is a criminal offence under the Fair Work Act. Companies found guilty face fines of up to $7.825 million (or three times the underpayment, whichever is greater). Individuals, including business owners and senior managers directly involved,  face up to 10 years’ imprisonment and fines up to $1.565 million. The law targets deliberate underpayment, not genuine mistakes, but if you’re aware of an error and fail to fix it, that distinction can disappear. Getting the award classification right from day one is the clearest way to stay out of trouble.

Prepare the Employment Contract

The employment contract must be signed before the start date. It’s a legal document, not just a formality. Include:

• Job title and reporting structure.
• Employment type (full-time, part-time, or casual).
• Salary or hourly rate aligned with the applicable award.
• Ordinary hours of work.
• Probation period (typically 90 days, up to 6 months maximum).
• Notice period for termination by either party.
• Leave entitlements.
• Workplace location.

For casual employees, the contract must also reference the Casual Employment Information Statement and their rights under the Closing the Loopholes legislation, including the right to request conversion to permanent employment after 6 or 12 months of regular work.

Register for PAYG Withholding

As an employer, you’re required to deduct income tax from your employees’ wages and remit it to the Australian Taxation Office. This is called pay-as-you-go (PAYG) withholding. Make sure you’re registered with the ATO before the first pay run. You’ll also need to report payroll information through the ATO’s Single Touch Payroll (STP) system, and confirm your payroll software supports this.

Some businesses also need to consider:

• Fringe Benefits Tax (FBT) if offering non-cash perks
• Payroll tax, which varies by state and applies once your total wages exceed a threshold (the threshold differs per state and territory)

Set Up Superannuation

You’re legally required to contribute to your employee’s chosen superannuation fund. The current superannuation guarantee rate is 12% of ordinary time earnings (from 1 July 2025). Give the new hire a Standard Choice Form at least four weeks before their start date. If they don’t return it, you must contribute to your nominated default fund, which must be a MySuper-approved product. You can also request their stapled super fund details from the ATO if no choice form is returned.

Until 30 June 2026 — Quarterly Payments Apply

Super must be paid at least quarterly by these deadlines:

Missing these deadlines means you lose the tax deduction and must pay the Superannuation Guarantee Charge, which includes interest and an administration levy.

From 1 July 2026 — Payday Super Starts

This is a major change every employer hiring now needs to know about. From 1 July 2026, the quarterly system is replaced by Payday Super: you must pay super contributions on every payday, at the same time as your employee’s wages. The employee’s super fund must receive contributions within 7 business days of each payday.

The calculation base also changes, super will be calculated on qualifying earnings (QE), a new term that covers ordinary time earnings plus salary sacrifice contributions and other wage-equivalent payments.

If you currently use the ATO’s Small Business Superannuation Clearing House (SBSCH), note that it closes permanently on 30 June 2026. You must transition to a SuperStream-compliant alternative before then. Contact your payroll software provider now to confirm their Payday Super readiness timeline.

Obtain Workers’ Compensation Insurance

You must hold workers’ compensation cover before your employee starts. Each state and territory has its own laws and regulator. Contact the relevant body for your location:

• NSW: icare NSW.
• VIC: WorkSafe Victoria.
• QLD: WorkSafe QLD.
• SA: ReturnToWork SA.
• WA: WorkCover WA.
• TAS: WorkCover Tasmania.
• NT: WorkSafe NT.
• ACT: WorkSafe ACT.

This insurance provides wage replacement and medical benefits if your employee is injured at work. There is no grace period; it must be in place from day one.

Prepare Their Workspace and Equipment

Whether the role is in-office or remote, have everything set up and ready before they arrive. This includes:

• Computer configured with required software and logins.
• Email account created.
• Phone and voicemail set up (if applicable).
• Access card, keys, or remote access credentials.
• Any industry-specific tools or protective equipment.
• A name badge or ID card.

For remote hires, ship equipment early enough to guarantee it arrives before the start date, and include setup instructions.

Send a Welcome Email (3–5 Days Before)

A brief pre-start email reduces first-day anxiety and ensures the new hire arrives prepared. Cover:

• Start time and location (or login details for remote).
• What to bring (ID, bank details, TFN if they have it).
• Dress code.
• First-day schedule.
• Who to contact if they have questions.

Day One: Non-Negotiable Compliance Tasks

Collect the Tax File Number Declaration

Every new employee must complete a Tax File Number (TFN) Declaration form (NAT 3092) on or before their first day. This form sets how much tax you withhold from their pay. The employee indicates their TFN, whether they’re claiming the tax-free threshold, and any HELP or Trade Support Loan debts.

If a TFN isn’t provided within 28 days, you’re legally required to withhold tax at 47% from their entire pay, not just the amount above the tax-free threshold. Keep this form for at least five years.

Provide the Fair Work Information Statement

All employees must receive the Fair Work Information Statement within their first few days of employment. This document outlines minimum employment conditions under the National Employment Standards. The penalty for failing to provide it is $9,396 per instance under the Fair Work Act (2025 figures). Get a signed acknowledgment and keep it on file.

Casual employees must also receive the Casual Employment Information Statement on day one. This explains their rights regarding conversion to permanent employment and the distinctions between casual and ongoing arrangements.

Collect Essential Personal Details

On day one, collect:

• Full legal name and date of birth.
• Current residential address.
• Contact phone and email.
• Emergency contact name, relationship, and phone number.
• Bank account details (BSB, account number, account name) for payroll.

Verify that the account name matches the employee’s name to prevent payment errors.

Week One: Getting the Admin Right

Add Them to Payroll

Enter all employee details into your payroll system and check the first pay run before processing it. Confirm:

• Correct tax withholding settings (including tax-free threshold and any HELP debt).
• Correct award classification and pay rate.
• Super fund details are accurate.
• The bank account is entered correctly.
• Leave accrual is set up for permanent employees.

Using payroll software that integrates with STP reporting is the most practical approach for small businesses.

Document Workplace Policies

Provide the employee with written copies of your key workplace policies and get them to sign an acknowledgment. Essential policies include:

• Work Health and Safety (WHS) policy.
• Anti-discrimination and harassment policy.
• Privacy and confidentiality policy.
• Code of conduct.
• Social media policy.
• Technology and device use policy.
• The Right to Disconnect policy has been mandatory since August 2024. This explains when employees can legitimately refuse contact outside working hours.

Set Up an Employee File

You’re legally required to maintain accurate records for each employee. Each file should contain:

• Signed employment contract.
• TFN Declaration (kept confidential).
• Superannuation Standard Choice Form.
• Signed Fair Work Information Statement acknowledgment.
• Emergency contacts.
• Bank details.
• Copies of qualifications, licences, or certifications relevant to the role.
• Any policy acknowledgments.

Employment records must generally be kept for seven years. Superannuation contribution records must be kept for at least five years from the date of contribution.

The First 90 Days: Setting Them Up to Stay

Start With Organisational Training

In the first two weeks, focus on helping your new hire understand the business’s goals, values, structure, and culture before diving into role-specific tasks. Assign them a buddy or mentor from the existing team. A familiar contact makes a real difference to how quickly someone settles in and whether they choose to stay.

Research consistently shows that employees who receive structured onboarding are significantly more likely to remain with an organisation after three years and reach full productivity faster than those left to figure things out on their own.

Assign Work Progressively

Don’t overwhelm a new hire with full responsibility in week one. Start with defined, manageable tasks and increase complexity as they demonstrate competence. Set specific, realistic goals with them, not as a performance management exercise, but as a shared understanding of what success looks like in months one, two, and three. Document these goals in writing.

Conduct Regular Check-Ins

Schedule check-ins at consistent intervals: week two, week six, and the formal 90-day probation review. Don’t wait for problems to surface on their own. These meetings are also an opportunity for the employee to give feedback on the onboarding process itself. Australian workplaces tend toward flatter hierarchies, and two-way feedback is both expected and productive.

Run the Probation Review at 90 Days

The probation review is a formal, documented meeting, not just a casual chat. Cover:

• Performance against the key responsibilities in their position description (use specific examples)
• How they’ve integrated with the team and company culture
• Development areas and a plan for ongoing growth
• The outcome: confirm employment, extend probation with a specific timeline and targets, or end employment

Have both the manager and employee sign the review record. If you’re ending employment during probation, follow the notice period set out in the employment contract and provide written notice. For businesses with fewer than 15 employees, Fair Work’s unfair dismissal protections don’t apply during probation, but dismissal must never be based on discriminatory grounds.

Key Penalty Figures (2026)

Frequently Asked Questions

Do I need to check work rights even if I’m hiring an Australian-born person?

Yes. The VEVO check is required for all employees, regardless of nationality or appearance. It protects you from liability and is standard practice for compliant employers.

What’s the difference between an employee and a contractor?

An employee works within your business under your direction, while a contractor runs their own business and takes on commercial risk. The distinction affects your super, PAYG, and workplace obligations significantly. The ATO has an online tool to help you determine the correct classification — getting this wrong can result in significant back-payments and penalties.

Can I pay my employee in a currency other than Australian dollars?

Only if you have the employee’s explicit written consent to do so, by default, Australian employees must be paid in AUD.

What if my new hire doesn’t choose a super fund?

You must pay their contributions to your nominated default fund, which must be a MySuper-approved product. You cannot defer or skip contributions because the employee hasn’t returned the choice form.

When does the right to disconnect apply?

Since August 2024, employees have the right to refuse contact from their employer outside of working hours unless the refusal is unreasonable. What counts as unreasonable depends on factors like the urgency of the contact, the nature of the role, and the employee’s circumstances. Your workplace policy should explain how this works in your specific business context.

How long must I keep employee records?

Most employment records must be kept for seven years. ATO records, including TFN declarations, must be kept for five years. Super contribution records must also be kept for five years from the date of contribution. Payroll or HR software typically handles this automatically.

Where do I find the right modern award for my employee’s role?

The Fair Work Ombudsman website has a free award-finding tool. Enter the industry and job type, and it identifies the applicable award, along with current minimum pay rates.

What happens if I skip the probation review and the period expires?

The probation period ends by default, and the employee moves into standard employment protections. You lose the flexibility that the probation period provides for ending employment on a shorter notice period. Always schedule the review in advance so it doesn’t slip through.

What is Payday Super, and when does it start?

Payday Super is a major reform that replaces the current quarterly super system. From 1 July 2026, you must pay super contributions on every payday, with funds received by the employee’s super fund within 7 business days. If you currently use the ATO’s Small Business Superannuation Clearing House, you must transition to a SuperStream-compliant alternative before 30 June 2026 — the SBSCH closes permanently on that date. Talk to your payroll software provider now to confirm they’ll be ready.

Is underpaying staff still just a compliance issue?

No. Since 1 January 2025, intentional underpayment is a criminal offence. Companies face fines up to $7.825 million; individuals face up to 10 years’ imprisonment. Accidental errors are treated differently, but if you’re aware of an underpayment and don’t fix it, that distinction can disappear quickly. Small businesses can access a Voluntary Small Business Wage Compliance Code, which provides a safe harbour from criminal prosecution if you self-report and cooperate with the Fair Work Ombudsman.

The Bottom Line

Hiring your first employee in Australia involves more formality than most new employers expect, but every step exists to protect both parties. The legal requirements aren’t obstacles; they’re the structure that turns a working relationship into a stable, professional one.

Use this checklist as a living document. Update it as laws change, add your industry-specific requirements, and refine your onboarding process based on feedback from your hires. The businesses that treat their first employee well find their second, third, and fourth hires a whole lot easier.