How to hire contractors in Australia

Australia offers access to a highly skilled, English-speaking workforce, making it an appealing destination for businesses looking to expand globally. When you hire contractors in Australia, you gain flexibility, expertise, and the ability to scale without the long-term commitment of hiring full-time employees.

However, hiring Australian contractors also comes with legal and operational responsibilities. From proper classification to payment and taxation, it’s important to follow local laws to avoid costly mistakes.

Fortunately, platforms like Payoneer Workforce Management (WFM) make it easy and efficient to hire and pay contractors without setting up a local legal entity.

In this guide, we walk you through how to hire contractors in Australia, what labor laws to be aware of, how to pay contractors in Australia, and why using a global platform like Payoneer WFM can help simplify the entire process.

How to hire contractors in Australia

To hire contractors in Australia, businesses must correctly classify the working relationship, understand local labor laws, source qualified professionals, and set clear expectations with clear written agreements.

1. Understand contractor vs. employee classification

Before hiring a worker in Australia, businesses must determine whether they are engaging an employee or an independent contractor. This distinction has major implications for tax, legal liability, and the overall structure of the working relationship.

Typically, Australia contractors:

• Operate their own business
• Invoice for services rendered
• Control how and when work is performed
• Use their own tools and resources
• Work for multiple clients

Employees, on the other hand:

• Have set hours
• Follow direct supervision
• Receive regular wages or salary
• Are entitled to benefits and leave
• Use the company’s equipment

Misclassifying an employee as a contractor can lead to fines and back pay obligations. It’s important to evaluate the nature of the working relationship based on how the work is done, not just the contract terms. When in doubt, consult legal counsel or use workforce management platforms that help you accurately classify global contractors and employees.

2. Understand local labor laws

While many Australian employment laws don’t apply to independent contractors, understanding the local framework helps reduce risk and supports better contractor relationships. Key areas to consider include:

• Minimum wage: Australia’s minimum wage is A$24.10 per hour. That’s roughly US$15.50. Minimum wage doesn’t apply to Australia contractors, though, as they set their own rates based on market demand and the nature of the work.
• Working hours: Employees in Australia are capped at 38 hours of work per week. Standard working hour limits do not apply to contractors, providing more flexibility.
• Superannuation: This is Australia’s mandatory retirement savings system, like a pension plan. While typically not required for contractors, companies may need to pay superannuation if the contractor is hired solely for their labor and works in a similar manner to an employee.
• Public holidays: Australia has eight national public holidays, and each state and territory also has specific holidays. Independent contractors are not entitled to paid public holidays, but may expect to have these days off work. 
• Annual leave: Australian employees are entitled to four weeks of annual leave per year. However, this does not apply to contractors who are only paid for the work they complete and can take unpaid time off at their discretion.
• Rights and legal protection: While not covered by employee protections under the Fair Work Act, contractors are still protected by Australian contract and commercial laws. This includes the right to fair payment, dispute resolution, and terms enforcement.
• Termination: The rules for ending a contractor relationship should be detailed in your contract. Unlike employees, contractors are not covered by national unfair dismissal laws but may have recourse under contract law if terms are breached.
• Contract terms: A strong contractor agreement should clearly outline the project scope, expected deliverables, timelines, payment terms, intellectual property rights, and dispute resolution processes.

3. Find and hire contractors in Australia

The next step is to find qualified professionals, but where do you start? Some of the most popular platforms for sourcing talent in Australia include:

• Seek
• LinkedIn
• Indeed
• Jora
• Freelancer.com

When evaluating candidates, make sure to request references and verify experience, confirm they hold an Australian Business Number (ABN), and assess cultural fit and communication style, especially for remote collaboration.

After choosing a contractor, it’s essential to formalize the arrangement with a well-drafted agreement. This should include:

• The scope of work
• Timelines and milestones
• Payment schedule
• Confidentiality terms
• Ownership of work product
• Termination terms
• Any applicable warranties

For a deeper look at what should be included in a contract, see Payoneer’s guide to freelancer contracts.

Once the agreement is in place, the next stage is setting up a reliable, efficient way to pay your contractor.

How to pay contractors in Australia

To pay contractors in Australia effectively and with fewer risks, businesses need to choose the right payment method, verify tax obligations, and use tools that support scalability and accurate tracking.

1. Determine how to pay

There are several options available for paying contractors in Australia. Each method has its advantages and considerations:

• Bank transfers: Bank transfers are a common and familiar option, but international transfers can be slow and often come with high fees and limited visibility into payment status.
• Online payment platforms: These platforms allow you to pay multiple contractors efficiently, in their local currency, from a single dashboard. Tools like Payoneer WFM support multi-currency payments and simplify financial operations for global teams.
• Cryptocurrency: Some businesses explore this option for speed or accessibility, but it introduces potential legal, tax, and exchange-rate challenges, especially when contractors convert crypto into local currency.

2. Ensure your Australian contractors have the right tax information

Independent contractors in Australia are responsible for handling their own tax reporting. Most will need to:

• Register for an Australian Business Number (ABN)
• Complete quarterly Business Activity Statements (BAS) to report income and expenses to the Australian Taxation Office (ATO)

As the hiring company, you generally aren’t required to withhold taxes or provide payslips. However, you should confirm that your contractor understands their tax obligations and operates as a legitimate business entity.

If your company is based in the United States, you may be required to complete forms such as the 1099 or 1042, depending on the classification and nature of work. Learn more in Payoneer’s tax form guide.

3. Pay your Australian contractor

Now it’s time to start sending payments. Although it is possible to manually manage contractor payments, this approach can create friction and introduce risks. Manual processes often lead to delays, errors, a lack of payment tracking, compliance issues, and a poor contractor experience.

Payoneer WFM allows companies to pay contractors through a centralized platform, providing greater transparency, efficiency, and scalability.

As you calculate payment amounts, remember to factor in exchange rates, platform fees, and potential additional charges to avoid surprises and support accurate financial forecasting.

Why Payoneer WFM is the easiest way to hire and pay contractors in Australia

Payoneer Workforce Management helps fast-growing companies hire and pay contractors and full-time employees in over 160 countries, including Australia, without the complexities of setting up local legal entities.

Built for startups, SMBs, and enterprises looking to scale globally, the platform enables businesses to:

• Onboard contractors in Australia quickly and in alignment with local laws
• Pay in 70 currencies through a single interface
• Stay informed about employment regulations as they evolve
• Manage tasks such as tax documentation, time tracking, work permits, background checks, and more

Payoneer WFM also supports value-added services such as visa processing, device procurement, and localized benefits administration to give your global talent a seamless onboarding experience.

Whether you’re hiring developers in Sydney or designers in Melbourne, Payoneer WFM helps you manage the entire contractor lifecycle with fewer administrative burdens.

Australian contractors FAQ

What are some advantages of hiring Australian contractors?

There are several advantages to hiring contractors in Australia, including:

• No need to set up a local entity
• Lower overhead compared to hiring full-time employees
• Access to a highly skilled and English-speaking workforce
• Flexibility to scale up or down based on project needs

Do Australian contractors get benefits?

No, independent contractors in Australia are not entitled to employee benefits such as paid leave or health insurance. Offering these benefits may increase the risk of being reclassified as an employee.

Can you manually pay contractors in Australia?

You can manually pay Australian contractors, but it’s generally not recommended. Manual payments can introduce risks such as:

• Non-compliance with local regulations
• Errors in payment calculations or timing
• Inconsistent documentation
• Lower satisfaction for contractors

Using a global workforce management platform like Payoneer WFM helps reduce these risks and improves visibility across your global contractor payments.