- A foreign company has three main ways to employ people in Australia: set up an Australian subsidiary and run local payroll, use an Employer of Record (EOR), or operate as a branch / register directly as a foreign employer.
- Whichever route you choose, Australian employer obligations can apply: PAYG withholding, superannuation guarantee at 12%, Single Touch Payroll reporting, workers compensation, and Fair Work minimum conditions. Super can apply even where PAYG withholding does not.
- The subsidiary route triggers a hard rule: every Australian Pty Ltd must have at least one director who ordinarily resides in Australia (Corporations Act s201A). A resident director service solves this for overseas owners.
A foreign company can hire employees in Australia in one of three ways: by setting up an Australian subsidiary and running payroll through it, by using an Employer of Record that employs the staff on your behalf, or by registering as a foreign employer and operating through a branch.
The right choice depends on how committed you are to an Australian presence and how much compliance you want to carry yourself. Whichever route you pick, you take on Australian employer obligations like PAYG withholding and superannuation.
This guide compares the routes; for setting up the business itself, see our guide on registering an Australian company from overseas.
How can a foreign company hire employees in Australia?
There are three established routes, and they trade off speed, cost and control. Setting up a subsidiary gives you a permanent Australian entity you fully control, but it carries the most setup and ongoing compliance.
An Employer of Record lets you hire quickly without any entity, at the cost of a per-employee fee and less direct control. Registering as a foreign employer or branch sits in between and suits specific situations. The table below summarises them; the sections after work through each.
|
Route |
Best for |
Trade-off |
|---|---|---|
|
Australian subsidiary |
A lasting local presence, multiple hires |
Most setup and compliance; needs a resident director |
|
Employer of Record |
Testing the market, hiring fast, 1 to few staff |
Per-employee fee; the EOR is the legal employer, not you |
|
Branch / foreign employer |
Specific structures, existing foreign parent |
Registration and ongoing reporting; permanent establishment risk |
Route 1: An Australian subsidiary with local payroll
Setting up an Australian subsidiary means registering a Pty Ltd company that you own, then employing staff directly through it and running Australian payroll. This is the route for a foreign company that wants a genuine, lasting presence in the market and expects to hire more than one or two people.
The subsidiary is a separate legal entity, which contains your liability and reads as a committed local operation to staff, banks and customers. If you are weighing this against operating through a branch, our guide on the difference between a branch and a subsidiary sets out the trade-offs.
It comes with a hard requirement that catches many overseas owners. Under Corporations Act section 201A, every Australian proprietary company must have at least one director who ordinarily resides in Australia.
If your whole team is offshore, you must appoint an Australian-resident director, and if a company fails to meet this, ASIC can take enforcement action and you must appoint a replacement and notify ASIC within 28 days. A resident director service fills this gap with a compliant local director so you can own and run the company from overseas.
Sleek can set up your Australian subsidiary, provide a resident director, and run your Australian payroll.
Route 2: Using an Employer of Record
An Employer of Record (EOR) is a third-party company that legally employs your Australian staff on your behalf. The worker does their job for you day to day, but the EOR is the legal employer: it runs payroll, withholds PAYG, pays super, handles Single Touch Payroll reporting, and carries the compliance. You pay the EOR a fee, usually per employee per month, and avoid setting up an entity at all.
This route suits a foreign company that wants to hire one or a few people quickly, or test the Australian market before committing to a subsidiary. The trade-offs are cost at scale, since per-employee fees add up, and reduced direct control, since the formal employment relationship sits with the EOR.
Sleek’s focus is the subsidiary and payroll route rather than acting as an EOR, so if an EOR is the right fit we would point you to a specialist provider.
Route 3: Branch or direct foreign-employer registration
A foreign company can also operate in Australia as a registered foreign company (a branch) rather than incorporating a separate subsidiary, or in some cases register directly as a foreign employer for payroll purposes.
A branch is an extension of the overseas parent, not a separate legal entity, which means the parent carries the liability and the branch must register with ASIC as a foreign company and meet reporting obligations.
Importantly, Australian employer obligations can apply even without any local entity. A non-resident employer with staff living and working in Australia may still need to register for PAYG withholding, pay superannuation, and report through STP.
This route tends to suit companies with a specific structural reason for a branch, but it brings permanent establishment risk, the possibility that the activity creates an Australian tax presence for the parent, which is worth professional advice before choosing it. The ongoing duties are covered in our guide to foreign company compliance in Australia.
Your employer obligations: PAYG, super, workers comp
Whichever route you take, employing someone in Australia brings a consistent set of obligations. These flow from who is legally the employer, and missing them risks penalties and underpayment claims.
- PAYG withholding: withhold tax from employees’ wages and remit it to the ATO, in line with the PAYG withholding rules. Foreign employers with Australian-based staff can have this obligation even without a local entity.
- Superannuation guarantee: pay 12% of ordinary time earnings into employees’ super funds. Paying super on time matters, as it can apply even in situations where PAYG withholding does not.
- Single Touch Payroll (STP): report wages, tax and super to the ATO each pay run through STP-enabled software.
- Workers compensation: take out workers compensation insurance, which is administered at the state or territory level, for your employees.
- Fair Work minimum conditions: meet the National Employment Standards and any applicable modern award covering pay rates and conditions, issue compliant pay slips, and keep records.
These are not optional for whoever is the legal employer. The attraction of the subsidiary route with a provider, or an EOR, is that the compliance is handled by people who do it daily rather than learned under pressure from overseas.
Visa and sponsorship considerations
Hiring people who already have the right to work in Australia, citizens, permanent residents, and many visa holders, carries no sponsorship obligation; you simply verify their work rights. Bringing someone from overseas to work for you is different and may require employer sponsorship under a skilled visa, which itself generally requires an Australian entity to be the sponsor.
That is one reason the subsidiary route and hiring are linked, and our business visa guide covers the pathways in more detail.
This is a brief flag rather than a full visa guide. Skilled visa thresholds and sponsorship rules change, and pathways are detailed, so confirm current requirements with the Department of Home Affairs or an immigration specialist before relying on a particular visa for a hire.
For most foreign companies, the first hires are people already in Australia with work rights, which sidesteps sponsorship entirely.
How to choose the right route
The decision usually comes down to commitment and scale. A quick way to narrow it:
- Choose a subsidiary if you want a lasting Australian presence, plan to hire several people, or need to sponsor visas. Budget for setup, a resident director, and ongoing compliance.
- Choose an EOR if you want to hire one or a few people fast, are testing the market, or are not ready to commit to an entity. Expect a per-employee fee and less direct control.
- Consider a branch only where there is a specific structural reason, and take advice on permanent establishment risk first.
Many foreign companies start with an EOR to move fast, then set up a subsidiary once the Australian team and revenue justify it. There is no single right answer, only the one that fits your stage.
How Sleek helps with hiring and running a company in Australia
For the subsidiary route, Sleek handles the parts that stall overseas owners. We register your Australian Pty Ltd, provide a resident director to meet the section 201A requirement, set up your ABN, TFN, GST and PAYG, and run compliant Australian payroll including super and Single Touch Payroll reporting.
A dedicated accountant means your employer obligations are met from the first pay run, across time zones, through one provider. If your situation points to an EOR instead, we will tell you plainly.
Sleek sets up your subsidiary, provides a resident director, and runs your payroll from day one.
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FAQs on hiring employees in Australia as a foreign company
Can a foreign company hire employees in Australia without setting up a company?
Yes. You can use an Employer of Record, which legally employs the staff on your behalf and handles payroll, tax and super, so you avoid setting up an entity. Alternatively a foreign company can register as a foreign employer or branch. Even without a local entity, Australian PAYG withholding and super obligations can still apply to you.
Does a foreign company need a resident director to hire in Australia?
Only if it takes the subsidiary route. Every Australian Pty Ltd must have at least one director who ordinarily resides in Australia under Corporations Act section 201A. If your team is entirely overseas, you appoint an Australian-resident director, often through a resident director service. An Employer of Record route avoids this because you do not set up a company.
What are a foreign employer's obligations in Australia?
Whoever is the legal employer must handle PAYG withholding, pay the 12% superannuation guarantee, report through Single Touch Payroll, hold workers compensation insurance, and meet Fair Work minimum conditions. These can apply to a foreign employer with staff in Australia even without a local entity, and super can apply even where PAYG withholding does not.
What is the difference between a subsidiary and a branch in Australia?
A subsidiary is a separate Australian company (Pty Ltd) that you own, which contains liability locally and needs a resident director. A branch is an extension of the foreign parent, registered with ASIC as a foreign company, where the parent carries the liability. A branch can also create permanent establishment risk, a local tax presence for the parent.
Do I need to sponsor a visa to hire someone in Australia?
Not if you hire people who already have work rights, such as citizens, permanent residents or eligible visa holders; you just verify their work rights. Sponsorship under a skilled visa is needed only to bring someone from overseas, and that generally requires an Australian entity to act as sponsor. Confirm current rules with the Department of Home Affairs.
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Should I use an EOR or set up a subsidiary in Australia?
Use an EOR to hire one or a few people quickly or to test the market without committing to an entity. Set up a subsidiary for a lasting presence, several hires, or to sponsor visas, accepting the setup, resident director and compliance that come with it. Many companies start with an EOR and move to a subsidiary as the team grows.
