Employee Benefits in Australia Guide (2025)

If you’re planning to employ individuals or use contractors in Australia you need to know about the optional and mandatory employee benefits in Australia first. This guide walks through the basics to kickstart your research including a look at who must receive benefits, the type of offers usually available and the top employee benefits in Australia for salary packaging.

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Table of contents

Who gets benefits in Australia? Offering benefits for Australian contractors Top employee benefits in Australia salary packaging What are Australia's statutory and common employee benefits? 1. Employer tax contributions 2. Leave entitlements 3. Long service leave 4. Maternity, paternity and parental leave 5. Sick and carer's leave 6. Minimum wage 7. Overtime 8. Medicare 9. Superannuation 10. Workers’ compensation insurance Non-mandatory employee benefits

Who gets benefits in Australia?

The benefits offered to people working in Australia can depend on whether the individual is considered an employee or an independent contractor. Mandatory requirements are usually set out in the National Employment Standards¹, and can also be in enterprise agreements and awards. Awards are agreed conditions for a specific industry or occupation, while enterprise agreements are set out to cover one or more specific businesses.

In addition to this, other benefits may be agreed as part of the employment contract, and then become mandatory.

This guide is intended for information only. Managing employee benefits - particularly in a different country - can be complex, and can have financial and legal consequences if you get it wrong. Take professional advice if you’re ever unsure about your obligations.

Employee vs. independent contractor: What’s the difference?

The benefits and tax implications are different if you have employees in Australia compared to employing independent contractors. This is because usually an independent contractor is required to manage their own tax affairs, while employees usually have tax withheld at source, and the employer will also pay fringe benefits tax on other benefits offered.

The ATO offers lots of useful advice to help you decide if an individual is considered an employee or a contractor, to make sure you stay on the right side of the law and fulfil all your duties².

Offering benefits for Australian contractors

Even where it’s not mandatory to offer benefits to Australian contractors, many employers do choose to do so to allow them to recruit top talent into contracting positions. Usually with a contractor you will not need to pay super - although this is not always the case, so you will need to take professional advice based on your own situation. You do not usually need to pay fringe benefits tax either³. Outside of this, you are able to make your own decisions about which benefits you want to extend to your contractors to be competitive and keep your employees happy at work.

Top employee benefits in Australia salary packaging

Salary packaging is where an employee agrees with their employer to reduce their base pay in order to receive part of it through a more tax efficient method. You can usually package your super payments, as well as fringe benefits and exempt benefits⁴. This could include fringe benefits such as a company car, loans for specific purposes and health insurance, as well as exempt benefits such as payments to support you setting up a home office.

There’s lots of advice on what can be packaged as part of your salary on the Australian government website - you’ll then need to talk to your employee to understand what works well for them and you as the employer, to agree on a final package.

What are Australia's statutory and common employee benefits?

As we’ve seen, employee benefits in Australia could be mandated nationally, by industry or by a local agreement. This makes it important to do your research into what’s needed to offer competitive packages and hire the top talent in your niche. Here’s an overview of some common benefits to think about.

1. Employer tax contributions

When you employ people in Australia you’ll usually need to withhold tax on salary⁵ and the medicare levy, and may also need to pay fringe benefits tax⁶ to the ATO on certain benefits you offer. In addition there are regional payroll taxes which vary by location. Before you hire anyone or engage a local contractor in Australia, take professional advice about what tax contributions are needed and how to manage reporting.

2. Leave entitlements

Australians value work life balance and so it is unsurprising that there are some rules in place about leave, and when it’s appropriate to ask an employee to work.

The mandatory annual leave is set at 4 weeks a year, and starts to accumulate immediately once an employee is engaged. Aside from this it’s also important to note that there’s a ‘right to disconnect’ which is in place for businesses with 15 or more employees, and which means you can not expect an employee to take calls or emails outside of working hours. This law is set to roll out to smaller businesses in 2025.

3. Long service leave

Long service leave is likely not something you’ll find mandated in many countries, but in Australia most states and territories have laws which enforce long service leave⁷ after 5, 7 or 10 years, allowing them additional vacation that year. This leave is paid and can be around 2 months of extra time off.

4. Maternity, paternity and parental leave

There’s no standard mandatory paid maternity, paternity or parental leave in Australia. However, some parents can apply to receive paid parental leave which is operated through government schemes. You need to meet certain eligibility requirements for this option to apply⁸.

Aside from this, it is mandatory to offer unpaid parental leave for 12 months, which can be extended on request for an additional 12 months. This applies when an employee or their partner gives birth or adopts a child.

5. Sick and carer's leave

Mandatory sick and carer's leave falls into the same bracket, allowing you to use your time when you are sick personally, or when you have a family emergency or a sick loved one to take care of. Full time workers are entitled to 10 days a year of sick and careres leave, which accumulates year on year if not taken⁹.

6. Minimum wage

The minimum wage set by law at the time of research is 915.90 AUD a week for a 38 hour week, or 24.10 AUD an hour¹⁰. This is around 15 USD an hour. It’s important to note that many people are covered by additional agreements which effectively mean that their minimum wage level is far higher than this. Check if awards or enterprise agreements apply to your employees before you start to operate in Australia.

7. Overtime

Overtime which is above the standard working hours of an employee is usually covered by awards and enterprise agreements which can vary depending on the industry. The standard working week for full time employees is 38 hours.

The Australian Fair Work Ombudsman has a handy tool online which allows you to enter the industry you operate in and view the applicable awards to see overtime conditions and pay rates¹¹. Generally overtime will be paid at a higher rate than your normal weekly working hours.

8. Medicare

Employees must pay a 2% medicare levy in most cases, which is withheld by the employer and allows access to health services¹².

9. Superannuation

Superannuation is a government backed pension scheme which employers pay into. At the time of writing the base payment is 11.5%, which is set to rise to 12% in coming years¹³. Additional rules apply in some industries where awards and agreements have been reached. Employees can draw from their super from the age of 55 to 65 depending on their birth year.

10. Workers’ compensation insurance

Employers in Australia must usually have workers compensation insurance which offers some support in the event an employee is injured or killed in the line of work. This insurance can help pay lost wages, support hospital costs and can be a lump sum payment for family members in the event of an employee dying at work¹⁴.

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Non-mandatory employee benefits

To make sure your business is an attractive employer, it’s common to offer non-mandatory benefits alongside those required by law. Australians tend to value benefits which improve their work life balance in particular, which allows employees to tailor benefits packages to the people they’re trying to attract. Here are a few additional benefits you may choose to add into your salary packages when negotiating.

1. Health Insurance

While medicare payments are mandatory, many employers also add in the option for private health cover as an additional benefit. This gives employees access to private health care facilities which can mean quicker treatment times and access to additional services.

2. Personal development programs and career development allowance

Personal development options make sense for both the employer and the employee. By offering options for continuous professional development you’re ensuring your team stays ahead of the game, and giving a valued benefit for individuals at the same time. You might choose to support employees with a career development allowance they can use how they please, or offer specific support such as paid time off for study or support with some work based training.

3. Company car or commuter allowance

Getting to and from work is an expense for most people, so offering benefits which address this is a smart plan. This may be in the form of a company car or an allowance to lessen the burden of paying for a daily commute. As with most additional benefits, this is likely to attract fringe benefit tax which is payable by the employer, but it is a very valued option which can make a salary and benefits package look more attractive overall.

4. Child care

Employers might choose to write child care support into their policies to make them a more attractive place for parents or prospective parents to work. This could mean offering an allowance to set against the costs of childcare for example, and would need to be set out in writing in company policy.

5. Hardware

Most employers will pay for hardware needed by the employee to do their job. This can include company phones, laptops and other devices necessary for working remotely, from home, and on the road.

6. Stock options

Whether or not stock options are a good choice depends on your business type - but this is a common benefit offered in tech and startup businesses. The way you use this can vary a lot depending on the individual’s role and level in the organization, and the business itself. Generally you will offer a specific value of the business in stock, as a percentage, which comes with additional conditions such as a fixed length of service.

Bonus

Offering a bonus payment is another common mechanic to make sure that employees are properly motivated and rewarded for their efforts. Bonus schemes could be based on tenure, performance, or business profit, allowing for flexibility in building out a benefits and bonus package which suits your specific business need.

1. Additional time off

You will need to offer the mandatory leave required by law to all employees but you can also offer additional time off for other requirements. This may cover specific religious or cultural festivals for example, or you might choose to allow employees to take paid leave on their birthdays.

2. Value-based benefits to attract local employees

Some benefits can cost little or nothing to the employer but be extremely valuable to the employee. Understanding the local working culture can help here if you’re trying to attract Australian talent.

As Australians tend to enjoy an active lifestyle, travel and a good work/life balance, benefits which support this are highly prized. You might offer additional time off over slow periods such as December when summer travel kicks in, or subsidized gym and pool memberships for example. Other options include paid volunteering days and leave on your birthday for example, as well as things to make the workplace more comfortable like free food and drink in the office, and a relaxed dress code.

3. Flexible work schedule

Employees with over 12 months service have the legal right to apply for a flexible working agreement - although the employer is not obliged to agree to this. Offering flexible working as a basic benefit can be valuable for all, cutting the costs of managing a large office, allowing employees to work in the conditions which are optimal for them, and showing a respect to team members who can get on with their work in the way that suits them best.

4. Life and disability insurance

Additional life and long term disability insurance, on top of that mandated by law can also be a sensible option for an employer. Life insurance would pay out a fixed sum to the employee’s family in the case of a death in service, while long term disability insurance can be valuable in the case of people being unable to work, or work at the same capacity, due to illness or injury.

5. Employee Assistance Programme (EAP) and wellness benefits

An EAP, combined with a holistic approach to employee wellness can help keep employees happy and engaged at work. An EAP tends to offer support such as counselling and therapy if people have individual needs, while wellness services could include anything from healthy snacks and yoga in the office, to subsidised access to fitness facilities.

6. Paid parental leave

As we’ve seen, there’s no mandatory employer funded parental leave, but this is an option for companies looking to attract talent. Building in paid leave for maternity, paternity and parental leave - on top of anything which may be available though government schemes - can be an attractive option for parents and prospective parents.

7. Paid relocation service & visa sponsorship

Finally, if you want to recruit people from outside of Australia, another option is to consider supporting relocation and visa sponsorship. Relocating for work is exciting but daunting, so employers offering support in this respect will be able to more easily attract individuals from around the world.

So there you have it - our overview of some of the most common required and options employee benefits in Australia. Get some local advice to make sure you're tailoring your benefits package to your unique business needs, and while you’re planning your new Australian enterprise, be sure to also check out BatchTransfer for low cost ways to manage your business finances across USD, AUD and other global currencies, with low costs and an intuitive service.

Country Articles	Learn More About Employee Benefits
Australia	Employee Benefits in Australia: A Complete Guide
Singapore	Employee Benefits in Singapore: A Complete Guide
UK	Employee Benefits in UK: A Complete Guide
Brazil	Employee Benefits in Brazil: A Complete Guide
South Africa	Employee Benefits in South Africa: A Complete Guide
Spain	Employee Benefits in Spain: A Complete Guide

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Sources:

1. Fair Work Ombudsman National Employment Standards
2. ATO - employee or independent contractor?
3. ATO - Super and other considerations for contractors
4. Australian government - Salary packaging
5. ATO - PAYG withholding
6. ATO - fringe benefits tax
7. Fair Work Ombudsman - long service leave
8. Services Australia - paid parental leave
9. Fair Work Ombudsman - sick and carers leave
10. Australian government - employee entitlements
11. Fair work ombudsman - overtime rates and awards
12. ATO - medicare levy
13. ATO - superannuation rates
14. Safe Work Australia - workers’ compensation