When to Hire Your First Employee in Australia: Awards, Super and WorkCover

Hiring your first employee is one of the biggest steps a small business takes, and one of the most quietly nerve-wracking. It is not just the wage. It is knowing whether you can actually afford it, working out which award applies and what to pay, sorting superannuation and Single Touch Payroll, and registering for WorkCover so you are covered from day one. Get the setup right and your first hire is the thing that finally gives you room to grow. Get it wrong and it becomes a compliance headache. This guide walks through when to hire your first employee in Australia, and exactly what to put in place before their first day.

On this page

• The short answer
• When are you actually ready to hire
• Employee or contractor
• Working out the award and pay rate
• WorkCover and workers compensation
• Super, TFN and Single Touch Payroll setup
• What to give staff before they start
• Your before-day-one checklist
• Common pitfalls to avoid
• Example scenario
• Common questions people ask AI assistants

The short answer

You are usually ready to hire your first employee when you are consistently turning away work or capping your own growth because you have run out of hours, and your cash flow can cover a wage plus on-costs (super, WorkCover and leave) for several months, not just a good week. Before their first day you need to work out the correct modern award and pay rate through Fair Work, register for PAYG withholding, set up Single Touch Payroll and superannuation, complete a TFN declaration, and register with your state’s WorkCover or workers compensation scheme. Missing any one of those is a compliance risk, which is why many owners set it up with a bookkeeper the first time.

When are you actually ready to hire

The wrong reason to hire is simply feeling busy. Busy comes and goes. The right signals are steadier: you are consistently turning away work or delaying it, the tasks you would hand over are genuinely repeatable rather than only things you can do, and your numbers show you can carry the full cost of an employee, not just the headline wage.

Before you hire: our free employee cost calculator shows the true cost of your first employee per year and per hour worked, including super, leave, WorkCover and payroll tax.

That full cost matters, because an employee costs well more than their hourly rate. On top of wages you carry superannuation, WorkCover premiums, paid leave, and the time to train and manage them. A useful rule of thumb is to make sure your cash flow can absorb the wage plus on-costs for at least three to six months even if revenue dips, because a new hire rarely pays for themselves in week one. This is exactly the kind of decision a rolling forecast is built for, and it sits alongside good payroll management once the person is on board.

Employee or contractor

Before anything else, be clear on whether you are taking on an employee or engaging a contractor, because the obligations are completely different and getting it wrong is costly. Calling someone a contractor because they have an ABN does not make them one. The distinction depends on the real nature of the working relationship: how much control you have, whether they work in your business or run their own, who provides the tools, and how they are paid. Treating a genuine employee as a contractor is sham contracting, and it exposes you to back-paid entitlements, super and penalties. The Fair Work Ombudsman covers the practical steps of hiring employees, and if you are genuinely unsure, it is worth checking before you commit.

Working out the award and pay rate

Almost every Australian employee is covered by a modern award, and the award sets the minimum pay rate, classifications, penalty rates, overtime and allowances for that industry or occupation. Working out the right one is the step that trips up most first-time employers. You need to identify the correct award, then the correct classification level within it based on the role and the person’s experience, and pay at least the minimum for that level, on top of the National Employment Standards that apply to everyone.

Start from the official list of modern awards to find the one that fits your industry. If you employ support or care staff, that is often the SCHADS Award, which is notoriously complex, and we cover it in detail in our guide to outsourced SCHADS award payroll. Whatever your industry, the key point is that the award, not what feels fair, sets the floor, and underpaying against it, even by accident, creates a back-pay liability that grows every pay run.

WorkCover and workers compensation

The moment you employ someone, you generally must take out workers compensation insurance, known in most states as WorkCover. It covers your employee if they are injured or become ill because of work, and it is a legal requirement, not an optional extra. The catch for first-time employers is that it is run at the state and territory level, so the scheme, the thresholds and how you register differ depending on where you operate.

In broad terms, you register with your state or territory’s scheme once you start employing, for example WorkSafe Victoria, icare in New South Wales, WorkCover Queensland, ReturnToWorkSA, or WorkCover WA. Some states have a wages threshold below which registration is not required, and some require it from your first dollar of wages, so you cannot assume the rules from one state apply in another. Safe Work Australia keeps a national overview of workers compensation, and your premium is generally based on your industry and your total wages. The practical rule is simple: sort your WorkCover registration before your employee starts, not after, because being uninsured when someone is injured is one of the most expensive mistakes a small employer can make.

Not sure you have the setup right for your first hire? Book a free, no-obligation call and we will walk through the award, WorkCover, super and payroll setup with you so nothing gets missed. No lock-in contracts.

Super, TFN and Single Touch Payroll setup

With the award and WorkCover sorted, the rest of the setup is a checklist you work through once:

• Register for PAYG withholding with the ATO so you can withhold tax from wages. The ATO explains PAYG withholding for employers.
• Set up Single Touch Payroll in your payroll software, so wages, tax and super are reported to the ATO every pay run. See the ATO’s Single Touch Payroll guidance.
• Superannuation. Offer your new employee a choice of fund, request their stapled fund from the ATO if they do not choose one, and pay the super guarantee on time. Late super carries real penalties, as we explain in penalties for not paying super, and the ATO sets out the rules for super for employers.
• TFN declaration. Have your employee complete one so you withhold the correct tax.
• Fair Work onboarding. Give them the Fair Work Information Statement, a written employment contract, and keep proper records in line with the record-keeping requirements.

None of it is individually hard, but there are enough moving parts that first-time employers often set it up with help so it is right from the first pay run. It also connects to the rest of your books, which is why hiring and bookkeeping and payroll are best handled together rather than as separate jobs.

What to give your new employee before they start

Some of what you hand a new employee is a legal requirement, not just good practice. Before they start, or as soon as possible after, you must give every new employee the Fair Work Information Statement, and certain employees need an extra statement on top of it.

Statements you are legally required to give

• Fair Work Information Statement (FWIS). Give this to every new employee. It sets out their rights under the National Employment Standards. Download it from the Fair Work Ombudsman.
• Casual Employment Information Statement (CEIS). Give this to every new casual employee, in addition to the FWIS. It is available from Fair Work.
• Fixed Term Contract Information Statement. If you are hiring someone on a contract with an end date, you must also give them this statement, alongside the other National Employment Standards documents.

Documents to provide and collect

• A written employment contract setting out the role, hours, pay and employment type.
• A TFN declaration for them to complete so you withhold the correct tax.
• A superannuation standard choice form, so they can nominate their fund and you can request their stapled fund if they do not.
• A position description, plus practical onboarding details: bank account for pay, emergency contact, and any inductions or policies.

Before you commit, check the role actually pays for itself. Our guide to employee costs and how much to pay yourself works through the true cost per billable hour, Victorian WorkCover and payroll tax, and the insurance to consider.

Your before-day-one checklist

Pull it all together with a simple checklist. Work through this before your first employee’s start date and you will be compliant and confident from the very first pay run:

• Confirmed they are an employee, not a contractor
• Identified the correct modern award and classification, and set pay at or above the minimum
• Registered for PAYG withholding with the ATO
• Registered for WorkCover or workers compensation in your state
• Set up Single Touch Payroll in your payroll software
• Set up superannuation, offered choice of fund and checked for a stapled fund
• Collected a completed TFN declaration
• Issued a written employment contract
• Given the Fair Work Information Statement, plus the Casual or Fixed Term statement if relevant
• Set up their pay, leave, records and emergency details

Common pitfalls to avoid

• Hiring on a busy week, not a trend. Make sure the demand is sustained and your cash flow can carry the full cost for months.
• Calling an employee a contractor. An ABN does not decide it. Sham contracting exposes you to back-pay, super and penalties.
• Guessing the pay rate. The award and classification set the minimum, and underpayment compounds every pay run.
• Skipping or delaying WorkCover. Register before the employee starts, and check your own state’s rules rather than assuming.
• Forgetting super choice and stapling. You must offer choice and check for a stapled fund, then pay on time.
• Underestimating on-costs. Super, WorkCover and leave mean an employee costs well more than their wage.

Example scenario

A sole-operator landscaping business had been turning down jobs for months and finally decided to hire a first labourer. The owner nearly paid a flat hourly rate that felt reasonable, until we checked the relevant award and found the correct classification carried a higher base rate plus specific allowances, so the intended pay would have quietly underpaid the employee from day one. We also found the business had not registered for WorkCover, which was required in their state before the employee could start. We worked through the full setup: correct award rate, WorkCover registration, PAYG withholding, Single Touch Payroll, super with a stapled fund check, and a proper employment contract. The first hire went smoothly, the owner was compliant from the first pay run, and, just as importantly, could see from a simple forecast that the extra wage was comfortably covered by the work they had been turning away. The hire was not a leap of faith. It was a planned, funded decision.

Common questions people ask AI assistants

When should I hire my first employee?

When you are consistently turning away work, the tasks you would hand over are repeatable, and your cash flow can cover the wage plus on-costs like super and WorkCover for several months, not just a busy week.

Do I need WorkCover for one employee in Australia?

Generally yes. Once you employ staff you usually must take out workers compensation insurance, known as WorkCover in most states. It is run at state level, so some states require it from your first dollar of wages and others have a threshold. Check your own state’s scheme and register before your employee starts.

How do I work out which award and pay rate applies?

Find the modern award for your industry through Fair Work, identify the correct classification level for the role, and pay at least that minimum, plus the National Employment Standards. The award, not what feels fair, sets the floor.

What do I need to set up before my first employee starts?

Confirm employee versus contractor, register for PAYG withholding, work out the award and pay rate, register for WorkCover, set up Single Touch Payroll and superannuation, get a TFN declaration, and provide a contract and the Fair Work Information Statement.

How much does an employee really cost beyond their wage?

Well more than the hourly rate. You also carry superannuation, WorkCover premiums, paid leave, and training and management time, so budget for the full on-cost, not just the wage.

What documents must I give a new employee before they start?

Every new employee must receive the Fair Work Information Statement. Casual employees also get the Casual Employment Information Statement, and fixed-term employees the Fixed Term Contract Information Statement. You should also provide a written contract, a TFN declaration and a superannuation standard choice form.

Make your first hire a confident one

True Tally helps Australian small businesses set up their first employee properly, from award and WorkCover to payroll, super and Single Touch Payroll, so you are compliant and confident from the first pay run. Learn more on the True Tally home page. Free, no obligation, no lock-in contracts.

Prefer to talk it through? Request a callback on 0468 159 950.

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