To pay an employee in Australia you must pay at least the correct award (or National Minimum Wage) rate, withhold PAYG tax from their gross pay, pay 12% superannuation on top, issue a compliant payslip within one working day, and report it all to the ATO via Single Touch Payroll. Get those five things right every pay run and payroll becomes a predictable, minutes-per-week task. Get them wrong and you risk back-pay, Fair Work penalties and the non-deductible Super Guarantee Charge.
This guide walks through the whole process step by step, with the FY2026-27 figures that apply from the first full pay period on or after 1 July 2026 (Fair Work Commission Annual Wage Review 2025-26 decision). The same rates sit behind our 2026-27 trade charge-out rate guide.
Before You Pay Anyone: The Setup Checklist
Before your first pay run, you need to tick off several legal and administrative requirements.
1Register as an Employer with the ATO
You'll need to:
- Register for PAYG withholding, this lets you withhold tax from employee wages and send it to the ATO. Most businesses register through their ABN.
- Get a withholding payer number (WPN) if you don't have an ABN (for example, some non-business employers).
Register through the Business Registration Service or via the ATO.
2Check If an Award Applies
Most employees in Australia are covered by a Modern Award, a legal document that sets minimum pay rates, overtime, penalty rates, leave entitlements and other conditions. If no award or enterprise agreement applies, the National Minimum Wage is the floor: $26.44/hour, or $1,004.90 per 38-hour week, from the first full pay period on or after 1 July 2026 (Fair Work Commission Annual Wage Review 2025-26 decision). Award rates almost always sit above this, so check the award first.
Common awards for small businesses:
| Award | Code | Typical Industries |
|---|---|---|
| General Retail Industry Award | MA000004 | Shops, retail stores |
| Hospitality Industry Award | MA000009 | Restaurants, cafes, hotels |
| Building and Construction Award | MA000020 | Tradies, builders |
| Clerks, Private Sector Award | MA000002 | Office workers, admin |
| Hair and Beauty Industry Award | MA000005 | Salons, barbers |
| Fast Food Industry Award | MA000003 | Fast food, takeaway |
Use the Fair Work Award Finder to find yours.
3Determine the Employment Type
- Full-time, 38 ordinary hours/week, all leave entitlements
- Part-time, regular hours below 38/week, pro-rata leave
- Casual, no guaranteed hours, receives a 25% casual loading instead of paid leave. The casual National Minimum Wage (the $26.44 base plus the 25% loading) is $33.05/hour, from the first full pay period on or after 1 July 2026.
Important: You can't just call someone casual if they work regular, predictable hours. Under Fair Work's casual employment rules, eligible employees can notify you that they want to change to permanent employment after a qualifying period, so classify carefully.
4Set Up Superannuation
Every employer must pay super guarantee (SG) contributions for eligible employees.
Current SG rate: 12% of ordinary time earnings, up from 11.5%. This is the final scheduled increase, 12% is the long-term rate.
Key rules:
- Pay super at least quarterly (within 28 days after each quarter ends).
- Employees choose their own fund, if they don't nominate one, request their stapled super fund via ATO online services before defaulting them anywhere.
- Super applies from the first dollar earned, the old $450/month threshold was abolished in 2022.
- Super is payable on ordinary time earnings (OTE), base pay, commissions and most shift loadings, but generally not overtime.
| Quarter | Period | Super Payment Due |
|---|---|---|
| Q1 | 1 Jul to 30 Sep | 28 October |
| Q2 | 1 Oct to 31 Dec | 28 January |
| Q3 | 1 Jan to 31 Mar | 28 April |
| Q4 | 1 Apr to 30 Jun | 28 July |
Late super triggers the Superannuation Guarantee Charge (SGC), the shortfall plus interest plus a $20-per-employee-per-quarter admin fee, and none of it is tax-deductible. Note that the government has announced "Payday Super" (super paid at the same time as wages) to start from 1 July 2026, so quarterly batching is on its way out, paying super each pay run now is good practice.
You can sanity-check any employee's contribution with the OneBookPlus superannuation guarantee calculator before you process the run.
5Register for Single Touch Payroll (STP)
STP is mandatory for all employers. Every pay run, your software reports to the ATO:
- Gross wages
- PAYG tax withheld
- Super liability
- Allowances and deductions
There are no end-of-year payment summaries, employees see their income statement in myGov. STP Phase 2 (mandatory since 1 January 2022) adds more granular reporting of income types, allowances and the reason for any termination.
Running Your First Pay Run
Step 1: Calculate Gross Pay
Start with the employee's base rate from their award.
Example: A Level 2 retail employee (MA000004) working 30 hours:
- Base rate: $26.05/hour
- Gross pay: 30 × $26.05 = $781.50
With 5 Saturday hours (1.25x penalty):
- 25 weekday hours: 25 × $26.05 = $651.25
- 5 Saturday hours: 5 × $32.56 = $162.80
- Gross pay: $814.05
Step 2: Add Allowances
Awards may require allowances for specific conditions, meal allowances for overtime, uniform/laundry allowances, tool allowances for tradespersons, first aid allowances or vehicle allowances. Some are taxable and reportable through STP; check your specific award and the ATO's allowance treatment.
Step 3: Calculate PAYG Withholding
PAYG withholding is income tax you deduct from gross pay and send to the ATO. The amount depends on earnings, whether the employee has lodged a Tax File Number declaration, whether they claim the tax-free threshold, and any HELP/HECS (now STSL) study debt. STSL repayments kick in once income reaches the relevant threshold (the FY2025-26 first repayment threshold was around $67,000 of annual income; check the ATO's study and training loan repayment thresholds for the current year before your first pay run).
Example: An employee earning $814.05/week, claiming the tax-free threshold, no study debt:
- PAYG withholding: ~$99
- Net pay: $814.05 − $99 = $715.05
Use the OneBookPlus PAYG withholding calculator to get the exact figure from the current ATO tax tables for any pay.
Step 4: Calculate Super
Super contribution: $814.05 × 12% = $97.69
This is on top of wages, you don't deduct it from their pay.
Step 5: Issue a Payslip
Payslips are due within 1 working day of payment. They must include:
- Employer name and ABN
- Employee name
- Pay period and date
- Gross and net amounts
- Hourly rate and hours worked
- Loadings, allowances and penalty rates (separately itemised)
- Deductions (PAYG, salary sacrifice)
- Super contributions (and the fund they were paid to)
- Leave balances (best practice; required to be available)
Missing or false/misleading payslips can attract significant Fair Work penalties per breach, so don't treat them as optional.
Penalty Rates & Leave
Penalty Rates
Penalty rates vary by award, always confirm against your specific award, but typical ranges are:
| When | Typical Rate |
|---|---|
| Saturday | 1.25x to 1.50x |
| Sunday | 1.50x to 2.00x |
| Public holiday | 2.00x to 2.50x |
| Evening/night shift | Base + 10 to 15% loading |
| Overtime (first 2 hours) | 1.5x |
| Overtime (after 2 hours) | 2.0x |
Leave Entitlements (Full-time)
| Leave Type | Annual Entitlement |
|---|---|
| Annual leave | 4 weeks (20 days) |
| Personal/carer's leave | 10 days |
| Compassionate leave | 2 days per occasion |
| Long service leave | ~8.67 weeks after 10 years (varies by state) |
| Parental leave | Up to 12 months unpaid (plus government Paid Parental Leave) |
Annual leave accrues progressively across the year; you can estimate an employee's balance with the OneBookPlus annual leave calculator. Casuals receive no paid leave, the 25% loading compensates for this.
Common Payroll Mistakes
1Underpaying Award Rates
The #1 compliance issue. Fair Work audits small businesses regularly, and underpayment, even unintentional, results in back-pay and penalties. Since 1 January 2025, intentional ("wage theft") underpayment can also be a criminal offence.
2Late Super Payments
The SGC includes the super owed + interest + a $20 admin fee per employee per quarter. None of it is deductible, so a small cash-flow slip becomes an expensive, permanent cost.
3Not Keeping Time and Pay Records
You must keep employee records, including hours worked, start/finish times, breaks and overtime, for at least 7 years.
4Misclassifying Employees as Contractors
If someone works regular hours, uses your tools and you control how they work, they're likely an employee regardless of what the contract says. Sham contracting carries its own penalties.
5Forgetting Casual Conversion
Keep an eye on casuals working regular, predictable hours, Fair Work's employee choice pathway lets eligible casuals move to permanent employment, and you have obligations to respond.
How OneBookPlus Helps
OneBookPlus is an all-in-one Australian business platform, bookings, quotes, invoicing, jobs, CRM and accounting on a single connected finance hub, built GST/ABN/BAS-native and hosted in AWS Sydney. The core platform starts on a genuinely free $0 plan, so you can run quotes, jobs and invoicing for your business at no cost.
For payroll specifically, OneBookPlus offers a rostering and payroll module (a paid add-on) that handles the steps above for you:
- Award-aware rates, pre-loaded rate tables across hospitality, retail, construction, cleaning and more
- Automatic penalty rates, Saturday, Sunday, public holiday and overtime calculations
- PAYG withholding using the current ATO tax tables
- Super tracking at the 12% rate with quarterly due-date reminders
- Compliant payslips delivered by email or employee portal
- Year-to-date payroll summary (gross wages, PAYG withheld, employer super), the figures that feed your STP lodgement. OneBookPlus does not lodge Single Touch Payroll pay events to the ATO, so you still report each pay run through STP-enabled software
- Time and attendance, clock in/out via phone with GPS
- Leave management, automatic accrual and balance tracking
- Public holiday detection, national and state-specific
Because payroll sits next to your invoicing, jobs and accounting in the same system, your wage costs flow straight into your reporting and BAS prep, no exporting between disconnected tools.
Frequently Asked Questions
How do I pay an employee in Australia for the first time? Register for PAYG withholding with the ATO, work out the correct award or National Minimum Wage rate ($26.44/hour from the first full pay period on or after 1 July 2026), set up Single Touch Payroll software, then each pay run calculate gross pay, withhold PAYG tax, add 12% super on top, and issue a payslip within one working day.
How much superannuation do I have to pay an employee? 12% of ordinary time earnings for FY2026-27, paid from the first dollar earned and at least quarterly (28 Oct, 28 Jan, 28 Apr, 28 Jul). You can check a figure with the superannuation guarantee calculator.
Do I have to pay casual employees more? Yes. Casuals get a 25% casual loading on top of the base rate in lieu of paid leave, taking the casual National Minimum Wage to $33.05/hour from the first full pay period on or after 1 July 2026. Award casual rates are usually higher again.
Get Payroll Right From the First Pay
Before you process a pay run, confirm the numbers in seconds with the free PAYG withholding calculator and superannuation guarantee calculator, then bring payroll, invoicing and accounting together on the OneBookPlus finance platform, free to start.
