Hiring your first employee is an important step for any business, but it also brings a new set of legal, payroll and workplace obligations.
Some requirements need to be dealt with before the employee starts. Others must be ready before the first pay run or only apply once particular thresholds are reached.
The safest approach is to set things up properly from the beginning. That means confirming the employee's correct pay and classification, documenting the employment terms, setting up payroll and superannuation, checking WorkCover requirements and making sure your record-keeping systems are ready.
Hiring your first employee? Get the basics right before day one rather than trying to fix them later.
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Before deciding what to pay, check whether the role is covered by a Modern Award or enterprise agreement.
If an Award applies, you also need to identify the correct classification within that Award.
The classification can affect:
- minimum hourly or weekly rates
- penalty rates
- overtime
- allowances
- breaks
- rostering requirements
- other employment conditions.
An employment contract cannot provide less than the minimum entitlements under the National Employment Standards, an applicable Award or an enterprise agreement.
Underpayments can accumulate over time, so getting the classification and pay rate right at the start is important.
The Checklist Before Your First Employee Starts
1. Choose the Correct Employment Type
Decide whether the employee will be full-time, part-time or casual.
The choice affects pay, leave and other entitlements.
Do not use casual employment simply because it appears administratively easier. The Fair Work Act contains a statutory definition of casual employment, and the actual nature of the employment relationship matters.
Eligible casual employees also have an employee choice pathway that can allow them to seek permanent employment in certain circumstances.
2. Put the Employment Terms in Writing
A written employment contract is strongly recommended.
It should clearly address matters such as:
- position and duties
- employment status
- hours of work
- pay
- probation
- leave
- confidentiality
- intellectual property
- termination
- any post-employment obligations.
The contract should work together with the National Employment Standards and any applicable Award or enterprise agreement, not attempt to replace them.
3. Give the Required Fair Work Information Statements
Every new employee must receive the Fair Work Information Statement.
Casual employees must also receive the Casual Employment Information Statement. Fixed-term employees must receive the Fixed Term Contract Information Statement where applicable.
These are statutory documents, not optional onboarding materials.
Employers should also remember that the Casual Employment Information Statement must be provided again at specified points during a casual employee's employment.
4. Set Up PAYG Withholding and Payroll
Before making payments from which tax must be withheld, make sure the business is appropriately registered for PAYG withholding.
Your payroll system should also be set up to meet Single Touch Payroll reporting requirements.
This is also the time to make sure the system can correctly record:
- ordinary hours
- overtime
- allowances
- leave
- superannuation
- deductions
- PAYG withholding.
Errors in the payroll setup can quickly become repeated underpayments if they are not identified early.
5. Set Up Superannuation and Payday Super
From 1 July 2026, Payday Super changed the timing of superannuation guarantee payments.
Employers now generally need to calculate super in connection with each payday and ensure the contribution reaches the employee's super fund within the applicable statutory timeframe. The ordinary timeframe is generally seven business days after payday, although extended periods can apply in specific circumstances, including for new employees.
You should also make sure the employee is given any required choice-of-fund documentation and that stapled fund or default fund requirements are dealt with where relevant.
The important point is that superannuation should now be built into the payroll process from the beginning rather than treated as a separate quarterly task.
6. Check Whether WorkCover Registration Is Required
Do not assume that hiring one employee automatically means WorkCover registration is required, but check the position immediately.
In Victoria, an employer generally needs to register for WorkCover where annual remuneration is more than, or is expected to be more than, $7,500.
Registration is also required where an employer has an apprentice or trainee, regardless of annual remuneration.
The definition of remuneration for WorkCover purposes can extend beyond ordinary wages, so businesses close to the threshold should check the position carefully.
7. Check Payroll Tax, But Do Not Assume It Applies
Payroll tax is different from PAYG withholding.
It is a Victorian state tax that may apply once taxable Australian wages exceed the relevant threshold.
From 1 July 2025, Victoria's general annual payroll tax-free threshold is $1 million, with a monthly threshold of $83,333. The calculation can change where the employer has interstate wages, is part of a group or employs for only part of the financial year.
A business hiring its first employee may be well below the threshold, but related businesses and grouping rules can materially change the position.
8. Set Up Leave, Payslips and Employment Records
Compliance does not end once the contract is signed.
Your payroll and HR systems should be able to accurately record hours worked, wages, leave, superannuation and other employment information.
Employers also need to issue compliant payslips and retain required employment records.
For a growing business, a reliable payroll system is far easier to establish with the first employee than to reconstruct after several employees have already been hired.
Casual, Part-Time or Full-Time: The Classification Matters
A casual employee is not simply someone who works irregular hours.
The legal test looks at the employment relationship, including whether there is a firm advance commitment to ongoing work.
Casuals can also use the employee choice pathway under the National Employment Standards if they meet the eligibility requirements and believe they no longer satisfy the casual employment definition. For small business employers, the relevant minimum employment period is generally 12 months.
Employment arrangements should therefore be reviewed if the role changes substantially over time.
What Continues After Day One?
Employment compliance is ongoing.
Employers need to continue checking that:
- wages remain above Award minimums
- Award classifications remain correct
- payslips and records are compliant
- leave is accruing correctly
- superannuation is paid within the Payday Super timeframe
- casual information statement obligations are met
- payroll tax thresholds are monitored as wages increase
- workplace policies and safety systems remain appropriate.
A payroll system that was correct when the employee started can become non-compliant if pay rates, Awards or legislation later change.
How Phan Campbell & Associates Can Help
At Phan Campbell & Associates in Footscray, Victoria, our legal and accounting teams can help businesses set up their first employment arrangements properly.
Our commercial and employment lawyers can assist with Award coverage, employment status, contracts and workplace obligations.
Our accounting team can assist with payroll setup, PAYG withholding, superannuation and payroll compliance.
Having both teams involved helps ensure that the employment contract and payroll system reflect the same legal and financial obligations.
If you are about to hire your first employee, speak to us before the employment arrangements are finalised.
Book a Free Client Assessment →
Frequently Asked Questions
1. Do I legally need a written employment contract?
Not in every case. An employment relationship can exist without a formal written contract. However, a written agreement is strongly recommended because it records the agreed terms and reduces the risk of later disputes.
2. Do I need WorkCover for one employee?
Possibly. In Victoria, registration is generally required if annual remuneration exceeds, or is expected to exceed, $7,500 or if you employ an apprentice or trainee.
3. When do I need to pay super?
Under Payday Super, which commenced on 1 July 2026, employers generally need to ensure super contributions reach the employee's fund within the required timeframe following each payday. The ordinary period is generally seven business days, although exceptions and extended periods can apply.
4. Does payroll tax apply as soon as I hire someone?
No. Payroll tax generally depends on the amount of taxable Australian wages paid by the employer or relevant group. In Victoria, the general annual threshold is currently $1 million, although grouping, interstate wages and other rules can affect the calculation.
This article contains general information only and does not constitute legal, accounting or tax advice. Employment obligations depend on the particular business, employee and workplace arrangements. Professional advice should be obtained for your circumstances.