Can a sole trader have employees?

Can a sole trader have employees?

Being a sole trader does not necessarily mean you have to operate your business alone. In short, yes – as a sole trader you are permitted to hire employees. As an employer you must comply with the legal obligations that any other employer has.

Being an employer in Australia consists of various responsibilities and there are certain minimum standards that must be met if you hire employees to work for your business. Some of these working standards include providing employees with work entitlements such as annual leave, superannuation and minimum wage. 

More specifically, as an employer your sole trader company must meet the following requirements. 

Work entitlements

Depending on the type of employee, you must provide entitlements to each worker. This includes minimum wage, leave entitlements and notice periods for termination. 

Superannuation

Employers are legally obligated to contribute 9.5% of their employee’s time wage to their superannuation account. Superannuation payments need to occur at least 4 times a year by the quarterly due dates, otherwise a late payment fee will be incurred.  

Right to work requirements 

When employing staff, all employers in Australia must ensure that employees have a right to work in Australia. You should ensure your employees are either: 

  1. Australian citizens
  2. Permanent residents
  3. Temporary residents with a visa permitting them to work in Australia

Employer Insurance 

There are different types of insurance which are compulsory for Australian businesses. If you are a sole trader and you hire employees, you must obtain workers’ compensation insurance or public liability insurance. If you own a motor vehicle, then you must also obtain third party personal injury insurance. 

Workplace health and safety measures 

Most importantly, you are required to ensure that your workplace meets the Workplace Health and Safety regulations. This generally requires you to implement risk management and practices which remove adverse risks in the work environment.

Key takeaways for sole traders 

Sole traders can hire employees. They have the same duties and obligations as any other business entity that is an employer. You should note that you will not be able to become an ‘employee’ yourself of the entity. 

If you require further advice in relation to hiring employees or employment law, you can contact us on 1300 337 997.

About Kristine Tran

Kristine TranKristine is a legal intern at OpenLegal. She is a fifth year UTS law student nearing the final stages of her law degree. She has previously worked for a boutique law firm and volunteered as a paralegal with the Refugee Advice and Casework Services (RACS).