Guide
Can a sole trader have employees? Yes, and here is what changes
A sole trader can employ people. You don’t need a company to hire. What changes is the list of obligations: PAYG withholding, super on every payday, workers compensation, award pay and record keeping. Here is what business.gov.au and the ATO expect from the day you hire, and the insurance that comes with it.
- You don’t need a company to hire
- The obligations that start with your first employee
- Workers compensation thresholds by state
Yes, a sole trader can hire employees
Being a sole trader describes who owns the business, not how many people work in it. business.gov.au describes a sole trader as an individual running the business, and a sole trader can employ staff. The trade-off is that you carry the obligations personally, because there is no company between you and the business, and your personal assets sit behind its debts.
Many sole traders stay sole traders with a few staff. Others move to a company once the payroll and the liability grow. Our guide to sole trader vs company covers that choice.
What starts the day you hire
| Obligation | What business.gov.au and the ATO say |
|---|---|
| PAYG withholding | Register before you pay your employees for the first time. You only register once |
| Superannuation | The super guarantee is 12% of qualifying earnings for employees aged 18 and over, and for under-18s working more than 30 hours a week. From 1 July 2026, super is paid with each payday rather than quarterly |
| Workers compensation | You must have workers compensation insurance. The scheme and threshold depend on your state |
| Award and NES | Meet the relevant award and the National Employment Standards, and give each new employee the Fair Work Information Statement |
| Tax file number | Ask for a TFN declaration. Without one you withhold at the highest rate |
| Records | Keep employment records for 7 years, and tax and super records for 5 |
When workers compensation starts, by state
| State | Threshold |
|---|---|
| NSW | From the first worker, unless you pay $7,500 or less a year with no apprentice or trainee and no group membership |
| Victoria | Once rateable remuneration passes $7,500 a year, or as soon as you hire an apprentice or trainee |
| Queensland | From the first worker, with WorkCover Queensland |
| South Australia | Register within 14 days of employing, unless remuneration is under $16,806 in 2026-27 and no worker is injured |
| WA and Tasmania | From the first worker, with an insurer licensed by WorkCover WA or the WorkCover Tasmania Board |
Our workers compensation pages for each state explain the scheme, the premium basis and how a broker arranges it.
Your own cover as the owner, and your employees’ cover
The two are separate policies, and a sole trader often needs both.
Usually covered
- Workers compensation for your employees, from the threshold in your state.
- Public liability for injury or damage your business causes to others, which employees extend.
- Income protection or personal accident for you, because workers compensation usually doesn’t cover the sole trader.
- Tools, vehicle and a business pack as before, with employees now using them.
Usually not covered
- Your own injury under workers compensation, in most schemes.
- A contractor with their own ABN, unless the scheme deems them a worker. Check before you assume.
- Fines for underpaying staff.
- Unpaid super, which the ATO pursues with the super guarantee charge.
Compare the covers that come with hiring
Sole trader employee questions
Can a sole trader have employees in Australia?
Yes. A sole trader is an individual running a business and can employ staff. You take on PAYG withholding, super, workers compensation, award pay and record keeping, personally.
Do I need to become a company to hire staff?
No. You can hire as a sole trader. Some owners change to a company later for liability or tax reasons, which is a separate decision.
Does a sole trader need workers compensation?
Once you employ, yes, from the threshold in your state. It covers your employees. Your own income needs income protection or personal accident cover, because most schemes don’t treat the sole trader as a worker.
How much super does a sole trader pay employees?
The super guarantee is 12% of qualifying earnings for employees aged 18 and over, and for under-18s who work more than 30 hours a week. From 1 July 2026 it’s paid with each payday.
Can a sole trader hire a casual or a family member?
Yes. The same obligations apply, including super, award rates and workers compensation.
Keep reading
More guides
Sources
- business.gov.au: Hiring employees
- ATO: Take charge of your upcoming employer obligations
- business.gov.au: Difference between a sole trader and a company
- icare NSW: Who needs a workers compensation policy
- WorkSafe Victoria: Do I need to register for WorkCover insurance?
- ReturnToWorkSA: Register for cover
- business.gov.au: Types of business insurance
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