The moment you hire someone in a second state, your compliance obligations roughly double. Not because the rules are twice as complex, but because every state has its own thresholds, rates, registration requirements, and deadlines for payroll tax, workers compensation, long service leave, and award interpretation.
Most business owners discover this the hard way. They hire a remote employee in Victoria while based in NSW, and six months later receive a letter from Revenue Victoria asking why they have not registered for payroll tax. Or they assume NSW long service leave rules apply to their Melbourne-based staff and get the entitlement calculation wrong.
This checklist covers everything you need to know when employing across multiple Australian states and territories.
Payroll tax is the obligation that catches most growing businesses. The critical point is this: thresholds are calculated on your total Australia-wide wages, not wages in each state separately.
If you have $800,000 in wages in NSW and $400,000 in Victoria, your total Australian wages are $1,200,000. That exceeds Victoria's $1,000,000 threshold, meaning you owe payroll tax in Victoria even though your Victorian wages alone might seem modest.
You must register for payroll tax in a state if:
The thresholds for FY2026-27 vary significantly. NSW sits at $1,200,000. Victoria is $1,000,000 (increased from $900,000 on 1 July 2025). Queensland is $1,300,000. Western Australia is $1,000,000. South Australia is $1,500,000. Tasmania, the ACT, and the Northern Territory each have their own thresholds.
For the full breakdown of every state's rates, thresholds, and monthly limits, read our complete payroll tax thresholds guide.
The grouping trap: If you operate multiple entities (e.g. a trading company and a holding company, or related businesses with common directors), the wages of all grouped entities are combined for threshold purposes. This prevents businesses from splitting operations across entities to stay below thresholds. Grouping rules differ by state but generally catch related companies, common directors, and businesses under common control.
Victoria's additional complexity: Victoria has the most layered payroll tax structure of any state. Beyond the base rate of 4.85%, the threshold phases out for employers with national wages between $3 million and $5 million (reducing by $1 for every $2 above $3 million). Employers above $5 million receive no threshold at all. Two surcharges also apply on Victorian wages for larger employers: the Mental Health and Wellbeing Surcharge (0.5%, for national wages above $10 million) and the COVID-19 Debt Temporary Surcharge (0.5%, applying until 30 June 2033). Combined, these add 1% on Victorian wages for employers with national wages above $10 million, and 2% for those above $100 million. Regional Victorian employers paying at least 85% of their taxable wages to regional employees qualify for a reduced rate of 1.2125%.
When you employ across multiple states, you apportion wages to the state where the work is performed. For a salesperson based in Queensland who travels to NSW for client meetings, the wages are generally apportioned to Queensland (where they are primarily based), though rules differ by state and extended periods working interstate can shift the obligation.
Remote workers are apportioned to the state where they physically work, not where your head office is located. This is increasingly relevant as more businesses hire remote staff across state lines. A developer working from their home in Melbourne for a Sydney-based company creates a Victorian payroll tax obligation for that employer if total Australia-wide wages exceed the $1,000,000 Victorian threshold.
Once registered in a state, you must lodge monthly payroll tax returns (typically due by the 7th of the following month) and an annual reconciliation (typically due in July, though exact dates vary by state). Each state has its own portal, login, and lodgement process. If you are registered in three states, that means three sets of monthly returns and three annual reconciliations.
Late registration penalties can be significant, potentially reaching up to 200% of unpaid tax plus daily interest charges. Revenue offices have become more aggressive in detecting unregistered employers, particularly through STP data matching with the ATO. The ATO shares payroll data with state revenue offices, meaning a Victorian employee appearing in your STP reports will be visible to Revenue Victoria even if you have not registered.
Workers compensation is compulsory in every state and territory. You must hold a policy in every state where you have employees performing work.
Each state operates its own workers compensation scheme with different:
You need a separate workers compensation policy in each state where employees are based. If your NSW business hires someone in Victoria, you need a Victorian policy covering that employee. You cannot simply extend your NSW policy to cover them.
The exceptions are extremely limited (certain categories of workers who travel between states briefly), and getting this wrong exposes you to significant penalties and uninsured liability. In NSW, employing without a workers compensation policy is an offence carrying penalties of up to $55,000 for a corporation and $5,500 for individuals, plus you become personally liable for any claims.
Having employees in multiple states means multiple premium calculations. Premiums are typically a percentage of wages, varying by industry classification and claims history. Average rates range from 1% to 3% of wages for office-based work, up to 5% to 8% for high-risk industries like construction.
Claims in one state can affect your experience rating in that state but typically do not directly affect premiums in other states (since they are separate policies with separate insurers). However, some large employer self-insurance arrangements and group schemes may have different rules.
A practical pain point: each state requires separate wage declarations, different classification codes, and different reporting formats. A business with employees in NSW, Victoria, and Queensland is managing three sets of declarations, three renewal cycles, and three claims processes.
Long service leave is entirely governed by state and territory legislation, and the rules differ more than most business owners expect. This is the area where multi-state employers make the most mistakes.
Australian states use two fundamentally different approaches to long service leave.
The lump entitlement model (NSW, Queensland, Western Australia, Tasmania, and under most federal pre-modern awards): Employees accrue a set entitlement that becomes available at a specific milestone. In NSW, employees are entitled to 2 months (8.6667 weeks) of leave after 10 years of continuous service. Queensland and Western Australia follow a similar structure of 8.6667 weeks after 10 years, though WA's recent legislative changes affect entitlements accruing after June 2022.
The progressive accrual model (Victoria): Victoria operates differently under the Long Service Leave Act 2018. Leave accrues progressively at 1 week for every 60 weeks of continuous service, which works out to approximately 0.867 weeks per year from the start of employment. Employees can first access their accrued leave after 7 years of continuous service. At the 7-year mark, that means roughly 6.07 weeks is available. At 10 years, approximately 8.67 weeks. At 15 years, approximately 13 weeks. The entitlement builds continuously rather than arriving as a lump sum at a vesting milestone.
Why this matters for multi-state employers: If you have a team member in NSW and one in Victoria who both started on the same date, the Victorian employee can access their accrued leave three years earlier than the NSW employee. Your payroll system needs to apply the correct accrual formula for each state, not a single national rule.
South Australia and the Northern Territory also have more generous structures than NSW, with SA providing 13 weeks after 10 years.
For the full state-by-state breakdown including pro-rata rules on termination, portable schemes, and cashing out provisions, read our leave entitlements by state guide.
This is where the differences create the most risk for employers.
In Victoria, if employment ends after 7 years for any reason (including dismissal for misconduct), any accrued but untaken leave must be paid out. There is no "serious misconduct" carve-out in Victoria.
In NSW, pro-rata payment applies from 5 years, but only if the termination is by the employer for reasons other than serious and wilful misconduct, or by the employee due to illness, incapacity, or domestic or other pressing necessity. After 10 years, payment applies on termination for any reason.
In Queensland, pro-rata applies from 7 years on termination by the employer (other than for serious misconduct) or by the employee due to illness, incapacity, or domestic or other pressing necessity.
Getting these rules wrong can mean either underpaying an employee (creating a Fair Work or state court claim) or overpaying (which may not be recoverable).
The general principle is that long service leave is governed by the legislation of the state where the employee is based. If an employee in your Melbourne office transfers to your Sydney office, the applicable legislation changes. The treatment of service accrued under one state's rules when an employee moves to another state is genuinely complex and often requires specific legal advice.
Key questions that arise:
There are no simple universal answers. The interaction between state acts when an employee moves interstate is one of the most genuinely complex areas of employment law for multi-state employers. If you have employees transferring between states, get specific advice before calculating their entitlements.
Several states operate portable long service leave schemes for specific industries, most commonly construction. These schemes allow workers who move between employers to accumulate leave credits across the industry. If you employ workers in construction, community services, or contract cleaning (depending on the state), you may have obligations to register and contribute to the relevant portable scheme.
NSW expanded its portable scheme to include community services workers from 1 July 2025, with those workers able to access leave after 7 years of recognised industry service across multiple employers. Victoria has portable schemes for construction workers (under CoINVEST) and community services workers (under the Long Service Benefits Portability Act 2018).
Registration deadlines are tight. In Victoria, employers must register with the relevant portable scheme within 7 days of employing an eligible worker and submit quarterly returns even if no workers are employed that quarter.
If your employees are covered by Modern Awards under the Fair Work system (which covers most private sector employees), the award itself applies nationally. However, several award provisions have state-specific elements.
Public holidays. Awards reference state and territory public holidays for penalty rate calculations. Public holiday schedules differ between states, affecting penalty rate costs. An employee in the ACT may have different public holidays than one in NSW, even though the two jurisdictions are geographically intertwined. Your payroll must correctly calculate penalty rates based on the public holidays of the state where each employee works, not where the employer is headquartered.
Award coverage. The same employee performing the same work in two different states is covered by the same Modern Award, but the non-award entitlements (long service leave, public holidays, workers comp) change. This means you cannot simply copy one employee's setup for another in a different state.
Redundancy provisions. While the NES provides a national minimum, some awards and state-specific provisions may offer additional entitlements. Be cautious about assuming national consistency when making redundancy decisions across states.
Use this when you hire your first employee in a new state.
Applying home-state rules everywhere. Your NSW long service leave rules do not apply to your Victorian employees. Your Victorian payroll tax threshold does not affect your NSW obligations. Each state is independent.
Forgetting the grouping rules. If you operate two related entities, one in NSW and one in Victoria, payroll tax grouping provisions combine their wages for threshold purposes. Many business owners set up separate entities thinking they can stay below thresholds in each state. State revenue offices actively audit for this.
Assuming payroll software handles it automatically. Xero, MYOB, and KeyPay all support multi-state payroll tax calculations and leave accrual rules. But they need to be configured correctly for each state. Incorrect setup is one of the most common sources of errors, particularly around payroll tax thresholds, long service leave accrual rates, and public holiday schedules. Test your configuration rather than assuming default settings are correct.
Missing registration deadlines. Payroll tax registration must occur before the end of the month in which you first exceed the threshold. Workers compensation coverage must be in place before the employee starts work. Portable scheme registration must happen within 7 days in Victoria. Missing any of these triggers penalties regardless of intent.
Not budgeting for the compliance overhead. Managing payroll tax returns in three states, workers comp policies with three insurers, three different long service leave accrual calculations, and three sets of public holiday schedules takes real time. Budget 2 to 4 hours per month of additional administration for each state you add. Or hand it to a provider who manages multi-state compliance as part of their service.
Do I need to register a business in another state to hire someone there?
Not necessarily. You can employ someone in another state without registering a separate business entity. However, you will likely need to register for payroll tax and workers compensation in that state. ASIC registration applies to the entity, not to each state of operation.
What if I only have one employee in another state?
You still need workers compensation coverage and potentially payroll tax registration (depending on your total Australia-wide wages). The obligations apply regardless of how many employees you have in each state. One remote employee in Victoria triggers the full range of Victorian employer obligations.
Can my payroll software handle multi-state compliance?
Xero, MYOB, and KeyPay all support multi-state payroll tax calculations and leave accrual rules. However, they need to be configured correctly for each state. Default settings may not reflect the correct thresholds, accrual rates, or public holiday schedules. Have your configuration reviewed by someone experienced with multi-state payroll.
What happens if I miss payroll tax registration in a state?
Late registration penalties can reach up to 200% of unpaid tax plus daily interest charges. State revenue offices increasingly use STP data from the ATO to identify unregistered employers, so the risk of detection is higher than many business owners assume.
How do I handle an employee who works across multiple states?
Payroll tax is apportioned based on where work is performed. Workers compensation should cover the primary state of employment. Long service leave follows the state where the employee is predominantly based. For employees who genuinely split their time evenly between states, seek specific advice from a payroll tax specialist.
Is there a single registration that covers all states?
No. Each state operates independently. There is no national payroll tax registration, no national workers compensation policy, and no national long service leave scheme. You must register and comply separately in each state where you have employees.
What about the ACT and territories?
The ACT, Northern Territory, and Tasmania all have their own payroll tax thresholds, workers compensation schemes, and long service leave legislation. The same principles apply: you must comply with the specific rules of each jurisdiction where you employ staff. Do not assume smaller jurisdictions have simpler rules. The ACT, for example, has a portable long service leave scheme covering multiple industries.
Scale Suite manages multi-state compliance for employers across Australia. Our team handles payroll tax registration and monthly returns in every state, workers compensation policy management, correct long service leave accrual calculations under each state's legislation, and award interpretation including state-specific public holiday schedules.
We currently manage multi-state payroll and compliance for clients operating across NSW, Victoria, Queensland, Western Australia, and South Australia. When you hire someone in a new state, we handle the registration, system configuration, and ongoing compliance so nothing falls through the cracks.
Request your free proposal or book a 30-minute call to discuss your multi-state obligations.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses. Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire - without the recruitment risk, training time, or full-time salary commitment.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses.Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire - without the recruitment risk, training time, or full-time salary commitment.
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