Can a Sole Trader Have Employees? Rules & Guide

If you’re a sole trader or thinking of setting up a new business, you may be asking yourself: can a sole trader have employees? The short answer is, you can, but there are specific legal rules and responsibilities to consider before hiring your first team member.

This guide will go into detail about what’s allowed and what’s required as a sole trader, and offer a few tips for managing your new employees (including employee finances) effectively.

Table of contents
Can a sole trader hire employees? No. of employees allowed Types of employees suitable for sole traders Legal obligations Best practices Wise Business: For global payroll

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Can a sole trader hire employees?

Yes, a sole trader in Australia can legally hire employees¹.

While the term “sole trader” might suggest that you need to work on your own, the structure simply means the business is owned and controlled by one individual. You essentially are the business and are personally responsible for everything, including its debts. But you can still employ other people to help.

Hiring staff as a sole trader lets you:

• Bring in skills you don’t have yourself.
• Scale up and expand your capacity to take on more clients or larger clients.
• Free up time so you can focus on strategy and growth.

As the business owner, you are responsible for meeting all employer obligations, like paying superannuation and providing fair work conditions for these employees.

How many employees can a sole trader have in Australia?

There is no legal limit on the number of employees that a sole trader business can have. You’re allowed to hire one casual worker, or a team of dozens of full-time employees, depending on the needs of your business. The only limitation is that you can’t hire yourself⁷.

The key thing is making absolutely sure you are meeting all your obligations as an employer. We will discuss more on this below.

Types of employees suitable for sole traders

Hiring employees as a sole trader is very similar to how any other business brings in workers. You’ll need to consider the roles you need to fill and the legal requirements, such as contracts and entitlements. There’s also budgeting to account for — you need a steady cash flow to support ongoing employee costs.

There are multiple types of workers you can hire for your sole trader business. What’s best will depend on the nature of the work and the flexibility you need.

Let’s start by looking at the types of employees that you can hire as a sole trader.

Full-time employees

Full-time employees work an average of 38 hours or more and receive the full suite of employee entitlements like paid leave². They might be suitable if you need long-term stability in roles that support core processes year-round.

Part-time employees

Any employees working fewer than 38 hours per week on a regular basis are classed as “part-time”³. Like full-time employees, they are entitled to the same minimum benefits, but on a pro rata basis calculated proportionally to the hours they work. Part-time employees offer a good balance between stability and flexibility.

Contractors and freelancers

Contractors and freelancers are independent workers who invoice for their services. They aren’t technically employees, and are often sole traders themselves, using their own tech and tools from remote locations⁴. Contractors aren’t entitled to benefits like paid leave. They can be cheaper and useful for supporting specialist tasks.

👆Click here to checkout our guide on how to distinguish between independent contractors vs employees

Apprentices and trainees

Bringing in apprentices for structured training and on-the-job learning can help to attract new talent as you grow your workforce⁵. They get the same pay entitlements as full-time and part-time workers, such as annual and sick leave.

Casual employees

Casual employees don’t have guaranteed hours but typically work at a higher pay rate to make up for the lack of leave entitlements⁶. They can be useful for extra help during peak seasons and holidays, or if you want flexibility without committing to regular hours.

Legal obligations when hiring an employee as a sole trader

When hiring staff as a sole trader, you’ll take on the same responsibilities as any other Australian employer. The baseline obligations don’t change, just the scale of payroll management. It’s very important that you’re fully aware of all your responsibilities, as there are quite a few things to consider and sort out.

All the minimum entitles for employees are set out in the National Employment Standards (NES)⁸. This covers things like maximum weekly hours, annual leave, and superannuation contributions.

Contracts and fair pay

Every employee should have a clear written contract that sets out their pay and conditions like working hours. You can include extra entitlements in contracts, but you can’t ever reduce them below the legal minimum. This is the same for salaries, too — you must pay at least the minimum wage set by the Fair Work Commission.

The current national minimum wage in Australia is $24.95 per hour⁹.

Tax (PAYG withholding)

When you pay workers, you’ll need to withhold a certain amount from the payments as tax. The Australian Taxation Office (ATO) states that you must register for pay as you go (PAYG) withholding before your first employee payment. It’s easier to register for PAYG if you have an Australian Business Number (ABN) — all sole traders are entitled to one.

After registering, you can then deduct income tax from your employee’s wages and send it to the ATO. You will also be responsible for issuing payslips and completing payment summaries annually.

Superannuation

Another key obligation is handling superannuation, or “super,” as it is often known. You are legally required to pay this to workers to provide for their retirement. The current super guarantee rate is 12% (as of 1 July 2025), which means you must contribute an extra 12% on top of an employee’s ordinary earnings into their nominated super fund¹⁰.

👆Read our guide on superannuation for employees in Australia

Leave entitlement

There are several types of leave employees are entitled to: annual, sick and carer’s, and parental. All full-time and part-time workers get at least four weeks of leave for every 12 months they work. They also get to take time off for any personal illness or injury. The type of leave and amount vary based on the type of worker. Casual workers, for example, are not entitled to paid leave.

Work health and safety (WHS) and insurance

You also have a legal duty to make the workplace safe and secure for all employees under WHS laws¹¹. This covers things like using equipment correctly and providing training to reduce safety risks. As an employer, you’ll need to take out a workers’ compensation insurance policy to make sure your staff are covered in case of injury at work.

Record keeping

Finally, you need to document everything with accurate records. The Fair Work Ombudsman states that employers must keep a record of time worked, wages, super contributions (and more) for at least 7 years¹².

Additional tip: The rules can evolve, so it’s vital to keep on top of new legislation. For example, from 26 August 2025, all businesses with 15+ employees will have to give their workforce the “right to disconnect” outside work hours⁸.

Best practices when managing employees as a sole trader

There are lots of laws and compliance issues when hiring staff. But don’t lose sight of the need to create a productive and positive environment for your workers to thrive.

Here are a few best practices to help with managing employees as a sole trader.

Be clear and consistent - From the start, be upfront and very clear about your employee’s work hours, job responsibilities, and performance expectations. Document these in writing where possible so everyone knows what’s expected. And double-check that you’re doing your part in terms of legal obligations.

Open a business bank account - Get all your systems and records in order — everything else flows from here. Opening a business bank account is recommended by the government, even for sole traders. You can use this to separate your finances so employee payments don’t mix with personal funds. And it takes the hassle out of bookkeeping.

Manage team size - You might benefit from testing the waters with a casual or part-time worker first, but what your business needs, at any given moment, should guide your decisions. Always keep an eye on workflow and client demand so you don’t overstaff too quickly and take on more than you can handle.

Use payroll or accounting software - Integrate your accounting software with your business bank account to make it easier to track and manage your employees’ wages, tax, and super contributions. Again, this makes compliance easier, saving you time on admin so you can prioritise other things.

Hire globally when it makes sense - Sole traders can access a global talent pool through remote working. Hiring overseas contractors and freelancers for roles like virtual assistants or even writers can provide specialised skills without taking on the full costs or commitment of local full-time staff.

Wise Business: Effectively manage global payroll

Managing employee finances is one of the most challenging aspects of running a sole trader business, especially if you don’t have experience with accounting. This gets even more complex when a sole trader has in-house or contracted staff that are operating overseas. Global payroll involves tons of admin, layers of reports for filing, and high costs managing business transactions. This is where alternate solutions like Wise Business come into play.

Wise Business gives a wide range of features that aids in simplifying staff payments, tax reporting, and employee expenses management. For sole traders, this means less time wrestling with different platforms, and time saved on admin with fewer errors.

Wise Business helps streamline overseas business payments without foreign transaction fees, saving up to 3x compared to other providers.

• Free to register — Send money to 140+ currencies with no hidden exchange rate markups
• Make up to 1,000 transfers at once with the Wise batch payments feature
• Fast, low-cost payouts to customers, freelancers, employees, investors, and suppliers globally
• Automate invoice payments, recurring transfers, and international payroll
• Fast and fully secure payments through Wise, even for large amounts

Tired of hidden fees and complex processes when making overseas payments?

Start sending with a Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

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Sources:

1. Business Gov Au - Sole Trader hiring people
2. Fairwork Gov Au - Full time employees
3. Afirwork Gov Au - Part time employees
4. Business Gov Au - Hiring contractors
5. Fairwork Gov Au - Apprentices and trainees
6. Fairwork Gov Au - Casual employees
7. ABR - Sole Trader
8. Business Gov Au - Pay, leave, and entitlements National Employment Standards (NES), right to disconnect
9. Business Gov Au - Register for pay as you go withholding minimum wages
10. Business Gov Au - Superannuation super for employers
11. Business Gov Au - Work health and safety
12. Fairwork Gov Au - Record keeping