Arborist Payroll Australia: Hiring, Super & ATO Obligations Explained

Taking on your first employee is one of the biggest steps you will make as an arborist business owner. You have been running jobs solo (or maybe with a mate helping out here and there), and now the work is stacking up faster than you can fell a dead eucalypt. That is a good problem to have – but it comes with a stack of obligations that the ATO, Fair Work, and your state regulator will hold you to.

This guide walks you through everything you need to know before you bring someone onto your crew: the registrations, the payroll setup, the superannuation obligations, and the mistakes that catch arborists out more than any other trade. If numbers and compliance are not your strong suit, that is fine – but you do need to understand the basics and get them right from day one.

When It Is Time to Hire: Signs Your Solo Operation Needs Help

Not every busy period means you need a full-time employee. But if several of the following sound familiar, it is probably time to stop putting it off:

• You are turning down work. If you are regularly knocking back jobs because you cannot fit them in, you are leaving money on the ground.

• Jobs are taking longer than they should. Tree removals, stump grinding, and canopy reductions are faster and safer with a ground crew. If you are constantly rigging, climbing, and chipping alone, your productivity is suffering.

• Safety is becoming a concern. Working at height without a ground person is a serious risk. If you have been cutting corners on safety because there is nobody to spot you, that is a sign you need help.

• You cannot take a day off. If the business stops when you stop, you do not have a business – you have a job.

• Admin is piling up. Quoting, invoicing, scheduling, and chasing payments on top of the physical work is unsustainable. An employee on the tools frees you up to run the business.

If you are nodding along to three or more of these, it is time to seriously consider bringing someone on. The question is whether that person should be an employee or a contractor – and this is where a lot of arborists get into trouble.

Employee vs Contractor: The ATO’s Rules and Why Arborists Get This Wrong

This is the single most common compliance issue we see with arborist businesses. You find a qualified climber, they have an ABN, they send you an invoice, and you pay it. Simple, right?

Not necessarily. The ATO does not care what you call the arrangement. They care about the substance of the relationship. If someone works set hours, uses your equipment, wears your uniform, and only works for you – they are almost certainly an employee, regardless of whether they have an ABN.

How the ATO Determines the Difference

The ATO looks at several factors to determine whether a worker is a genuine contractor or an employee. The key considerations include:

• Control: Do you direct how, when, and where the work is done? If yes, that points to employment.
• Equipment: Does the worker supply their own major equipment (chipper, truck, climbing gear), or do they use yours? Using your gear points to employment.
• Financial risk: Does the worker bear financial risk for the work? A genuine contractor quotes a price and wears the cost if the job takes longer. An employee gets paid by the hour regardless.
• Ability to delegate: Can the worker send someone else to do the job? If they must turn up personally, that points to employment.
• Exclusivity: Does the worker perform similar work for other clients? If they only work for you, it looks like employment.

You can read the full ATO guidance on this at ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/employee-or-contractor.

Why This Matters for Arborists Specifically

The arborist industry is particularly prone to getting this wrong because:

1. It is common in the trade. Many arborists start out subcontracting to other operators, so the ABN-and-invoice model feels normal. That does not make it compliant.
2. The cost difference is tempting. Paying a contractor means no super, no PAYG withholding, no workers comp, and no leave entitlements. But if the ATO reclassifies that contractor as an employee, you will owe back-paid super (with interest and penalties), PAYG amounts, and potentially a Superannuation Guarantee Charge.
3. Workers compensation audits catch it. State-based workers compensation insurers regularly audit businesses in high-risk industries like arboriculture. If they find someone who should be classified as an employee, the consequences can be severe.

The bottom line: if someone is going to work on your crew regularly, under your direction, using your gear – set them up as an employee. It costs more upfront but protects you from far more expensive problems down the track.

The Hiring Checklist: Registrations and Setup Before Day One

Before your new employee picks up a chainsaw, you need several things in place. Here is your checklist:

Business Registrations

• [ ] ABN – You should already have this, but confirm it is active and your business details are up to date.
• [ ] Register for PAYG withholding – You must register with the ATO as a PAYG withholder before you pay your first employee. You can do this through the Business Portal or your BAS agent.
• [ ] Confirm your GST registration – If you are already registered for GST, no action needed. If you are not registered and your turnover is approaching $75,000, now is a good time to sort it out.

Employee Paperwork

• [ ] Tax File Number Declaration – Your new employee must complete a TFN declaration before they start. You lodge this with the ATO.
• [ ] Superannuation Standard Choice Form – Give your employee the opportunity to choose their super fund. If they do not nominate one, you will need to request their stapled super fund from the ATO.
• [ ] Fair Work Information Statement – You are legally required to provide this to all new employees. Download it from the Fair Work Ombudsman website.
• [ ] Employment contract – Not strictly mandatory for award-covered employees, but strongly recommended. It should cover hours, pay rate, duties, probation period, and termination terms.

Insurance and Workers Compensation

• [ ] Workers compensation insurance – This is compulsory in every state and territory. You must have a policy in place before your employee starts work. More on this below.
• [ ] Review your public liability and professional indemnity policies – Make sure your existing insurance covers employees, not just you as a sole operator.

Payroll Setup

• [ ] Choose a payroll system – Xero, QuickBooks Online, or another STP-compliant solution.
• [ ] Set up Single Touch Payroll (STP) – This is mandatory for all employers. Your payroll software will handle STP reporting, but you need to configure it correctly.
• [ ] Open a dedicated bank account for PAYG and super – This is not mandatory, but it is a smart move. Setting aside tax and super obligations in a separate account means you are never caught short when payment is due.
• [ ] Set up a regular pay cycle – Weekly or fortnightly is standard in the arborist industry.

If this checklist feels overwhelming, that is normal. Most arborists are experts at trees, not tax compliance. Our outsourced finance function is designed to handle all of this for trade-based businesses so you can focus on what you do best.

Understanding Award Wages for Arborists: The Horticulture Award

For detailed pay rates and benchmarks, see our comprehensive arborist award rates and payroll benchmarks guide.

Most arborist employees in Australia are covered by the Horticulture Award 2020 (MA000028). This modern award sets out minimum pay rates, hours, overtime, allowances, and leave entitlements for horticulture workers, including arborists.

Key Things You Need to Know

Classification levels: The award has multiple classification levels based on skill and qualifications. A qualified arborist with a Certificate III in Arboriculture will fall under a higher classification than a general labourer or ground crew member. The classification determines the minimum hourly rate.

Minimum pay rates: Award rates are updated annually, usually from the first full pay period on or after 1 July. Always check current rates on the Fair Work Ombudsman Pay Calculator before setting your employee’s pay – they change every year.

Overtime and penalty rates: If your employee works more than 38 ordinary hours per week, overtime applies. Saturday, Sunday, and public holiday work also attracts penalty rates. In arboriculture, early starts and weekend storm damage call-outs are common, so you need to understand these rates.

Allowances: The award includes allowances that may apply to arborist work, including first aid allowance, travel and vehicle allowances, and tool and equipment allowances.

Leave entitlements: Full-time employees are entitled to 4 weeks of paid annual leave per year, 10 days of paid personal/carer’s leave per year, compassionate leave, community service leave, and long service leave (governed by state legislation).

Can You Pay Above the Award?

Absolutely, and in the current market you probably will need to. Qualified arborist climbers are in high demand across Australia, and the award rate is a minimum, not a target. Just make sure the total pay always meets or exceeds the award minimum, including any applicable allowances and penalties.

If you are paying an annual salary rather than an hourly rate, you need to ensure the salary covers all award entitlements the employee would otherwise receive – including overtime, penalties, and allowances. This is called an annualised salary arrangement, and there are specific record-keeping and reconciliation requirements under the award. Get this wrong, and you risk underpaying your employee even if the headline salary looks generous.

Payroll Obligations: Super Guarantee, PAYG Withholding, and STP Reporting

Once your employee is on the books, you have three core ongoing obligations:

Superannuation Guarantee

You must pay the superannuation guarantee (SG) on top of your employee’s ordinary time earnings. The SG rate has been progressively rising toward 12% – always confirm the current rate for the financial year.

Key points:

• Super must be paid at least quarterly, by the 28th day after the end of each quarter (28 October, 28 January, 28 April, 28 July).
• Many arborist business owners find it easier to pay super each pay cycle rather than waiting until the quarterly deadline.
• If you miss the deadline, you are liable for the Superannuation Guarantee Charge (SGC), which includes the unpaid super, interest, and an administration fee – and it is not tax-deductible.
• You must pay super to the employee’s chosen fund, or their stapled super fund if they have not made a choice.

Example: If your ground crew member earns $1,200 per week in ordinary time earnings, and the SG rate is 11.5%, you owe $138 per week in super contributions. Over a quarter, that is approximately $1,794. Miss the deadline, and you will owe the SGC on top of that amount.

PAYG Withholding

You are required to withhold tax from your employee’s pay each pay cycle and remit it to the ATO. The amount depends on the employee’s earnings, their TFN declaration (residency status and tax-free threshold), and the ATO’s withholding tables.

Example: If your employee earns $1,200 per week and has claimed the tax-free threshold, the PAYG withholding amount is determined by the current ATO weekly tax table. Your payroll software calculates this automatically – but the TFN declaration must be lodged and the software configured correctly.

You report and remit withheld amounts via your Business Activity Statement (BAS), which is typically lodged quarterly (or monthly if your business is on a monthly cycle).

Single Touch Payroll (STP)

STP is mandatory for all employers. Every time you run a pay, your STP-enabled payroll software sends a report to the ATO containing gross wages, PAYG withholding amounts, superannuation liability information, and employee details.

At the end of the financial year, you make a finalisation declaration through STP, which replaces the old payment summary (group certificate) process. Your employees access their payment information through myGov.

STP is not something you do manually – your payroll software handles it. But you need to make sure it is set up, connected to the ATO, and working properly before you run your first pay.

Workers Compensation Insurance: Requirements by State

Workers compensation insurance is compulsory in every state and territory in Australia if you employ anyone – even one part-time employee. In high-risk industries like arboriculture, this is non-negotiable.

Each state and territory has its own scheme. NSW uses icare (via licensed insurers), Victoria has WorkSafe Victoria, Queensland has WorkCover Queensland, South Australia has ReturnToWorkSA, and the remaining states and territories use licensed private insurers.

What You Need to Know

• You must have cover before your employee starts. Arrange the policy during your setup phase, not on their first day.
• Premiums are based on your industry classification and wages. Arboriculture is classified as a high-risk occupation, so expect a higher premium rate than a desk-based business. Premiums are calculated as a percentage of your total wages bill.
• Penalties for non-compliance are severe. Operating without workers compensation insurance can result in significant fines, and you will be personally liable for any injury costs.
• Workplace safety matters. Beyond insurance, you have a duty of care under work health and safety legislation. Safe Work Australia provides guidance on managing risks in tree care work that you should be familiar with.

Example: If your annual wages bill is $65,000 and your industry premium rate is 8% (indicative – actual rates vary by state and claims history), your annual workers compensation premium would be approximately $5,200. Factor this into your job pricing.

Setting Up Payroll in Xero or QuickBooks

Most arborist businesses we work with use Xero or QuickBooks Online for accounting and payroll. Both handle STP reporting, PAYG calculations, super payments, and leave tracking.

Getting Started

1. Enable the payroll module in your accounting software. If you have been using Xero or QuickBooks just for invoicing, you will need to set up the payroll function – it is not always switched on by default.

2. Enter your business details including your ABN, PAYG withholding registration, and default super fund.

3. Add your employee with their personal details, TFN declaration information, super fund choice, pay rate, and employment type (full-time, part-time, or casual).

4. Set up pay items including ordinary hours, overtime rates, allowances, and deductions relevant to the Horticulture Award.

5. Connect to the ATO for STP. Both Xero and QuickBooks have a guided process for connecting to the ATO’s STP service. You will need your Software ID and ATO credentials.

6. Run a test pay before your employee’s first real pay day. Check the PAYG calculation, the super accrual, and the STP submission.

A Word of Caution

Payroll software makes the process manageable, but it does not make it foolproof. The software calculates based on what you tell it – if you enter the wrong award classification, the wrong hours, or the wrong super rate, it will faithfully calculate the wrong numbers.

This is one area where getting professional help at the setup stage saves you significant time and money. If you would rather hand off the entire payroll function, our outsourced finance function covers payroll processing, STP reporting, super payments, and BAS lodgement for arborist businesses across Australia.

Common Mistakes When Hiring Your First Employee

Here are the mistakes we see arborist businesses make repeatedly:

1. Treating an Employee as a Contractor

Worth repeating because it is the most expensive mistake on this list. If the ATO reclassifies your contractor as an employee, you can owe years of back-paid super, PAYG, penalties, and interest – potentially tens of thousands of dollars.

2. Not Registering for PAYG Withholding Before the First Pay

You must be registered as a PAYG withholder with the ATO before you make the first payment. If you pay wages without withholding, you are still liable for the tax – and you will be paying it out of your own pocket.

3. Missing Super Deadlines

The quarterly super deadlines are strict. If you miss them, the Superannuation Guarantee Charge applies automatically, and it is more expensive than the super itself. Set up calendar reminders or, better yet, pay super each pay cycle to avoid the problem entirely.

4. Not Keeping Proper Time Records

Under the Horticulture Award, you must keep accurate records of hours worked, including start and finish times, breaks, and overtime. Use a time-tracking app or a simple sign-in sheet. Fair Work audits do happen, and you need to demonstrate compliance.

5. Forgetting About Leave Accruals

From the moment your employee starts, they are accruing annual leave and personal leave. You need to track this, provision for it in your cash flow, and make sure your payroll software is calculating it correctly. When your employee takes two weeks off over Christmas, you still need to pay them.

6. Not Factoring the True Cost of an Employee into Your Pricing

An employee earning $30 per hour does not cost you $30 per hour. Once you add super, workers comp, leave accruals, payroll tax (if applicable), and training, the true cost can be 30-50% higher than the base wage. If you do not build this into your quoting, you will erode your margins without realising it.

Example: An employee on $30/hour ordinary time works 38 hours per week:

Cost Component	Weekly Amount (approx.)
Base wages (38 hrs x $30)	$1,140
Superannuation (11.5%)	$131
Workers compensation (approx. 8% of wages)	$91
Annual leave accrual (4 weeks/52 weeks)	$88
Personal leave accrual (2 weeks/52 weeks)	$44
Total weekly cost	$1,494

That is roughly $354 more per week than the base wage – or an additional 31%. This number needs to be reflected in your job pricing.

7. Not Getting Professional Advice Before You Start

Hiring your first employee changes the nature of your business. Getting proper advice upfront – from an accountant who understands the arborist industry – is not an expense. It is an investment that prevents far more costly problems later.

Frequently Asked Questions

Do I need to pay super to a casual employee?

Yes. Superannuation guarantee applies to all employees, including casuals, from the first dollar. There is no minimum earnings threshold. Pay it on time, every quarter (or more frequently), without exception.

Can I hire my partner or family member? Are there different rules?

You can hire family members, but the same employment rules apply. They need a TFN declaration, must be paid at or above the award rate, and you must withhold PAYG and pay super. The ATO scrutinises related-party arrangements, so make sure the role is genuine, the hours are real, and the pay is in line with what you would pay anyone else.

What is the difference between a full-time and casual employee for an arborist business?

A full-time employee works 38 ordinary hours per week and receives paid leave entitlements (annual leave, personal leave, etc.). A casual employee receives a casual loading (currently 25% under the Horticulture Award) in lieu of paid leave, with no guarantee of ongoing work. Many arborist businesses start with a casual to manage workload variability, then convert to full-time once the work is consistently there.

When do I need to start paying payroll tax?

Payroll tax is a state-based tax, and the threshold varies by state and territory. In most states, you will not need to worry about it until your Australia-wide wages bill exceeds the relevant threshold (for example, $1.2 million in NSW or $900,000 in Victoria – though thresholds are subject to change). For an arborist hiring their first employee, payroll tax is unlikely to be an immediate concern, but worth understanding as your business grows.

How long do I need to keep payroll records?

You must keep employee records for seven years. This includes pay records, time-and-attendance records, leave records, super contribution records, and TFN declarations. Your payroll software stores most of this digitally, but make sure you have backups and do not lose access if you change platforms.

Ready to Hire? Get It Right From the Start

Hiring your first employee is a milestone worth celebrating – it means your arborist business is growing. But it also means stepping into a world of payroll, compliance, and regulation that is genuinely complex. The penalties for getting it wrong are real, and they can hit hard.

You do not have to figure this out alone. If you want to make sure your payroll, super, workers comp, and ATO obligations are set up correctly from day one, we are here to help. We work exclusively with arborists and understand the specific challenges of your industry.

Book a free consultation and let us take the compliance burden off your plate so you can focus on running your crew and growing your business.

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George Morice is a Chartered Accountant and founder of Arbour Accountancy, working exclusively with arborist businesses across Australia. If you have questions about hiring, payroll, or any aspect of your business finances, get in touch.

Setting up or restructuring your arborist business? Our business setup services cover ABN registration, business structure advice, and everything you need to get started on the right foot.

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