How to start a recruitment agency in Australia

Decide which business you are starting

There are two businesses that both get called a recruitment agency, and the law treats them differently. In permanent placement, you introduce a candidate, the client employs them, and you invoice a fee. In on-hire (also called labour hire or temp), the worker stays employed or engaged by you, you pay their wages and superannuation, and you invoice the client for their hours. The second carries payroll, workers’ compensation, and in four jurisdictions a licence; the first carries none of those.

Most new agencies start with permanent placement because it needs no payroll and no licence, and add contracting later. This guide assumes that path, and says so wherever on-hire changes the answer. If you intend to run temps from day one, read the licensing section twice.

The other early decision is what you will specialise in. A desk that covers one sector in one city is easier to sell to clients, easier to build a candidate pool for, and easier to search. Generalist agencies exist, but almost none of them started that way.

Business structure, ABN and the registrations

The four structures are sole trader, partnership, company and trust. Most agencies that intend to sign client terms, employ consultants or ever sell the business run as a proprietary limited company, because the company rather than the founder is the party to the contracts. Which structure suits you turns on liability, tax and what you plan to do next, and that is a conversation for an accountant before you register anything.

A company is registered with the Australian Securities and Investments Commission (ASIC), which issues the Australian Company Number. ASIC’s fee to register a proprietary company is $636 from 1 July 2026, and the annual review fee for a proprietary company is $342. ASIC indexes its fees every 1 July, so check the current schedule before you pay. Every director needs a director identification number from Australian Business Registry Services, applied for before the appointment.An Australian Business Number is free, and comes from the Australian Business Register (ABR). The government’s Business Registration Service lets you apply for the ABN, a business name, GST and PAYG withholding in one application. Put the ABN on every invoice from the first one: where a supplier does not quote an ABN, the paying business is generally required by the Australian Taxation Office to withhold tax from the payment at the top marginal rate, which is not a conversation you want with your first client.

If you trade under any name other than your own name or the company’s exact name, that business name must be registered with ASIC: $47 for one year or $108 for three, from 1 July 2026. Registering a business name gives you no exclusive right to it. A trade mark, through IP Australia, does. A .com.au domain requires an Australian presence, which an ABN or ACN satisfies.

Do you need a licence? Placement and on-hire are different answers

There is no national licence for running a recruitment agency, and there is no national labour hire licence. The Commonwealth has said it intends to regulate labour hire nationally and has consulted on a single scheme; at the time of writing none has been legislated, and the state and territory schemes stand. That leaves two separate questions: does your state license labour hire, and does it license employment agents. They have different answers in different places, and the most useful thing on this page is the distinction between them.

Labour hire licensing operates in four jurisdictions: Queensland under the Labour Hire Licensing Act 2017 (Qld), administered by Labour Hire Licensing Queensland in the Office of Industrial Relations; Victoria under the Labour Hire Licensing Act 2018 (Vic), administered by the Labour Hire Authority; South Australia under the Labour Hire Licensing Act 2017 (SA), administered by Consumer and Business Services; and the ACT under the Labour Hire Licensing Act 2020 (ACT), administered by WorkSafe ACT, with licensing in force there since 27 May 2021.

In every one of those schemes, the trigger is supplying a worker to another business to do work in that business. Permanent placement is not supply: the candidate becomes the client’s employee and you were never in the chain of employment. Queensland’s regulator says plainly that recruitment and permanent placement services do not need a licence. Victoria’s Authority says the same, with one exception worth knowing: a recruitment or placement service that also provides or procures accommodation for the workers it places is labour hire in Victoria and needs a licence, a rule aimed at regional and seasonal work that catches some regional recruiters.

The moment a worker stays on your books, the answer flips. A temp, a contractor you pay, a "try before you buy" arrangement where the person remains your employee for a probation period: each of those is labour hire in those four jurisdictions, and the licence has to be held before the first supply, not applied for afterwards. Penalties for unlicensed labour hire are substantial, and they apply to the client that used you as well as to you, which is why larger clients ask for the licence number before they sign. The schemes apply according to where the work is done rather than where your office is, so an agency in Sydney supplying a temp into Brisbane is inside the Queensland scheme.

Two of the four schemes changed in 2026. South Australia’s was broadened from 29 January 2026 to cover labour hire in every industry, with newly covered providers required to be licensed by 29 July 2026. Victoria tightened its fit and proper person test and added financial viability requirements from 1 June 2026. If you are going to on-hire, read the relevant authority’s current guidance rather than a summary, including this one.

Western Australia is the inverse case. WA has no labour hire licence, but it does license the placement business. Under the Employment Agents Act 1976 (WA), anyone carrying on business as an employment agent, which includes placing people in jobs and charging the employer a fee for it, must hold a licence from Consumer Protection in the Department of Local Government, Industry Regulation and Safety. Labour hire companies are exempt from that Act. Applications are described as typically taking four to six weeks, so if you will operate in WA, or place people into WA jobs from elsewhere, ask Consumer Protection whether the Act reaches you before you take a role.For New South Wales, Tasmania and the Northern Territory we could find no licensing scheme for either activity at the time of writing. Do not take that as settled: search the Australian Business Licence and Information Service (ABLIS) for your activity and location, which is the government’s own finder for exactly this question. Membership of an industry body such as the RCSA is voluntary, and some clients ask for it, but it is not a licence.

Candidate data and the Privacy Act

The Privacy Act 1988 (Cth) and its thirteen Australian Privacy Principles are regulated by the Office of the Australian Information Commissioner (OAIC). A recruitment agency handles more personal information per dollar of revenue than almost any other small business, and the thing most new agency owners have heard about the Act, that small businesses are exempt, is the thing most likely to be wrong about them.The exemption is real: a business with an annual turnover of $3 million or less is generally not covered. But the Act removes the exemption from a business that discloses personal information for a benefit, service or advantage, or provides one in order to collect it, unless it does so with the consent of the individual or as required by law. Disclosing a candidate’s information to a client for a fee is what a recruitment agency does all day. On the OAIC’s own guidance, the exemption survives only as long as every one of those disclosures is consented to. Send one profile sourced from a public site to a client without asking the person first, and the basis for the exemption is gone. The practical answer is to treat yourself as covered from day one, and if a client’s procurement asks, the Act lets a small business formally opt in.

Do not rely on the employee records exemption either. The OAIC says it does not cover unsuccessful applicants, and it does not cover a recruitment agency handling an employer’s records as a contractor. The people in your database are not your employees.

The exemption is also on its way out. The government agreed in principle in 2023 to remove it. The exposure draft of the Privacy Amendment (Personal Data Protection) Bill 2026, released by the Attorney-General’s Department on 31 August 2026 with submissions closing on 18 September 2026, leaves the small business exemption in place for now, but the direction is set. Build for the Act and the question never arises.

In practice, day one looks like this. A privacy policy on your website (APP 1). A collection notice when a candidate registers, saying what you collect, why, who you disclose it to and how they can access it or complain (APP 5). Collecting only what you need (APP 3). Using and disclosing information for the purpose you collected it, which is what makes sending a CV to a client lawful, and asking before you do anything outside that purpose (APP 6). Knowing where your systems store data and whether any recipient is overseas, because you are accountable for overseas disclosures (APP 8). Keeping information secure, and destroying or de-identifying it when it is no longer needed, which is the honest answer to a ten-year-old candidate database (APP 11). Giving people access to their information and correcting it on request (APP 12 and 13). And a plan for the Notifiable Data Breaches scheme: a breach likely to result in serious harm must be reported to the OAIC and to the people affected. Separately, the Spam Act 2003, administered by ACMA, governs the commercial email and SMS you send to candidates and clients: consent, identification and a working unsubscribe. The candidate consent guide covers the case where a second agency is involved.

GST on placement fees

A placement fee is a taxable supply, and GST applies to it at 10%. The Australian Taxation Office (ATO) requires registration once your GST turnover reaches $75,000, measured on the past twelve months or the projected next twelve, and gives you 21 days from the point you know or could reasonably expect to reach it. Registration is free and can be done in the same application as the ABN. Most agencies register from the start, because clients expect a tax invoice showing GST, and because a couple of placements clears the threshold anyway.

Quote fees as excluding GST and say so in your terms and on every invoice. A fee agreed as a number with no GST treatment is a dispute waiting for its first invoice. Once registered, you must issue a tax invoice for any sale of $82.50 or more including GST, within 28 days of the client asking for one, showing your ABN, the GST amount and the date. Each instalment in a retained assignment carries GST when it is invoiced; a refund under a guarantee is an adjustment, and the ATO’s rules on adjustment notes apply. The GST you pay on your own inputs, including software, advertising and your accountant, comes back as credits on the business activity statement, on the reporting cycle the ATO sets for you. Employ anyone and PAYG withholding and superannuation guarantee obligations arrive at the same time; an accountant or registered BAS agent is the first supplier a new agency should engage.

Fee models and terms of business

Contingent is the default for permanent placement: no fee unless your candidate starts, usually calculated as a percentage of first-year remuneration and invoiced on the start date. It is easy for a client to say yes to and easy for a client to give to three agencies at once, which is why contingent work turns into a race.

Retained is paid in stages, typically on engagement, on shortlist and on completion, in exchange for exclusivity and a defined search. It is the model for executive search and for roles a client genuinely cannot afford to leave open. Fixed fee, a flat amount per role or a subscription for a volume of hires, is used for junior and repeatable roles. A split is two agencies sharing one fee, one holding the client and the other the candidate; the terms between the agencies need to be written before a CV moves, and the candidate needs to have agreed to the second agency’s involvement. On-hire is different again: a margin on the worker’s hourly cost.

What the percentages are is the question everyone asks and the one no honest guide answers with a number. Published surveys exist and are worth reading; the truthful position is that fees vary by sector, seniority and city, and you will set yours by what clients in your market accept and what your service is worth to them.

Whatever the model, terms of business go out and come back signed before the first CV does. They should state the fee base (base salary or total package), what triggers it, payment terms, the guarantee or replacement period and the conditions on it (usually that the invoice was paid on time), what happens if the client hires someone you introduced within a period of months after the introduction, and the GST treatment. Every fee dispute a recruiter will ever have is about one of those clauses being missing.

The systems a new agency needs on day one

One record system for candidates, clients, contacts, roles, candidacies and placements. Not a spreadsheet plus an inbox: the first privacy request, the first dispute over who introduced whom and the first consultant you hire will each expose what a spreadsheet cannot hold. The system should keep the applicant tracking and the client relationship as one set of linked records rather than as two products; the reasons are in ATS vs CRM. Choose it with the exit in mind, because you will change it once and the export decides how painful that is; the systems checklist is the list of questions to ask.

Around that: business email on your own domain, with the mailbox connected to the record system so that conversations attach to the people they are about; a calendar; a phone number that is not your personal mobile; a job page for each role that you control, plus whichever boards your candidates actually use (SEEK, LinkedIn, Indeed and Jora are the common Australian choices, each with its own pricing); a way to send and sign terms of business; an accounting package your accountant already works in; and a written privacy policy, collection notice and retention rule from the first registration.

Insurance is not a system but it belongs on the same list, because client procurement will ask. Professional indemnity and public liability are the two that are asked for. Workers’ compensation insurance is compulsory for employers in every state and territory, with only narrow exemptions, and for an on-hire business it is central rather than incidental. Get quotes; the figures depend on turnover and cover.

Recruited is one option for the record system, sized for exactly this stage: the Basic plan is A$249 a month plus GST for one user, 5,000 candidate records and 10 active opportunities, with candidates, clients, contacts, opportunities, the pipeline, a mailbox connection, your own job pages and the Deal Desk essentials included, and a full export in open formats on every plan from the first day. What it includes and leaves out is on the page for recruitment software for a small agency, and how it approaches its own Privacy Act obligations for candidate data is on the security page.

A realistic first-year cost picture

The honest version of this table has fewer numbers than the ones you will find elsewhere. The government fees are published and are given here as at the reviewed date. Everything else is set by a supplier, depends on your circumstances, or both, and a figure invented for the sake of a total would be worse than none.

The last row is the one that closes new agencies. A contingent fee is invoiced on the start date, and the start date comes after the candidate’s notice period, which comes after the offer, which comes after the search. Then the client’s payment terms run. Then the guarantee period runs, during which the fee is exposed. A realistic plan funds several months of costs before the first fee is cash in the bank, and does not treat the first fee as safe until the guarantee period on it has expired.

The order to do it in

Decide permanent, on-hire or both, and the specialisation. See an accountant about structure. Register the company with ASIC, get director IDs, then the ABN, GST, PAYG and business name in one application through the Business Registration Service. If you will on-hire, apply for the labour hire licence in each jurisdiction where the work will be done, and do not supply anyone until it is granted. If you will operate in WA, ask Consumer Protection about the Employment Agents Act.

Then insurance, the bank account, the domain and email, and the record system, in that order, so that the first candidate you register lands in a system with a privacy policy and a collection notice already in front of it. Write the terms of business and have them reviewed. Then start the conversations with clients, which is the part nothing on this page can do for you.

Sources named in this guide

ASIC for company registration, annual review and business name fees. The Australian Business Register for the ABN. The ATO for GST registration, tax invoices and withholding. The OAIC for the Privacy Act, the small business exemption, the employee records exemption and the Notifiable Data Breaches scheme. Labour Hire Licensing Queensland, the Victorian Labour Hire Authority, South Australia’s Consumer and Business Services and WorkSafe ACT for labour hire licensing. WA Consumer Protection for the Employment Agents Act. ABLIS for licences by activity and location. Checked on the reviewed date shown above; fees and thresholds change, and the authority’s page beats this one where they differ.