Employment Hero has launched HeroForce, a new model where they become your legal employer and handle it all. Here is what SME owners need to know.
What’s happening: Employment Hero has launched HeroForce, a co-employment model in which the company becomes the legal employer for a client’s workforce, taking on payroll, compliance, and HR administration while the business retains operational control.
Why this matters: With wage theft now a criminal offence, Payday Super changes arriving on 1 July 2026, and over half of audited businesses still failing to meet compliance standards, the cost and risk of getting employment wrong has never been higher for SME owners.
Running a business in Australia has always meant doing things you did not sign up for. Managing payroll across more than 120 modern awards, each with its own classifications and pay conditions, keeping up with superannuation changes, navigating Fair Work obligations, and staying across an employment framework that keeps getting more complex.
For most small business owners, it is a significant distraction from the actual work of running a business. For many, it is also a source of genuine legal risk, even when they are trying to do the right thing.
Employment Hero, the Australian-founded employment platform that processes around $120 billion in wages and superannuation annually for more than 350,000 businesses, has launched a new product that takes a different approach entirely. Rather than helping businesses manage compliance themselves, HeroForce asks whether the whole model of individual businesses shouldering employment administration on their own is worth rethinking.
The compliance problem in numbers
The scale of the problem Employment Hero is targeting is significant. Australian businesses collectively spend $160 billion a year on compliance, according to Employment Hero’s modelling. Each business manages this individually, largely manually, at a cost the company estimates at up to a quarter of an employee’s salary. Employment Hero’s modelling identifies $12.6 billion of that expenditure as pure duplication, money spent by thousands of businesses solving the same regulatory problems independently of each other, with no economies of scale and no shared infrastructure.
Despite that level of investment, the outcomes remain poor. Employment Hero’s data shows 250,000 Australian workers were underpaid in the last financial year. The Fair Work Ombudsman’s investigations found 56% of audited businesses were non-compliant with regulatory standards. And Employment Hero estimates the average underpayment exposure for a typical 50-person business sits at $18,668 per year, a liability that accumulates quietly and often without the employer realising it.
Employment Hero CEO and Co-Founder Ben Thompson is direct about what is driving this. “Most businesses aren’t failing at compliance because they’re careless or dishonest,” he said. “They’re struggling because individual employers are trying to solve an extremely specialised regulatory problem while also running the business. The system has become too complex to manage manually.” The average SME, he notes, spends between $40,000 and $80,000 a year just to stay compliant with employment law. “Running a business in Australia increasingly means becoming an expert in payroll, modern awards, Fair Work compliance and superannuation,” Thompson said.
That burden has been growing. From January 2025, intentional underpayment of wages became a criminal offence in Australia. Minimum wages and superannuation contributions have increased. Payday Super, which requires employers to pay superannuation at the same time as wages, arrives on 1 July 2026. A Federal Court judgment in September 2025, stemming from the Coles and Woolworths underpayment cases, has further complicated how employers can structure salary payments under modern awards, with small business groups describing the resulting obligations as an impossible payroll burden.
What HeroForce actually does
HeroForce is a co-employment model, sometimes called a Professional Employer Organisation or PEO arrangement, in which Employment Hero becomes the legal employer of a client business’s workforce. The client business retains full operational control of who it hires, what they work on, and how the business runs day to day. Employment Hero takes on the legal responsibilities of payroll, compliance, and HR administration.
It is a model that has been successful internationally, particularly in the United States, but has historically been difficult to make work at scale in Australia due to the structural complexity of the national employment system. Employment Hero says its HeroAI suite, which can interpret modern awards, develop rosters, automate payroll calculations, and monitor compliance obligations across thousands of employment relationships simultaneously, is what makes the model viable here for the first time. Thompson describes this as fundamentally changing the economics of employment administration. “By removing the friction that prevents employment, employment becomes cheaper and simpler and as decades of historical evidence tell us, businesses will employ more people to build more, serve more, expand into new areas,” he said. “Every hour reclaimed from repetitive administration is an hour redirected to work that actually grows economies.”
Workers engaged through HeroForce remain employees under formal employment contracts and retain full protections under the Fair Work Act, including award wages, superannuation, leave entitlements, and workers’ compensation. Employment Hero points to analysis of PEO models in the United States showing user organisations have twice the growth rate of comparable companies, 12% lower employee turnover, and are 50% less likely to go out of business. Those organisations report an average 27.2% return on investment, with a 3 to 5% service fee covering fully-managed employment.
Why now
The timing of the HeroForce launch reflects a confluence of pressures that are landing on SME owners simultaneously. Casual employment is growing at more than double the rate of full-time roles, up 9.3% year on year according to Employment Hero Jobs data, as businesses seek flexibility amid rising compliance pressure and wavering business confidence. The ABS reports 7.5% of the workforce are now independent contractors, a figure that reflects how many employers are restructuring their workforce arrangements to manage cost and regulatory risk.
At the same time, 59% of organisations identify reducing operational costs as their primary challenge, and 49% are struggling to attract and retain talent in a shifting labour market. The regulatory environment is not simplifying. It is adding obligations faster than most small businesses can absorb them.
For SME owners, the HeroForce model raises a genuine strategic question that goes beyond any single product. The traditional assumption is that hiring staff means taking on the full legal and administrative burden of employment. Co-employment models challenge that assumption by treating employment administration as an infrastructure problem that can be centralised, the same way cloud computing centralised IT infrastructure and removed the need for every business to run its own servers.
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