Employee details
Salary & role
On-costs & entitlements
Additional costs (optional)
True annual cost
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all-in cost to employer
On-costs above salary
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extra above base salary
Cost multiplier
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times base salary
Monthly cost
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to employer
Full cost breakdown
Base salary
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Superannuation
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Annual leave loading
17.5% loading on 4 weeks annual leave
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Personal/sick leave
10 days per year (NES entitlement)
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Long service leave
Accrual provision (~1.3% of salary)
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Workers compensation
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Payroll tax
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Subtotal — statutory on-costs
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Training & development
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Equipment & tools
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Software licences
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Recruitment (amortised)
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Total true annual cost
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Hiring tips for Australian small businesses
Budget 25–35% above salary
A common mistake is budgeting only the base salary. Super, leave entitlements, workers comp and payroll tax typically add 25–35% to your actual cost. Always budget the all-in figure.
Check your modern award
Most Australian employees are covered by a modern award that sets minimum pay rates, penalty rates and conditions. Check the Fair Work website to find the correct award for your industry before making a job offer.
Payroll tax threshold
Payroll tax applies once your total wages exceed the threshold in your state — typically $700,000–$1.2M per year. If you're approaching this threshold, factor it into your hiring costs carefully.
Consider contractors first
For short-term or project-based work, a contractor can be more cost-effective as you avoid super, leave and payroll tax obligations. But be careful of sham contracting — the ATO looks closely at worker classification.
Revenue per employee
A good rule of thumb: an employee should generate 3–5x their total cost in revenue. If a $110,000 all-in employee generates less than $330,000 in revenue or value, reconsider the hire.
Keep payroll records
The Fair Work Act requires you to keep detailed payroll records for 7 years. Use payroll software from day one — the cost is minimal and the compliance protection is invaluable.
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Frequently asked questions
How much does an employee really cost in Australia?
The true cost of an Australian employee is typically 1.25 to 1.35 times their base salary once you add superannuation (11.5%), leave entitlements, workers compensation insurance and payroll tax (if applicable). A $75,000 salary employee typically costs $95,000–$105,000 all-in per year.
What is payroll tax and when does it apply?
Payroll tax is a state government tax on wages paid by employers. It only applies once your total Australian wages exceed the threshold for your state — typically between $700,000 and $1.2 million per year. If you're below this threshold, you don't pay payroll tax. Each state has different rates and thresholds.
What is the superannuation guarantee rate in 2025?
The superannuation guarantee rate is 11.5% of ordinary time earnings from 1 July 2024, increasing to 12% from 1 July 2025. As an employer you must pay this into your employee's nominated super fund at least quarterly.
Do I have to pay annual leave loading?
Annual leave loading of 17.5% applies to most employees covered by a modern award when they take annual leave. Some enterprise agreements have different provisions. Check your applicable award on the Fair Work website to confirm your obligations.
What is the difference between an employee and a contractor?
Employees receive entitlements including super, leave, workers comp and award rates. Contractors are generally responsible for their own super and tax. The ATO has strict rules around worker classification — misclassifying an employee as a contractor (sham contracting) can result in significant penalties.