How Much Does an Employee Really Cost in Australia?
Salary is just the starting point. Use the calculator below to see the true, fully‑loaded cost of a hire, including superannuation, payroll tax, workers’ compensation and the hidden extras most budgets miss.
This is an estimate for planning purposes only. Actual costs depend on your specific award, industry, leave usage and state rules. Speak with our team for figures tailored to your business.
Why "salary" is only the starting point
When a job ad says $90,000, that's what lands in the employee's bank account before their own personal income tax. It doesn't include the substantial list of mandatory on-costs an employer carries on top. Across Australian businesses, the true cost of an employee typically runs 20% to 50% above base salary, sometimes more, depending on your state, industry and payroll size.
Understanding each layer properly is essential for budgeting a new hire, pricing your services correctly, and avoiding cash flow surprises down the track.
1. Superannuation Guarantee (SG)
This is the biggest and most predictable on-cost. Employers must currently contribute 12% of an employee's qualifying (ordinary time) earnings into their nominated super fund. The rate has been locked in since 1 July 2025, with no further increases currently legislated.
On a $90,000 salary, that's an extra $10,800 a year in compulsory superannuation.
2. Payroll tax
Payroll tax is a state-based tax, not federal. The threshold and rate depend entirely on where you pay wages. Once your total Australian wages (including super, bonuses and allowances) cross your state's threshold, tax applies to everything above it.
| State / Territory | Approx. threshold (FY26–27) | Standard rate |
|---|---|---|
| NSW | $1.2 million | 5.45% |
| VIC | $0.9–$1 million | 4.85% (1.21% regional) |
| QLD | $1.3 million | 4.75% |
| SA | $1.5 million | up to 4.95% |
| WA | $1 million | varies |
| TAS | ~$1.25 million | 4–6.1% |
| ACT | $1.75 million | 6.75%+ (tiered) |
| NT | $2.5 million | 5.5%+ |
Rates and thresholds change with state budgets, so always confirm current figures with your state revenue office or your accountant.
3. Workers' compensation insurance
Every state requires employers to hold workers' compensation insurance, calculated as a percentage of wages, typically 0.5% to 3%+, depending on your state, your industry's risk classification, and your claims history. A desk-based professional services role sits at the low end; construction, manufacturing and logistics sit much higher.
4. Leave entitlements
Full-time and part-time permanent employees accrue paid leave the employer funds without output in return during that time:
- Annual leave: 4 weeks per year
- Personal/carer's (sick) leave: 10 days per year
- Public holidays: typically 8–13 paid days per year depending on state
- Long service leave: accrues over years of service, becoming a real liability for long-tenured staff
- Parental and compassionate leave: additional statutory entitlements
None of this appears as a separate invoice, but it's real cost. An employee on $90,000 taking their full annual and personal leave is still paid for roughly 4–5 weeks a year they aren't at their desk.
5. Recruitment, onboarding and training
Before an employee contributes anything, there are upfront costs: job ads or agency fees, interview and reference-check time, onboarding, and reduced productivity while they ramp up (often 3–6 months for a role with any complexity). Industry data suggests the average cost to simply advertise a role in Australia runs into the thousands of dollars, and agency fees on top can run 10–25% of the role's salary.
6. Equipment, technology and workspace
Every employee needs the tools to do their job: laptop and software licences, desk and office space (or a home-office contribution), phone and communications, and ongoing IT support. For office-based roles this is commonly $1,000–$5,000+ in the first year; equipment-heavy roles (trades, field staff) can run much higher.
Putting it together
Use the calculator at the top of this page to model your own numbers. As a general rule of thumb, once you add super, insurance, leave and overheads, expect a fully-loaded cost of 20–40% above base salary for a typical office role under the payroll tax threshold, and higher again once payroll tax and higher-risk workers' comp rates apply.
Why this matters for your business
- Pricing: if you bill out staff time, your rates need to cover true cost, not just salary
- Hiring decisions: comparing a new employee against contracting, outsourcing or automation
- Cash flow planning: knowing when payroll tax kicks in, and budgeting for Payday Super's new timing
- Growth planning: the "payroll tax cliff" and other thresholds mean your next hire can cost disproportionately more than your last
This calculator and article are general information only and do not constitute financial, tax or legal advice. Superannuation rates, payroll tax thresholds and workers' compensation premiums are subject to change and vary by state, industry and individual circumstances. Please speak with our team for advice tailored to your situation.
