Employee cost calculator
This employee cost calculator shows what a new hire really costs an Australian business in the first year. It adds 12% super, payroll tax, workers compensation, recruitment and other costs to the salary, then works out the cost per productive hour once annual leave, public holidays and personal leave are taken out.
Updated 12 November 2026 · Uses 2026-27 figures
Work out the true cost of an employee
Enter the salary, your state and your yearly on-costs.
General information only, not financial, tax or legal advice. Results are estimates based on 2026-27 figures and the assumptions shown. Check your award, agreement or a qualified adviser for your situation.
Need extra staff without the on-costs and admin? TQN Personnel supplies vetted labour hire and recruitment across Australia.
Get a quote Call 0477 567 567How to use the employee cost calculator
- Enter the base salary for the role, before super.
- Choose your state and whether your total payroll is over the payroll tax threshold.
- Enter your workers comp premium as a percentage of wages. Your insurer's renewal notice shows the rate.
- Add other yearly costs such as uniforms, training, equipment and software, plus a one-off recruitment cost. The result shows the first-year cost and the cost per productive hour.
How much does an employee cost a business?
Salary is the biggest cost but not the only one. In 2026-27 a business employing someone in Australia usually pays:
| Cost | How it is worked out |
|---|---|
| Salary or wages | The agreed salary, at least the award minimum |
| Superannuation | 12% of ordinary time earnings |
| Payroll tax | 4% to 6.75% of wages and super, once total wages pass the state threshold |
| Workers compensation | A premium set as a percentage of wages, which depends on industry and claims |
| Paid leave | 4 weeks of annual leave, 10 days of personal leave and public holidays, paid while no work is done |
| Recruitment and onboarding | Advertising, agency fees, interview time, inductions and training |
| Equipment and overheads | Uniforms, PPE, tools, IT, software licences and desk space |
The calculator adds the cash costs to get the first-year total. It then divides by productive hours, which are 38 hours a week for 44 weeks after taking out 4 weeks of annual leave, about 2 weeks of public holidays and 2 weeks of personal leave.
Worked example
A NSW business with a payroll above the payroll tax threshold hires someone on a $65,000 salary. Workers comp is 2.5%, other yearly costs are $2,500 and recruitment costs $9,000.
Super at 12%: $7,800. Payroll tax at 5.45% of salary and super: $3,968. Workers comp: $1,625. Other costs and recruitment: $11,500.
The true first-year cost is $89,893, which is 38.3% on top of the salary. Spread over 1,672 productive hours, the employee costs $53.76 for every hour actually worked.
From the second year the recruitment cost falls away, but annual pay rises and training needs usually continue.
How to calculate the true cost of an employee
- Start with the yearly salary.
- Add 12% super. Super is paid on ordinary time earnings, so it also applies to most allowances and leave paid during employment.
- Add payroll tax if your total Australian wages are over your state's threshold. Payroll tax applies to wages and super.
- Add the workers comp premium.
- Add yearly costs for equipment, uniforms, training and software, and a one-off recruitment cost.
- Divide the total by the hours the person will actually work to get a cost per productive hour.
The cost per productive hour is the best figure to compare with a contractor's rate or a labour hire charge rate, because those are only paid for hours worked.
Costs that are easy to miss
- Leave cover. When a permanent employee takes annual leave, someone else may need to cover the shifts, so you pay twice for those hours.
- Turnover. If the person leaves within a year, you pay recruitment and training again. See our guide on the cost of employee turnover.
- Overtime and penalty rates. Weekend, night and public holiday work costs more under most awards.
- Management time. Payroll, rostering, performance management and compliance all take time that the calculator does not price.
- Long service leave. It builds up in the background and becomes payable after 7 to 10 years depending on the state.
Hiring direct or using labour hire
If you only need the role for part of the year, compare the numbers with the labour hire vs direct hire calculator. A labour hire agency pays the wages, super, payroll tax and workers comp, and you pay for hours worked. TQN Personnel can price your roles if you request a quote.
Frequently asked questions
How much does an employee cost in Australia?
Expect the first-year cost to be well above the salary. Super alone adds 12%, and payroll tax, workers comp, recruitment and equipment add more. In the example on this page a $65,000 salary costs $89,893 in the first year, about 38% more than the salary.
How much does it cost to have an employee per hour?
Divide the yearly cost by the hours actually worked. A full-time employee is paid for 52 weeks but works around 44 once annual leave, public holidays and personal leave are taken out. In the example on this page that gives $53.76 per productive hour.
How do I calculate employee on-costs?
Add super at 12% of ordinary time earnings, payroll tax if your wages are over the state threshold, the workers comp premium and the value of paid leave. Express the total as a percentage of salary to get your on-cost rate.
How much does it cost to hire a new employee?
Recruitment costs include job ads, an agency fee if you use one, interview and onboarding time, inductions and training. A placement fee from a recruitment agency is usually a percentage of the first-year salary. This calculator lets you enter your own figure.
Does a small business pay payroll tax?
Only if its total Australian wages are above the state threshold, which is $1.2 million in NSW and $1 million in Victoria in 2026-27. Many small businesses are below it. Grouped businesses share one threshold.
How much does a full-time employee cost?
A full-time employee is paid for 38 hours a week plus 12% super, with 4 weeks of paid annual leave and 10 days of personal leave a year. Add payroll tax, workers comp and overheads to see the full figure for your business.
Is super paid on top of salary?
Usually yes. The 12% super guarantee is paid on top of a salary unless the employment contract states the salary includes super. When comparing job offers or costing a role, check whether a figure is quoted plus super or including super.
Related calculators
Sources and assumptions
- ATO: Super guarantee rate
- Revenue NSW: Payroll tax thresholds and rates
- Fair Work Ombudsman: National Employment Standards
General information only, not financial, tax or legal advice. Results are estimates based on 2026-27 figures and the assumptions shown. Check your award, agreement or a qualified adviser for your situation.