Labour hire vs direct hire calculator
This labour hire vs direct hire calculator compares what a worker costs through an agency with what the same role costs if you employ someone yourself. It adds super, on-costs, recruitment and the cost of ending the job early, then shows which option is cheaper for the time you need the worker and where the break-even point sits.
Updated 12 November 2026 · Uses 2026-27 figures
Compare labour hire with hiring direct
Enter the salary, how long you need the worker and the labour hire rate you have been quoted.
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.
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- Enter the yearly salary you would pay if you employed the person directly.
- Enter how many weeks you need the worker. Short projects and seasonal peaks favour labour hire, long-term roles favour direct hire.
- Enter the labour hire charge rate per hour, excluding GST, from your quote.
- Add your recruitment cost for a direct hire (advertising, agency fee or staff time) and the cost of ending the job early. The result shows the cheaper option and the break-even point.
How the comparison works
The two options carry different costs, so the calculator puts them on the same footing.
| Cost | Direct hire | Labour hire |
|---|---|---|
| Wages | You pay them | In the charge rate |
| Super (12%) | You pay it | In the charge rate |
| Payroll tax, workers comp, leave | You pay them (about 8% of salary in this tool) | In the charge rate |
| Recruitment | One-off cost | Usually included |
| Ending the job | Notice, leave payout and admin | End the booking |
| Hours paid | Every working week, including leave | Hours worked only |
Direct hire cost is the yearly employment cost (salary plus 12% super plus about 8% for on-costs) spread over 48 working weeks, plus recruitment, plus an exit cost if the job ends inside a year. Labour hire cost is the charge rate times 38 hours times the number of weeks.
Worked example
You need a worker for 20 weeks. The role would pay $62,000 a year if you hired direct, recruitment would cost $9,000 and ending the job early would cost about $3,000. A labour hire agency quotes $48 an hour plus GST.
Direct hire for 20 weeks costs about $43,248. Labour hire for 20 weeks costs $36,480 (20 weeks of 38 hours at $48). Labour hire is cheaper by $6,768.
The break-even point is about 46 weeks. If you need the worker for most of the year or longer, hiring direct becomes cheaper.
The labour hire rate here is an example only. Use the rate from your own quote, or build one with the labour hire charge rate calculator.
What does it cost to hire a new employee?
Salary is only part of the cost. A direct employee also brings 12% super, payroll tax if your wages are over the state threshold, workers compensation premiums, paid annual leave, personal leave and public holidays, plus the cost of advertising, interviewing, onboarding and training. If the person leaves or the role ends, there is notice, leave payout and the cost of hiring again.
For a full breakdown of a permanent hire, use the employee cost calculator. It shows the true first-year cost and the cost per productive hour, which you can compare directly with a labour hire hourly rate.
When labour hire is the better choice
- Short or uncertain demand. Seasonal peaks, project work, shutdowns and new contracts where volume is not settled yet.
- Cover for absences. Parental leave, long service leave, injury or a vacancy you are still recruiting for.
- Speed. An agency with workers ready can usually fill a role faster than a direct recruitment process.
- Try before you hire. Many hosts use labour hire to see how a worker performs before offering a permanent role.
Direct hire usually wins when the role is ongoing, full-time and stable, because the agency margin adds up over a full year.
Things the calculator does not include
The comparison covers the main cash costs. It does not put a price on management time spent on payroll, rostering and compliance, the risk of an unfair dismissal claim, or overtime and penalty rates, which cost more under both options. Labour hire licensing rules in Queensland, Victoria, South Australia and the ACT also mean hosts should only use a licensed provider in those places. If you want to compare real numbers for your roles, ask for a labour hire quote and enter it above.
Frequently asked questions
Is labour hire cheaper than hiring an employee?
For short bookings it often is, because you pay only for hours worked and avoid recruitment, leave and exit costs. For a full-time role that lasts most of a year or longer, hiring direct is usually cheaper because the agency margin adds up. The calculator shows the break-even point for your numbers.
How much does it cost to hire a new employee in Australia?
On top of salary you pay 12% super, payroll tax if your wages pass the state threshold, workers compensation, paid leave and public holidays, plus recruitment and onboarding. In the default example on our employee cost calculator, a $65,000 salary costs about $89,900 in the first year, around 38% more than the salary.
What is the difference between labour hire and recruitment?
With labour hire the agency employs the worker and charges you an hourly rate for the hours they work at your site. With recruitment the agency finds a candidate who you then employ directly, and you usually pay a one-off placement fee.
Can I offer a labour hire worker a permanent job?
Often yes. Many labour hire agreements allow a host to employ the worker directly, sometimes after a minimum period or for a conversion fee. Check the terms of your agreement before making an offer.
Who pays super and workers comp for labour hire workers?
The labour hire agency is the employer, so it pays the worker's wages, super, payroll tax and workers compensation, and recovers those costs through the charge rate. The host still has work health and safety duties for the workplace.
What is temporary vs permanent staffing?
Temporary staffing fills a need for a set period, usually through labour hire or fixed-term contracts. Permanent staffing means employing someone on an ongoing basis. Temporary staff give flexibility, while permanent staff cost less per hour over a long period.
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Sources and assumptions
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.