Employee Cost Calculator – Australia [2026]
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Employee Cost Calculator Australia: What a Hire Really Costs
You found a great candidate in Sydney. The salary fits your budget. Then your finance lead asks the question that stalls the hire: “What does this actually cost us?”
In Australia, the salary is only part of the bill. Compulsory superannuation, state payroll tax, workers’ compensation and leave entitlements sit on top. For a company hiring from overseas with no local entity, these on-costs are the part you can’t see until the first invoice lands.
This guide breaks down the real numbers for the 2025–26 financial year. You get a worked example in Australian dollars, the on-costs state by state, and an honest look at what a calculator can and can’t tell you before you commit.
The short answer: salary is about 75–85% of the real cost
As a planning rule, budget roughly 20% to 30% on top of gross salary for a full-time Australian employee. A $100,000 salary usually costs $120,000 to $130,000 fully loaded.
The exact figure moves with three things: which state the employee sits in, your total Australian wage bill, and the industry risk rating that sets your workers’ comp premium. A single first hire often lands near the bottom of that range. A growing team can push toward the top once payroll tax kicks in.
The rest of this page shows you how that multiplier is built so the number holds up when your CFO pressure-tests it.
What goes into the true cost of an Australian employee
Four mandatory on-costs apply to most full-time hires. An employment cost calculator, or employee calculator, helps a business forecast cash flow by capturing the total cost and full employee costs base in FY2025–26.
Superannuation (12% and it changed on 1 July 2025)
Superannuation is Australia's compulsory retirement contribution. You pay it on top of salary, not out of it. The superannuation guarantee rate reached 12% of ordinary time earnings on 1 July 2025 - the final step in a run of legislated increases. These contributions must be paid into a complying super fund. It stays at 12% for now.
On a $100,000 salary, that's $12,000 a year straight away. Super is the single largest on-cost for most hires, and it is not optional. Miss a payment deadline and the Australian Taxation Office applies the Super Guarantee Charge on top. It also applies to eligible casual employees, and older guidance often referred to the prior 10% benchmark once an employee earned $450 or more in a month.
Payroll tax (state-based, and easy to miss)
This is the one that catches overseas employers. Payroll tax is not a federal tax. Each state and territory sets its own rate and its own threshold, and you only pay once your total Australian wages cross that threshold.
For a first hire or a small team, you often pay nothing, most thresholds sit above $1 million in annual wages. But the moment your Australian payroll grows past the line, the rate applies to the excess. Rates run from about 4.75% to 6.85% depending on the state.
Because the tax is tied to where your workers are, a team spread across several states means several registrations and several thresholds to track.
Workers' compensation insurance
Workers' compensation called WorkCover in some states, is compulsory the moment you employ someone. It covers work-related injury and illness, and the premium is a percentage of your wage bill.
These insurance costs vary by state or territory, and key factors include the employer's industry and workforce profile. For standard office roles, premiums often sit in roughly the 1.3%–3.5% range, while higher-risk industries can differ materially from office-based businesses. For most office hires, budget somewhere in that range as a working estimate, then confirm against the state scheme once the role is defined.
Annual leave loading and paid leave
Full-time employees accrue four weeks of paid annual leave a year and are entitled to 10 days of paid personal leave annually, including sick leave and carer’s leave. Where an award applies, annual leave loading is typically 17.5%, and many employers also review leave-related benefits when estimating employment costs.
Paid leave isn't a line item you pay separately, but it is a real cost: the salary keeps running while the work pauses. Factor it into capacity planning, not just the pay run, because the cost of hiring should also allow for long service leave as a mandatory entitlement, along with long service and parental leave.
The costs an employee cost calculator won't show you
A calculator gives you the mandatory percentages. It won't price the things that quietly add up:
- Entity setup: If you go it alone - registration, local directors, accounting and ongoing filings.
Payroll software and compliance admin - Single Touch Payroll reporting, payslips, keeping up with rule changes, and the administrative tasks that payroll systems and cloud tools can streamline.
Operational overheads - these indirect costs can include desk space, equipment, software licenses, and onboarding training.
Modern Award obligations - many roles sit under an award that sets minimum pay, allowances and penalty rates above the national minimum.
Non-cash benefits - fringe benefits tax may apply to items such as company cars or reimbursements.
Getting it wrong - misclassifying an employee as a contractor, or missing a filing, carries penalties from local statutory bodies.
These are exactly the expenses that turn a clean salary number into a messy real one. They're also the reason the entity-vs-EOR decision later in this guide matters, and why training costs should be budgeted for, especially in specialized industries, since employers must invest in training for employee skill development and those costs can materially affect hiring budgets.
A worked example: the real cost of a $120,000 hire
Take a software engineer in New South Wales on a $120,000 base salary. Here's how the fully loaded cost builds, assuming your Australian wage bill stays under the payroll tax threshold.
Cost component | Rate (FY2025–26) | Annual cost (AUD) |
|---|---|---|
Base salary | — | $120,000 |
Superannuation | 12% | $14,400 |
Workers' compensation (est.) | ~1.8% | $2,160 |
Payroll tax | Below threshold | $0 |
Total employer cost | — | $136,560 |
That's a 13.8% load on salary, before payroll tax. Now grow the team. Once your total NSW wages pass $1.2 million, payroll tax at 5.45% applies to the excess, and the same engineer's share of that adds roughly $6,500 a year. The load climbs past 19%.
The lesson: your per-hire cost isn't fixed. It steps up as your payroll crosses state thresholds. A calculator built around a single salary misses that. Model the whole team, not one row.
On-costs by state and territory (FY2025–26)
Payroll tax and workers’ comp are where the states diverge. Super is national and identical everywhere. Use this as a directional guide, then confirm current figures with the relevant state revenue office -thresholds and rates change with each state budget.
State / Territory | Payroll tax rate | Annual threshold | Workers’ comp (avg.) |
|---|---|---|---|
New South Wales | 5.45% | $1,200,000 | ~1.8% |
Victoria | 4.85% | $1,000,000 | ~1.8% |
Queensland | 4.75% | $1,300,000 | ~1.3% |
Western Australia | 5.5% | $1,000,000 | ~1.8% |
South Australia | 4.95% | $1,500,000 | ~1.85% |
Tasmania | 4.0% | $1,250,000 | ~1.9% |
ACT | 6.85% | $2,000,000 | ~2.0% |
Northern Territory | 5.5% | $1,500,000 | varies |
Two takeaways for an expanding employer. Queensland is the most cost-friendly on the combined load. The ACT has the highest payroll tax rate but the highest threshold, so it only bites at scale. Where you place a role has a real dollar consequence.
Two changes foreign employers keep getting caught by
Most cost pages quote last year’s figures and stop. Two current changes matter more than the headline rates.
Payday Super from 1 July 2026
Until now, employers paid super quarterly. From 1 July 2026, super must be paid at the same time as wages, a reform called Payday Super. For a company running payroll from overseas, that means tighter cash-flow timing and payroll systems that can settle super on every pay run, not four times a year. If your provider still batches super quarterly, that gap becomes your compliance risk.
Payroll tax grouping for foreign-owned groups
Grouping provisions let state revenue offices treat related entities as one for payroll tax. If your Australian operation is part of a larger group, the states can combine your wages which can pull you over a threshold you thought you were under, and limit you to a single threshold across the group. Foreign-owned structures get caught here often, because the group relationship isn’t obvious until the assessment arrives. Check grouping before you assume you’re below the line.
Entity vs Employer of Record: the cost decision
Here’s the decision a calculator can’t make for you. To employ someone in Australia, you either set up a local entity or use an Employer of Record (EOR) that employs the person on your behalf.
Setting up an entity means registration, a local presence, ongoing accounting, payroll infrastructure and compliance filings – real upfront and recurring cost, plus months of lead time before your first hire starts. Some employers also budget for public liability insurance alongside workers’ comp when comparing entity costs. It makes sense once you’re running a sizeable, permanent Australian team.
An EOR becomes the legal employer. It handles super, payroll tax, workers’ comp, STP reporting and local compliance, and bills you a predictable fee on top of the fully loaded salary. You skip the entity entirely and onboard in days. It makes sense when you’re testing the market, hiring a handful of people, or want zero local compliance exposure.
The rough break-even: below five to ten Australian employees, an EOR is usually cheaper and far faster once you count the admin and risk you avoid. Above that, modelling your own entity starts to pay off. Run both numbers before you decide – determine the cheaper option by modelling both direct employment costs and the compliance overhead each route must cover, because the cheapest option on paper isn’t always the cheapest once compliance and time-to-hire are priced in.
How to calculate employee cost in Australia (step by step)
Start with gross annual salary. This is your base.
Add 12% superannuation. Non-negotiable, on top of salary.
Add workers’ compensation. Use ~1.5–1.9% as a placeholder, then confirm your industry rate.
Check payroll tax. Only applies if total Australian wages exceed the state threshold then apply the state rate to the excess.
Account for leave. Four weeks annual leave plus loading where it applies; price the paused-work cost into capacity.
Add admin and compliance. Either your entity’s running costs, or your EOR fee.
Include recruitment costs. Add hiring expenses such as advertising, interviews, and reference checks; as a benchmark, advertising a role alone can average $5,380.
Sum those and you have a defensible fully loaded cost – the kind that survives a board review.
Why overseas companies use PamGro to hire in Australia
PamGro is a global employment partner that becomes the legal employer for your Australian hires. You get the person onboarded without opening an entity, and the on-costs handled by people who run this every day.
We manage superannuation, state payroll tax, workers’ compensation, Single Touch Payroll reporting and local compliance across 150+ countries. Pricing is transparent, with no hidden onboarding or termination charges so the cost you model is the cost you pay.
If you’re sizing an Australian hire right now, start with the numbers above, then talk to us about what your specific role and state actually cost. We’ll give you a real figure, not a range.
Frequently Asked Questions
How much does it really cost to employ someone in Australia?
Budget roughly 20% to 30% on top of gross salary for a full-time Australian employee. A $100,000 salary typically costs $120,000–$130,000 fully loaded once superannuation (12%), workers’ compensation and any payroll tax are added. The exact figure depends on the employee’s state and your total Australian wage bill.
What is included in the on-costs of an Australian employee?
The main mandatory on-costs are superannuation at 12% of ordinary time earnings, state payroll tax (only above a threshold), compulsory workers’ compensation insurance, and paid leave entitlements including annual leave loading, all sitting on top of gross wages. On top of these sit entity or payroll admin costs, superannuation contributions, and compliance obligations under Fair Work and any relevant Modern Award, while some employers also face recruitment agency fees when hiring.
How much is superannuation in Australia in 2025–26?
The Super Guarantee rate is 12% of ordinary time earnings, effective from 1 July 2025. This was the final legislated increase, and the rate stays at 12% unless Parliament changes it. Employers pay super on top of salary, not deducted from it. From 1 July 2026, super must be paid on each payday rather than quarterly.
Do overseas companies pay payroll tax in Australia?
Yes, if their total Australian wages exceed the relevant state threshold. Payroll tax is state-administered, with rates from about 4.75% to 6.85% and thresholds generally above $1 million. A single hire often falls below the threshold, but grouping provisions can combine a foreign-owned group’s wages, pulling you over the line sooner than expected.
Can I hire in Australia without setting up a local entity?
Yes. An Employer of Record (EOR) employs the person on your behalf and handles superannuation, payroll tax, workers’ compensation and compliance, so you avoid opening an entity. This is usually faster and cheaper for small or early-stage Australian teams. Setting up your own entity tends to make sense only once the team grows larger and permanent.
How accurate are free employee cost calculators?
They’re a good starting point for mandatory percentages like super, but they have limits. Most assume a single salary and miss payroll tax thresholds that step up as your team grows, grouping rules, industry-specific workers’ comp rates, and award obligations. A good calculator can also surface hidden on-costs, flag where modern award compliance gets complex, and show which fees sit outside salary and statutory payroll costs. Treat the output as a planning estimate, then confirm the figures for your exact role and state.
What is Payday Super and when does it start?
Payday Super is a reform requiring employers to pay superannuation at the same time as wages, rather than quarterly. It starts on 1 July 2026. For companies running Australian payroll from overseas, it means tighter payment timing and payroll systems that can settle super on every pay run, not in quarterly batches.