SG rate is 12% for 2025/26
Varies by industry and claims history (typically 1-5%)
Used to determine if payroll tax applies (threshold: $1,200,000.00)
Total Annual Cost
$101,107.50
Gross Salary
$85,000.00
On-Cost %
18.9%
Cost per $1
$1.19
Cost Breakdown
Everything you need to know about Australian employer costs
True Cost of Employment in Australia
The true cost of employing someone in Australia goes well beyond their gross salary. Employers must pay superannuation guarantee (currently 12%), payroll tax (if above the state threshold), and workers' compensation insurance. These "on-costs" typically add 15-25% on top of the gross salary.
Superannuation Guarantee
From 1 July 2025, employers must pay 12% of an employee's ordinary time earnings into their super fund. This is in addition to the employee's gross salary. The maximum contribution base is $62,500 per quarter ($250,000 per year).
Payroll Tax
Payroll tax is a state/territory tax on wages paid by employers. Each state has different rates and thresholds. If your total Australian payroll exceeds the threshold, you pay the state's rate on each employee's salary.
WorkCover / Workers Compensation
All employers must have workers' compensation insurance. Premiums vary by industry and claims history, typically ranging from 1% to 5% of wages. High-risk industries like construction pay higher rates.
Note: This calculator provides estimates. Actual payroll tax and WorkCover premiums may vary based on industry, claims history, and specific state rules. Consult your payroll provider for exact figures.
The true cost of hiring an employee beyond their salary — super, WorkCover, leave, and more
What are the total costs of employing someone?
The cost of an employee goes well beyond their salary. On top of a A$80,000 salary, you typically pay superannuation (A$9,200), WorkCover insurance (A$800 to A$4,000 depending on industry), payroll tax if applicable, and the cost of leave entitlements. The true cost is usually 20% to 35% more than the base salary. For a A$80,000 employee, expect to pay A$96,000 to A$108,000 in total.
How much is the Superannuation Guarantee?
Employers must pay the Superannuation Guarantee (SG) at 11.5% of an employee's ordinary time earnings for 2024-25. This rises to 12% from 1 July 2025. On a A$90,000 salary, that is A$10,350 per year in super contributions. You must pay super at least quarterly to your employee's nominated super fund. Late payments attract the super guarantee charge, which includes interest and penalties.
What is WorkCover insurance?
WorkCover (or workers compensation) insurance covers employees if they are injured or become ill because of work. It is compulsory in every state and territory. The premium depends on your industry, claims history, and total wages. Low-risk office work might cost 0.5% to 1.5% of wages, while high-risk construction can cost 3% to 8%. On A$500,000 in total wages at a 2% rate, your WorkCover premium would be about A$10,000 per year.
When does payroll tax apply?
Payroll tax is a state tax on your total Australian wages. Each state has a different threshold and rate. In NSW, the threshold is A$1.2 million and the rate is 5.45%. In Victoria, it is A$900,000 at 4.85%. In Queensland, A$1.3 million at 4.75%. If your total wage bill (including super) exceeds your state's threshold, you pay payroll tax on the amount above it. Small businesses with few employees often fall below the threshold.
What leave entitlements must employers fund?
Full-time employees are entitled to 4 weeks of paid annual leave, 10 days of paid personal/carer's leave, and long service leave (typically 8.67 weeks after 10 years). These entitlements build up as a liability on your books. For a A$80,000 employee, annual leave costs about A$6,153 and personal leave costs about A$3,077. When an employee leaves, you must pay out any unused annual leave and potentially long service leave.
What other costs should employers budget for?
Other costs include equipment and tools (A$2,000 to A$5,000 to set up a new employee), training and development (A$1,000 to A$5,000 per year), recruitment costs (10% to 25% of salary if using an agency), uniforms or protective equipment, fringe benefits tax on any non-cash benefits, and HR or payroll software subscriptions. Many businesses also pay for employee assistance programs and health and wellbeing initiatives.
How do you calculate the hourly cost of an employee?
Take the total annual cost (salary plus super plus WorkCover plus leave loading plus other costs) and divide by the actual hours the employee works. A full-time employee works about 1,976 hours per year (38 hours x 52 weeks). After subtracting leave, the productive hours drop to about 1,672. For a A$80,000 employee costing A$100,000 in total, the real hourly cost is about A$60, not the A$42 per hour the salary suggests.
ATO-Aligned: Based on 2024-25 ATO rates and thresholds. For personal advice, speak to a qualified tax agent.
Disclaimer: This calculator provides estimates based on current ATO rates and thresholds for the 2024–25 financial year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified tax agent before making financial decisions. Read our terms
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