What is a normal cost multiplier for an Australian employee?

Between 1.25 and 1.40 times base salary for most office employers. Businesses under the state payroll tax threshold sit near the bottom of that range, while employers with high workers compensation premiums, generous allowances or expensive city office space can push past 1.5. Junior roles always run higher because fixed overhead does not scale down.

Is superannuation calculated on top of salary or included in it?

It depends on the contract. A package quoted as a total remuneration figure includes superannuation, while a base salary plus super arrangement adds it on top. This calculator treats the salary you enter as the base and adds the guarantee on top, so enter the base figure rather than the package.

Do I have to pay state payroll tax?

Only if your total Australian wages exceed your state or territory threshold, and thresholds and rates differ in each. Grouping rules can combine related businesses, so companies under common control may cross the threshold together even when each looks small on its own. Check with your state revenue office.

How should I account for paid time off?

Leave is already inside the salary because you pay the person while they are away. The real effect is on capacity, not cost, which is why this calculator divides by roughly 1,710 productive hours a year rather than the 1,976 contracted hours. Using contracted hours understates your true hourly cost by about fifteen per cent.

Should recruitment cost be included at all?

Yes, spread across expected tenure. Agency fees commonly run fifteen to twenty-five per cent of first-year salary, and even internal hiring consumes advertising spend and a great deal of interview time. Ignoring it hides the real cost of turnover and makes retention spending look expensive when it is usually the cheaper option.

How does this compare with hiring a contractor?

Compare the contractor's rate against the cost per productive hour rather than against salary. Contractors carry their own superannuation, leave, insurance and equipment, so a headline rate two to three times the base hourly salary can still be competitive, especially for short engagements where recruitment and ramp-up would be wasted.

Employee Cost Calculator

Australia· 2026-27

Calculates what an employee really costs an Australian employer once superannuation, state payroll tax, workers compensation, annual leave loading, equipment, workspace and amortised recruitment are added to base salary. An $85,000 salary lands near $118,600 a year, a multiplier of about 1.40, or roughly $99 an hour billable.

Enter your values

Annual base salary

Ordinary time earnings before tax, as written in the employment contract and excluding superannuation.

Superannuation guarantee

The Australian super guarantee rate, 12% since 1 July 2025. Raise it if your award or contract pays above the minimum.

State payroll tax rate

Your state or territory rate. Enter 0 if your total Australian wages sit under the state threshold, which most small employers do.

Workers compensation premium

Premium rate for your industry classification, from your insurer's renewal notice. Office work is low, construction and care work are much higher.

Annual leave loading

The loading paid on four weeks of annual leave under many awards. Enter 0 if your award or agreement does not include it.

Other benefits and allowances

Phone, travel allowance, income protection, bonuses, parking and anything else paid on top of salary each year.

Equipment and software a year

Laptop and phone spread over their replacement cycle, plus every per-seat software licence this role consumes.

Training and development

Courses, conferences, certifications and professional memberships budgeted for this role each year.

Workspace and overhead

Rent, power, insurance and facilities divided by headcount. Use a smaller figure for a remote role and add home office reimbursements.

Cost to recruit the role

Agency fee or advertising plus the interview time of everyone involved. Agencies typically charge fifteen to twenty-five per cent of first-year salary.

Expected tenure

years

How long you expect the person to stay, used to spread the recruitment cost across the years you get the benefit.

Ordinary hours a week

Contracted hours, which is 38 for a standard Australian full-time week. Use the actual figure for a part-time role.

Billable or productive share

For services firms, the share of productive hours you can charge to a client. Set it to 100 for a role with no billable target.

Runs in your browser. Nothing you enter is stored or sent anywhere.

Results

Worked example. Edit the values and press Calculate

True annual cost

$118,646

Base salary of $85,000 plus $33,646 of on-costs and overhead.

Cost multiplier
1.40x
Within the usual 1.25 to 1.40 band for an Australian employer.
Monthly cost
$9,887
What this role takes out of the bank account every month.
Cost per productive hour
$69.38
Based on 1,710 hours actually at work after leave and public holidays.
Cost per billable hour
$99.12
Your charge-out rate has to clear this before the role contributes a cent of profit.
Cost per paid hour
$60.04
Total cost spread across all 1,976 contracted hours, including paid leave.
Superannuation
$10,200
State payroll tax
$5,251
Calculated on salary plus superannuation plus leave loading, as most states do.
Workers compensation
$1,551
Annual leave loading
$1,144
Loading on four weeks of annual leave.
Other benefits and allowances
$2,000
Equipment and software
$3,000
Training and development
$1,500
Workspace and overhead
$5,000
Recruitment, amortised
$4,000
$12,000 spread across 3 years of expected tenure.
Total on-costs above salary
$33,646
39.6% of base salary.
Productive hours a year
1,710

True annual cost: Everything the role costs you in a year, which is the figure that belongs in a budget rather than base salary.
Cost multiplier: True annual cost divided by base salary. Australian employers usually land between 1.25 and 1.40 times salary.
Monthly cost: The annual cost spread across twelve months, which is how the commitment actually hits your bank account.
Cost per productive hour: Total cost divided by hours genuinely at work after leave and public holidays. Use this for project costing.
Cost per billable hour: The floor your charge-out rate must clear before the role earns anything, given the billable share you entered.
Cost per paid hour: Cost spread over all contracted hours including paid leave, useful for comparing against a casual or contract rate.
Superannuation: The employer's superannuation guarantee contribution, which is a legal minimum and cannot be traded away.
State payroll tax: State tax on wages above the threshold. Small employers under the threshold pay nothing, which changes the multiplier sharply.
Workers compensation: The insurance premium for this role, driven almost entirely by your industry classification and claims history.
Annual leave loading: The extra percentage paid on four weeks of annual leave under many awards and enterprise agreements.
Other benefits and allowances: Phone, travel, bonuses, income protection and anything else paid on top of salary during the year.
Equipment and software: Hardware spread over its replacement cycle plus every per-seat licence this role consumes each year.
Training and development: Courses, conferences and certifications budgeted for the role, which are far cheaper than replacing the person.
Workspace and overhead: Rent, power, insurance and facilities allocated per head, or the home office allowance for a remote role.
Recruitment, amortised: The cost to fill the role spread across expected tenure, so short tenure is correctly shown as expensive.
Total on-costs above salary: Everything you pay beyond base salary, expressed in dollars and as a percentage of salary.
Productive hours a year: Hours actually available for work after annual leave, public holidays and typical personal leave are removed.

Why use this calculator

Base salary is the number in the contract and it is never the number that leaves your bank account. Once the superannuation guarantee, state payroll tax, a workers compensation premium, annual leave loading, a laptop, a software stack, a desk and the amortised cost of recruiting are added, an Australian employer typically pays between 1.25 and 1.40 times the salary, and more for high-risk industries or high-overhead offices.

Getting this wrong distorts every downstream decision: you quote projects that lose money, you compare an employee against a contractor on the wrong basis, you budget a headcount you cannot actually afford, and you set charge-out rates that never recover the true cost of delivery.

This calculator names every component separately so you can replace the defaults with figures from your own payroll, insurance renewal and lease.

How to use it

Enter the annual base salary exactly as it appears in the contract, excluding superannuation.
Leave the superannuation guarantee at 12 per cent unless your award or agreement pays more than the legal minimum.
Set the state payroll tax rate from your state revenue office, and enter zero if your total Australian wages sit under the threshold, which most small employers do.
Take the workers compensation premium from your insurer's renewal notice, because the rate depends on your industry classification.
Set annual leave loading to 17.5 per cent if your award includes it and zero if it does not.
Add allowances, bonuses and insurances as other benefits, then enter equipment and software for the year, a training budget, and workspace cost per head from your lease.
Enter what it cost to recruit the role and how long you expect the person to stay, so recruitment is spread across the tenure.
Finally set contracted hours a week and, for services firms, the share of time you can charge to a client.

What each result means

True annual cost: Everything the role costs you in a year, which is the figure that belongs in a budget rather than base salary.
Cost multiplier: True annual cost divided by base salary. Australian employers usually land between 1.25 and 1.40 times salary.
Monthly cost: The annual cost spread across twelve months, which is how the commitment actually hits your bank account.
Cost per productive hour: Total cost divided by hours genuinely at work after leave and public holidays. Use this for project costing.
Cost per billable hour: The floor your charge-out rate must clear before the role earns anything, given the billable share you entered.
Cost per paid hour: Cost spread over all contracted hours including paid leave, useful for comparing against a casual or contract rate.
Superannuation: The employer's superannuation guarantee contribution, which is a legal minimum and cannot be traded away.
State payroll tax: State tax on wages above the threshold. Small employers under the threshold pay nothing, which changes the multiplier sharply.
Workers compensation: The insurance premium for this role, driven almost entirely by your industry classification and claims history.
Annual leave loading: The extra percentage paid on four weeks of annual leave under many awards and enterprise agreements.
Other benefits and allowances: Phone, travel, bonuses, income protection and anything else paid on top of salary during the year.
Equipment and software: Hardware spread over its replacement cycle plus every per-seat licence this role consumes each year.
Training and development: Courses, conferences and certifications budgeted for the role, which are far cheaper than replacing the person.
Workspace and overhead: Rent, power, insurance and facilities allocated per head, or the home office allowance for a remote role.
Recruitment, amortised: The cost to fill the role spread across expected tenure, so short tenure is correctly shown as expensive.
Total on-costs above salary: Everything you pay beyond base salary, expressed in dollars and as a percentage of salary.
Productive hours a year: Hours actually available for work after annual leave, public holidays and typical personal leave are removed.

The formula

Superannuation = base salary multiplied by the guarantee rate

Annual leave loading = salary multiplied by four fifty-seconds multiplied by the loading rate

Because loading applies to four weeks of leave.

Payroll tax = (salary plus superannuation plus leave loading) multiplied by the state rate, since most states include superannuation in the taxable wage base

Workers compensation = (salary plus leave loading) multiplied by the premium rate

Amortised recruitment = recruitment cost divided by expected tenure in years

True annual cost = salary plus all of the above plus benefits, equipment, training and workspace

Cost multiplier = true annual cost divided by base salary

Productive hours = contracted hours a week multiplied by 45 weeks, being 52 less four weeks of annual leave, about two weeks of public holidays and one week of personal leave

Cost per billable hour = true annual cost divided by productive hours multiplied by the billable share

How this number is used in practice

The Australian on-cost stack is easy to name and easy to underestimate. The superannuation guarantee has been 12 per cent since 1 July 2025 and applies to ordinary time earnings. State payroll tax is the component that surprises growing businesses, because it switches on only once total Australian wages cross a state threshold, and most states include superannuation in the taxable base.

Crossing that threshold can add four to six per cent of payroll overnight, which is why the second or third hire sometimes feels disproportionately expensive. Workers compensation premiums swing enormously by industry classification: clerical work often sits well under one per cent while construction, transport and aged care can run past five, and a poor claims history pushes it further.

Add 17.5 per cent leave loading on four weeks of annual leave where the award requires it and you have the statutory floor before a single laptop is bought.

For services businesses the number that matters is cost per billable hour, not cost per year. An $85,000 employee costing about $118,600 a year has roughly 1,710 productive hours after leave and public holidays, and at 70 per cent utilisation only about 1,200 of those are chargeable.

That is close to $99 an hour before a cent of profit, overhead recovery or non-chargeable management time. Firms that quote at $120 an hour on the assumption that an $85,000 salary equals $41 an hour are losing money on every job and usually do not discover it until the year end accounts land.

Work out this floor first, then set the charge-out rate at two and a half to three times base hourly cost, which is the long-standing rule of thumb in professional services.

Tenure is the quiet lever. Recruitment that costs $12,000 is $4,000 a year across three years but $12,000 a year if the person leaves inside twelve months, and that is before counting the productivity lost while a replacement gets up to speed. A modest training budget and a decent onboarding process are usually cheaper than one avoided replacement.

The same arithmetic explains why fixed overhead makes junior roles proportionally expensive: a desk, a laptop and a recruitment fee cost the same whether the salary is $60,000 or $150,000, so the multiplier is always worst at the bottom of the pay scale. Overseas the components change but the total does not: US employers face roughly 7.65 per cent in employer FICA plus unemployment insurance and health cover, while UK employers face employer National Insurance plus pension auto-enrolment, and both end up in a similar 1.25 to 1.4 band.

Worked examples

An $85,000 office role with 12% super, 5.45% payroll tax, 1.8% workers compensation, 17.5% leave loading, $2,000 allowances, $3,000 equipment, $1,500 training, $5,000 workspace and $12,000 recruitment over three years
True annual cost of $118,646, a 1.40x multiplier and $99.12 per billable hour at 70% utilisation
The same role at a small employer under the payroll tax threshold, working remotely with a $1,200 workspace allowance and no leave loading
True annual cost drops to $108,930 and the multiplier falls to 1.28, about $9,700 a year cheaper
A $65,000 trade role with a 4.5% workers compensation premium, $8,000 of tools and vehicle costs and only eighteen months of expected tenure
True annual cost of $98,339, a 1.51x multiplier driven by short tenure, tooling and a high insurance premium

When people use it

Budgeting a new headcount before you advertise the role
Setting a charge-out rate that genuinely recovers the cost of delivery
Comparing an employee against a contractor or agency on a like-for-like basis
Costing a project or tender where labour is the largest line
Testing what crossing the state payroll tax threshold does to your cost base
Making the case for a retention or training spend against the cost of replacing someone

Tips

Take the workers compensation rate from your actual renewal notice. Industry classification moves it by a factor of five or more.
Check your state payroll tax threshold before assuming you are exempt. Thresholds and rates differ in every state and territory.
Amortise recruitment over realistic tenure, not hoped-for tenure. If your industry averages two years, use two.
Remote roles cut workspace cost but add equipment, home office allowances and sometimes an internet contribution. Move the money, do not delete it.
For services firms, charge at two and a half to three times the base hourly cost. Anything less rarely covers non-billable time and overhead.
Review the multiplier annually. Superannuation, insurance premiums and software licences all drift upward without anyone deciding they should.
Compare the true cost, not the salary, when you weigh a pay rise against losing someone. A retained employee costs no recruitment fee and no ramp-up.

What it assumes, and where it stops being accurate

Written for Australian on-costs in the 2026-27 year. US employers should substitute employer FICA, federal and state unemployment insurance and health cover, and UK employers should substitute employer National Insurance and pension auto-enrolment.
Assumes payroll tax is calculated on salary plus superannuation plus leave loading. State rules and thresholds differ, and some states apply a deduction or a tiered rate rather than a flat one.
Assumes the employee is above the payroll tax threshold only if you enter a rate. Enter zero if your total Australian wages are under your state's threshold.
Assumes 45 productive weeks a year, being 52 less four weeks of annual leave, about two weeks of public holidays and one week of personal leave. Long service leave, parental leave and overtime are not modelled.
Ignores fringe benefits tax, which can apply to cars, entertainment and some allowances and is charged at a high rate on the grossed-up value.
Ignores redundancy provisions, long service leave accrual and the productivity cost of onboarding a new starter.
Assumes equipment is expensed evenly each year rather than depreciated under tax rules, which changes the tax treatment but not the cash cost.

Terms used on this page

On-costs: Everything an employer pays beyond base salary, including superannuation, payroll tax, insurance premiums and leave loading.
Superannuation guarantee: The compulsory employer contribution to an employee's retirement savings, set at 12 per cent of ordinary time earnings since 1 July 2025.
Payroll tax: A state or territory tax on total wages above a threshold, with rates and thresholds differing across Australia.
Annual leave loading: An extra percentage, commonly 17.5, paid on four weeks of annual leave under many awards and agreements.
Cost multiplier: True annual cost divided by base salary, the quickest way to compare on-cost burdens between roles or employers.
Utilisation: The share of productive hours a services firm can charge to a client, typically sixty to eighty per cent.

Questions people ask

What is a normal cost multiplier for an Australian employee?: Between 1.25 and 1.40 times base salary for most office employers. Businesses under the state payroll tax threshold sit near the bottom of that range, while employers with high workers compensation premiums, generous allowances or expensive city office space can push past 1.5. Junior roles always run higher because fixed overhead does not scale down.
Is superannuation calculated on top of salary or included in it?: It depends on the contract. A package quoted as a total remuneration figure includes superannuation, while a base salary plus super arrangement adds it on top. This calculator treats the salary you enter as the base and adds the guarantee on top, so enter the base figure rather than the package.
Do I have to pay state payroll tax?: Only if your total Australian wages exceed your state or territory threshold, and thresholds and rates differ in each. Grouping rules can combine related businesses, so companies under common control may cross the threshold together even when each looks small on its own. Check with your state revenue office.
How should I account for paid time off?: Leave is already inside the salary because you pay the person while they are away. The real effect is on capacity, not cost, which is why this calculator divides by roughly 1,710 productive hours a year rather than the 1,976 contracted hours. Using contracted hours understates your true hourly cost by about fifteen per cent.
Should recruitment cost be included at all?: Yes, spread across expected tenure. Agency fees commonly run fifteen to twenty-five per cent of first-year salary, and even internal hiring consumes advertising spend and a great deal of interview time. Ignoring it hides the real cost of turnover and makes retention spending look expensive when it is usually the cheaper option.
How does this compare with hiring a contractor?: Compare the contractor's rate against the cost per productive hour rather than against salary. Contractors carry their own superannuation, leave, insurance and equipment, so a headline rate two to three times the base hourly salary can still be competitive, especially for short engagements where recruitment and ramp-up would be wasted.

Use this with

Employee Cost Calculator answers one part of the question. These pick up where it stops: Hiring Cost Calculator, Salary Calculator, Superannuation Calculator, Payslip and Paystub Field Estimator and Freelance Rate Calculator.

Where these figures come from

Australia· 2026-27Last reviewed 2026-09·How we build and check calculators

Figures and rules on this page follow Australian law and ATO guidance.

Australian Taxation Office: Super for employers. Superannuation guarantee rate and ordinary time earnings definition
Fair Work Ombudsman. Award conditions, annual leave loading and minimum entitlements
Revenue NSW: Payroll tax. State payroll tax rate, threshold and taxable wage base
Safe Work Australia. Workers compensation premium rates by industry classification
US Bureau of Labor Statistics. Employer costs for employee compensation, for the US comparison

Employee Cost Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.