The true cost of hiring an employee in Australia

When you budget for a new hire, the advertised salary is the number everyone remembers. The real cost to your business is noticeably higher, because a set of other costs come with every employee.

The costs on top of salary

• ✓Superannuation: 12% of ordinary time earnings, paid on top of salary
• ✓Payroll tax: charged by your state or territory once your total wages pass its threshold, at a rate that differs by state
• ✓Workers' compensation insurance: the premium depends on your industry, state and wages
• ✓Leave: four weeks of annual leave and ten days of personal or carer's leave a year for full-time staff, plus leave loading under many awards
• ✓A desk, a computer, software licences and phone
• ✓Recruitment: agency fees or advertising, plus the time you and your team spend interviewing

A worked example

The Australian figures in our calculator are fully loaded: a market-rate base salary, 12% super, payroll tax, workers' compensation, plus desk, hardware and recruitment. On that basis a bookkeeper costs about $9,731 a month, or $116,772 a year.

For comparison, a full-time bookkeeper in Pakistan through 10Birds costs $1,639 a month, with employment, payroll, equipment and supervision included.

Costs that are easy to miss

• ✓Time to hire: weeks of a manager's time spent on job ads, screening and interviews
• ✓Ramp-up: the first months, when a new person is still learning your systems
• ✓Turnover: when someone leaves, you pay most of these costs again

When payroll tax applies

Payroll tax only applies once your total Australian wages are above your state's threshold. A small business below the threshold doesn't pay it, so its fully loaded cost per employee is lower. Check your state revenue office's current threshold before you compare.

This guide is general information, not tax or employment advice. Your accountant can confirm the costs for your business.