Ask most Australian business owners what an employee costs and they will tell you the salary.
The salary is roughly 70% of it.
That gap is why hiring decisions go wrong, why quotes get under-priced, and why “we can afford one more person” turns out to be untrue three months later.
The full stack, 2026-27
A $75,000 employee in New South Wales, above the payroll tax threshold:
| Component | Rate | Amount | Note |
|---|---|---|---|
| Base salary | — | $75,000 | |
| Superannuation | 12% | $9,000 | At its legislated ceiling since 1 July 2025 |
| Payroll tax (NSW) | 5.45% | $4,088 | Only above $1.2m total wages |
| Workers compensation | ~2% | $1,500 | Varies enormously by industry |
| Annual leave loading | 17.5% on 4 weeks | $1,010 | If the award provides it |
| Statutory subtotal | $90,598 | ||
| Equipment, phone, software | $2,500 | ||
| Desk space / floor area | $3,500 | Premises-based roles | |
| Recruitment, amortised 2 yrs | $2,000 | ||
| Training and development | $1,500 | ||
| True annual cost | ≈ $100,098 |
Multiplier: 1.33×
For trades and higher-risk industries where workers compensation runs 4–6%, the multiplier reaches 1.38–1.42×.
Payroll tax by state, 2026-27
Only applies above your state’s threshold, on total Australian wages — and grouping provisions aggregate related entities, which catches out businesses that believe they are under.
| State | Threshold | Rate |
|---|---|---|
| NSW | $1,200,000 | 5.45% |
| VIC | $1,000,000 | 4.85% (2.425% regional) — phases out $3m–$5m |
| QLD | $1,300,000 | 4.75%–4.95% |
Victoria’s phase-out is the one most often missed: the threshold reduces between $3m and $5m of national wages and disappears entirely above $5m.
→ Payroll tax thresholds by state
The costs that never appear in the model
Unproductive paid time. Annual leave, public holidays, personal leave. A full-time employee is paid for roughly 52 weeks and available for about 46. Your true hourly cost is therefore about 13% higher than salary ÷ 52 ÷ 38 suggests.
At $100,098 across ~1,748 productive hours, the real figure is $57.26 an hour — not the $37.98 that salary ÷ standard hours implies.
Management time. Every employee consumes supervision, review and direction. For a small business owner this is the scarcest resource there is, and it never appears in a hiring spreadsheet.
Ramp to productivity. Four to twelve weeks depending on the role, during which you pay full cost for partial output.
Payday Super, from 1 July 2026. The rate did not change, but super now leaves the account with every pay run rather than quarterly. The average SME needed over $124,000 in additional working capital, and 68% had made no preparation. That is a cash cost, not a P&L cost, and it hits hardest for the businesses with the most staff.
What this means for pricing
If you charge out staff time, your rate has to clear the true cost, not the salary.
At $57.26 an hour of true cost, plus a share of overhead (typically $20–$40 an hour in a small business), plus margin, a defensible charge-out rate for that $75,000 employee sits somewhere around $110–$140 an hour.
Businesses charging $85 because “they’re on $75k, so that’s a good markup” are losing money on every hour billed and cannot understand why growth is not producing profit.
→ Trades charge-out rates for the full build
The decision this should inform
The 1–4 employee segment of Australian business shrank by nearly 39,000 since 2021-22, while non-employing sole traders grew 4.3% in a single year.
That is not random. It is what happens when the cost of employing someone rises faster than the revenue that employee generates — and when owners are working from the salary figure rather than the real one.
Before the next hire, three questions:
- What revenue must this person generate to cover $100,098 plus a margin? At a 40% gross margin, roughly $250,000.
- How long until they reach it? Add the ramp period to your cash forecast.
- Is there a version of this that is not a full-time Australian employee? Systemising, automating, or offshore capability at $400–$1,200 a month for comparable admin work.
None of these say do not hire. They say hire with the actual number in front of you.
Where to go next
- Can You Afford to Hire? — the payback model
- Offshore vs Local Hire: The Full Cost Comparison
- The 2026-27 Award Increase
- Payday Super: The $124,000 Working Capital Hole
- Payroll Tax Thresholds by State
Sources: Australian Taxation Office; state revenue offices (NSW, VIC, QLD); Fair Work Commission Annual Wage Review 2026; ScotPac SME Growth Index; Employment Hero; ABS Counts of Australian Businesses. Worked figures are illustrative — workers compensation, award entitlements and payroll tax vary by industry and state. General information, not financial advice.