How much does it really cost to hire an employee in Australia?

The on-costs, line by line

Payroll tax thresholds and rates are set by each state and territory and change at budgets; workers compensation premiums come from your scheme’s rate for your industry class. The figures above are the 2026 settings as published and should be checked against your state’s revenue office and insurer.

Worked example: A$80,000 salary

• Salary A$80,000
• Super at 12 per cent: A$9,600
• Workers compensation at 1.5 per cent (office or retail): A$1,200; at 5 per cent (construction): A$4,000
• Payroll tax: nil below the threshold; about A$4,400 in NSW once the business is over A$1.2 million in wages
• Recruitment: A$0 on free boards and SponsorTalent; A$300 for a SEEK ad; A$12,000 to A$16,000 through an agency
• First-year total: about A$91,000 to A$95,000 for a small business hiring directly, A$100,000 or more with an agency fee or payroll tax

Casual, part-time, contractor: what changes

Casual employees receive a 25 per cent loading instead of paid leave, and super applies the same way; the hourly cost is higher, the commitment lower. Part-time employees accrue leave pro rata. Independent contractors with an ABN invoice for their work, but the Fair Work definition of employment turns on the real relationship, not the label, and sham contracting carries penalties; many "contractors" are also owed super under the extended definition. Labour hire adds the agency’s margin to everything above.

How sponsorship charges compare

For a role no suitable Australian applies to, the government charges to sponsor a worker on a two-year 482 at small-business rates are A$3,150 (sponsorship approval A$420, nomination A$330, Skilling Australians Fund levy A$1,200 a year), or A$5,550 for four years, plus fixed migration agent fees; the worker normally pays the A$4,015 visa charge. The sponsored employee then costs exactly what the table above says, because the law requires the same pay and conditions as an Australian in the role and a salary of at least A$79,423. Set against one agency placement fee, sponsorship is usually the cheaper route to a filled role, if the occupation is on a list and the business can carry the obligations. The decision in one page; every option when you cannot find staff.

Reducing the cost of a hire

• Post on the free boards first and search a candidate database rather than paying an agency for a role that is not hard to fill: free job posting, candidate databases.
• Check wage subsidies through a Workforce Australia provider for eligible hires, and apprenticeship incentives for trades.
• Hire from the onshore visa-holder pool where it fits; the on-costs are identical and the recruitment cost is near zero: who can work for you now.
• Get the award classification right at the start; back-pay claims are the most expensive on-cost there is.

Frequently asked questions

What is the superannuation rate in 2026? 12 per cent of ordinary time earnings, the rate that applied from 1 July 2025 and remains for 2026–27. From 1 July 2026 it is payable each pay cycle under payday super.

Do small businesses pay payroll tax? Only once total Australian wages exceed the state or territory threshold, which ranges from about A$700,000 in Victoria to A$2 million in the ACT, with rates of 4.75 to 6.85 per cent above it. Most small businesses pay none; related entities are grouped.

How much is workers compensation? A compulsory premium set by your state scheme for your industry class and claims history: roughly 1 to 2 per cent of wages for office and retail work, and 3 to 10 per cent or more for construction, transport and meat processing.

What does a recruitment agency add to the cost? Commonly 15 to 20 per cent of first-year salary for a permanent placement (A$12,000 to A$16,000 on A$80,000), more for senior roles. Free boards, Workforce Australia and SponsorTalent’s A$30-per-contact search are the low-cost alternatives.

Does a sponsored worker cost more than a local hire? The employment costs are identical by law: same pay and conditions, same super, same leave. The additions are the government charges (A$3,150 for a two-year 482 at small-business rates) and migration fees, which the employer pays and cannot recover from the worker.