What it really costs to hire your first employee in Australia (2026 breakdown)

If you pay an employee $1,000 in gross weekly wages, the real weekly cost to your business is roughly $1,140-$1,220. The extra $140-$220 covers superannuation, workers' compensation insurance, and (for permanent employees) accrued leave entitlements.

Most first-time employers budget for the wage and forget the rest. Then the first workers' comp premium notice arrives, the super needs paying quarterly, and they realise their actual employee cost is materially higher than the contract says. Here's the line-by-line.

From 1 July 2025, the Superannuation Guarantee rate is 12% of ordinary time earnings (OTE). That's payable on top of every gross wage payment to your employee's nominated super fund. From 1 July 2026, Payday Super starts: SG must be paid each pay cycle (not quarterly).

OTE includes base wages, commissions, shift loadings and most allowances. It excludes overtime, one-off reimbursements and certain bonuses. For a $1,000 weekly wage that's $120/week in super on top — $6,240 a year.

Every employer in every Australian state must hold workers' compensation insurance. Premiums are set by the state scheme insurer (icare NSW, WorkSafe Vic, WorkCover Qld, etc.) based on your industry classification and total wages bill.

Average premiums by industry classification:

• Office / professional: 0.4-0.8% of wages
• Retail / hospitality: 1.0-1.8% of wages
• Trades / construction: 2.5-5.5% of wages
• Aged care / disability: 1.5-3.0% of wages

For a $1,000/week employee in retail, that's roughly $14/week or $730/year.

Permanent (full-time and part-time) employees accrue 4 weeks paid annual leave + 10 days paid personal leave per year. That's the equivalent of 7.7% of base wage in accrued entitlements you'll pay later when leave is taken.

Casual employees don't accrue leave — their 25% casual loading is meant to compensate. So a $1,000/week casual is just a $1,000/week cost (plus super + workers comp). A $1,000/week permanent is closer to $1,077/week when you account for accrual.

Payroll tax kicks in only once your annual wages bill exceeds the state threshold:

• NSW: $1.2M+ → 5.45% of excess
• VIC: $700k+ → 4.85% of excess
• QLD: $1.3M+ → 4.75% of excess
• WA: $1M+ → 5.5% of excess
• SA: $1.5M+ → 4.95% of excess

One employee at $52k/year doesn't trigger payroll tax in any state — you'd need 14-25 employees before it bites. Worth knowing for the future, irrelevant for your first hire.

Single permanent employee, $1,000/week gross wages, retail in NSW:

• Gross wages: $1,000.00
• Superannuation (12%): $120.00
• Workers' comp (~1.4%): $14.00
• Annual leave accrual (7.7%): $77.00
• Personal leave accrual (3.8%): $38.00
• Total weekly cost: $1,249.00 (24.9% on top of wages)

Casual at the same $1,000/week gross: total cost ~$1,134/week (13.4% on top, no leave accrual).

Use the First Hire Checklist + Cost Calculator to model your own scenario, including the 12-step compliance setup checklist. For specific situational questions, ask FairWork Mate AI free.