Free tool
Hiring Cost Calculator — True Cost to Employ
Role details
Your business
Used to check payroll-tax threshold for your state.
Total annual cost to employ
$96,076.92
20.1% overhead on a base of $80,000
Effective hourly cost: $48.62/hr (38h × 52w basis)
Breakdown
Compared to engaging a contractor
Contractors typically invoice 1.5× the equivalent employee hourly rate to cover their own super, leave, workers comp, and business overhead. We've assumed 46 billable weeks/year (6 weeks unbilled) and a 1.5× markup. The numbers below are approximate.
Employee TCO
$96,076.92
Contractor (1.5× @ 46wk)
$106,156.04
$60.73/hr invoice
Employee is cheaper
+$10,079.12 per year
For ongoing labour, employment usually wins on TCO. For genuine project work or specialist skills, contracting often wins. The bigger risk: sham contracting under the 2024 Closing Loopholes reforms — courts now apply a substance-over-form test. Use the Contractor-or-Employee classifier to confirm the relationship is genuinely commercial before going contractor.
Sources
- • Super Guarantee 12% from 1 July 2025 — ATO
- • Workers comp rates: state schemes (iCare NSW, WorkSafe Vic, WorkCover QLD, etc.) 2025-26 published industry rates
- • Payroll tax thresholds + rates: each state Revenue Office, 2025-26
- • Leave loading 17.5% under most modern awards (Fair Work Act 2009 s90)
- • Last verified 2026-05-01 — re-check before relying on for material decisions.