Hiring in Australia costs more than a salary. The true cost is the base salary plus mandatory on-costs, chiefly superannuation (12%) (from 1 July 2025), payroll tax (state-dependent), workers' compensation, and paid leave entitlements, plus one-off recruitment and onboarding costs.
Hiring employees is an essential aspect of running any business, and it's a critical step that can be costly. As an employer in Australia, you need to be aware of the costs associated with hiring an employee, and how they can impact your business. From wages and benefits to superannuation contributions, employers need to be aware of the overall cost when considering hiring new staff. Let's discuss the different costs and main factors that should be considered when budgeting for a new hire in Australia.
Benefits of Hiring in Australia
Employing staff in Australia offers a range of significant benefits for businesses. One of the biggest benefits of hiring in Australia is being able to tap into a highly educated and diverse talent pool. Australia ranks 1st in the OECD for its capacity to attract and retain highly educated people.
With a booming economy and low unemployment rates, there is no shortage of talent in Australia to hire. Now, let's take a closer look at the costs involved in hiring an employee in Australia.
Required Costs of Hiring in Australia
Minimum Wage
In Australia, the Fair Work Commission sets the minimum wage. As of 1 July 2026, the national minimum wage is $26.44 per hour, or $1,004.90 per week before tax, based on a 38-hour week for a full-time adult. Casual employees receive at least $33.05 per hour, which includes a 25% casual loading. The minimum wage may vary depending on the industry and the level of experience of the employee.
Penalty Rates & Overtime Pay
Penalty rates are higher pay rates that employers must pay employees for working particular hours or days, such as the weekends, public holidays, overtime, late night shifts or early morning shifts. Penalty rates depend on your industry and whether your shifts are designated.
In terms of overtime, these rules apply:
From Monday to Saturday, employees are paid 150% of their hourly wage rate for the first two or three hours of overtime worked. After that, it is 200% of their hourly wage rate per overtime hour worked. On Sundays, overtime is paid at 200% of their hourly wage rate per overtime hour worked.
During a public holiday that falls on Monday to Friday, overtime is paid at 150% of the hourly wage rate for the first 7.6 hours and at 250% of the hourly wage rate thereafter. When a public holiday falls on a Saturday or Sunday, overtime is paid at 250% of the hourly wage rate.
Part-time employees working overtime will be paid their normal hourly rate within 38 hours. For any overtime worked more than 38 hours, the above-mentioned conditions will apply for overtime.
Superannuation
Superannuation (a.k.a super) is a compulsory contribution made by employers to their employees' retirement savings. The Superannuation Guarantee rate is 12%, effective from 1 July 2025 (the final scheduled increase) and unchanged for FY2026-27. This means that if you hire an employee with a salary of $50,000 per year, you'll need to contribute $6,000 per year to their superannuation account.
For high earners, an additional tax may apply. Under Division 293 tax, individuals whose income plus concessional super contributions exceed $250,000 pay an extra 15% tax on their super contributions (or on the amount over the $250,000 threshold, whichever is lower). This is not a 15% tax on all income over $250,000. These contributions are made in addition to the wages paid by the employer.
Superannuation contributions are an important part of hiring an employee in Australia and must be factored into any calculations related to salary packages and costs associated with hiring staff. Understanding your obligations here will help ensure compliance with government regulations and provide peace of mind for both employer and employee alike.
Payroll Tax
Payroll tax is a state-based tax that employers pay on their total wage bill. The rate and tax-free threshold vary between states, and you only pay payroll tax if your total wages bill exceeds your state's threshold.
Workers' Compensation Insurance
Workers' compensation insurance is mandatory insurance that employers need to have to cover their employees in case of a work-related injury or illness. The scheme is administered separately in each state and territory, across 11 different schemes. The cost of workers' compensation insurance varies depending on the industry and the size of your business.
Paid Vacation & Leave Loading
Most full-time employees receive 4 weeks of paid annual leave for each year of employment. Part-time workers also have the right to 4 weeks of annual leave, but their entitlement is calculated on a proportional basis.
Additionally, employees may qualify for an extra week of paid annual leave if they meet one or both of the following conditions: they often work shifts on Sundays and public holidays, or they are employed by a company that runs continuously, 24 hours a day and 7 days a week.
Typically, annual leave is remunerated at the regular hourly rate. Many modern awards also require a 17.5% annual leave loading when employees take annual leave — but this is an award-specific entitlement, not a universal NES obligation, so it doesn't apply to all employees. Where it applies, the loading is paid on top of the employee's normal salary.
Sick Leave
Except for casual employees, all workers are eligible for paid sick and carer's leave under the National Employment Standards (NES). To receive compensation for these types of absences, employees may need to provide notice or supporting documentation, such as medical certificates. Paid sick and carer's leave is classified as a single entitlement and is often called personal/carer's leave. The annual allocation of leave is determined by an employee's regular hours of work, with full-time personnel being granted 10 days and part-time staff receiving a prorated amount, equivalent to 1/26 of their ordinary hours of work per year.
Parental Leave Pay (PLP)
From 1 July 2026, eligible parents can access up to 26 weeks (130 days) of government Paid Parental Leave, paid at the National Minimum Wage, currently $200.94 per day, or $1,004.70 for a 5-day week in FY2026-27.
For children born or adopted between 1 July 2025 and 30 June 2026, the entitlement is 24 weeks. From 1 July 2025, the government also pays 12% super on Parental Leave Pay.
This is in addition to any paid parental leave the employee may receive from their employer. Parental Leave Pay can be taken flexibly, in periods negotiated between the employee and employer, within two years of the child's birth or adoption.
Often, the Australian Government makes PLP payments through the employer, who pays the employee. Employers can provide paid parental leave in enterprise or other registered agreements, employment contracts, and workplace policies too. The amount of leave and pay entitlements depends on the relevant agreement, contract, or policy. However, employer-funded paid parental leave doesn't affect an employee's eligibility for the Australian Government's PLP Scheme, and employees can receive both.
Employers that have employees receiving Australian Government-funded PLP are required to keep records of the amount of PLP funding received, the date each payment was made, and the gross amount of the payment, among other details. Additionally, employees receiving PLP must receive a pay slip for each payment that specifies the payments are PLP under the Australian Government PLP Scheme.
Recruitment, Training & Administrative Costs
Recruitment costs can include job advertising, recruitment agency fees, and other expenses associated with finding and hiring the right employees. These costs can vary greatly depending on the method you use to find your new employee, the industry, and the level of experience you require. Common cost drivers include:
- Job advertising and sourcing.
- Recruitment agency fees, usually charged as a percentage of the new hire's first-year salary.
- Onboarding and equipment for the new hire.
- Training and development.
- Lost productivity while the role ramps up.
According to the ELMO Software / AHRI 2022 HR Industry Benchmark Report (2021 survey data), the average cost to hire was $23,860 per worker (up from $10,500 in 2020), with an average time-to-hire of about 40 days. This is a 2021 benchmark, not a current figure, but it shows how quickly recruitment costs can add up.
It's essential to make sure that your new employee is adequately trained to perform their duties and responsibilities, and this may require some investment on your part. Training costs can be significant, especially if they require specialized skills or knowledge. Employers may choose to invest in developing their staff through workshops, seminars and conferences, as well as online learning resources or formal qualifications such as college diplomas or university degrees. Employers may also offer to cover co-working space memberships or other stipends.
Another thing to keep in mind is that it takes employers about 40 days on average to fill a vacant position. During this time, employers should consider the loss of productivity when the job is vacant – another cost the business must absorb.
Optional Costs of Hiring in Australia
Other Costs
Don't forget that there are also ongoing costs associated with employing someone, such as payroll processing fees, and other benefits that you may offer your employees, such as professional memberships, health or travel insurance or gym memberships.
On top of everything, employers should consider the costs of visa applications for international staff if they plan to hire non-Australians in Australia, such as fresh graduates or employees who are very specialized. The cost of a visa application varies depending on the type of position being filled, with skilled worker visas costing significantly more than holiday or student visas.
What Is the Total (Fully-Loaded) Cost of an Australian Employee?
The total cost of an Australian employee is their base salary plus roughly 12% superannuation and other on-costs — payroll tax (where you're above the state threshold), leave loading (where an award applies), and workers' compensation — on top of one-off recruitment and onboarding costs.
Full-time adult average weekly ordinary time earnings were $2,051.10 in November 2025 (ABS), up 3.8% year-on-year. On an annual basis, that works out to roughly $106,600 — a derived calculation, not an ABS figure. Actual salaries vary widely by industry, role, and experience.
To budget accurately, work from a simple formula:
Total employer cost = Base salary + Superannuation (12%) + Payroll tax (if above the state threshold) + Leave loading (if an award applies) + Workers' compensation + one-off hiring costs.
Here's how that looks on a $90,000 base salary:
Borderless Can Help You Cover The True Cost of Hiring in Australia
In conclusion, the cost of hiring an employee in Australia involves a range of factors, from the minimum wage to superannuation, payroll tax, leave entitlements, and one-off recruitment and onboarding costs. It's essential to factor in these costs when making hiring decisions so you can afford to employ and maintain a productive workforce.
An Employer of Record also lets you hire compliantly in Australia without setting up a local entity. Borderless AI handles contracts, payroll, tax, and benefits, with 24/7 in-house North American support. Unsure about the costs involved? An EOR like Borderless is here to help you hire the best in Australia.
Book a demo! Let's work together.
Disclaimer: Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
Frequently Asked Questions
How much does it cost to hire a full-time employee in Australia beyond their base salary?
Beyond base salary, expect roughly 12% superannuation, payroll tax (where your wage bill exceeds the state threshold), workers' compensation, and paid leave entitlements, plus one-off recruitment and onboarding costs.
What are the mandatory employer costs when hiring in Australia?
The mandatory employer costs are superannuation (12% from 1 July 2025), payroll tax above your state's threshold, workers' compensation insurance, and National Employment Standards leave entitlements.
What is the current superannuation rate employers must pay?
The Superannuation Guarantee rate is 12%, effective from 1 July 2025 and unchanged for FY2026-27.
What is the National Minimum Wage in Australia?
As of 1 July 2026, the National Minimum Wage is $26.44 per hour, or $1,004.90 per week before tax, based on a 38-hour week.
Average Salary & Employer Costs
As of 2023, the average Australian salary is $805 per week. This varies from industry to industry. For example, the average annual salary for an IT professional is AUD91,200 (USD61,000) while the average annual salary for a marketing professional is AUD 87,524 (USD 58,406).
Taking everything into account, from superannuation to healthcare, the average employer costs up to 15.85% of an employee’s salary.
Disclaimer: Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
