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What Does an Employee Really Cost Me?

A wage isn't the whole cost of an employee. Add super, on-costs, paid leave and the gear they need, and see what each paid and productive hour really costs.

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Their pay is

Their ordinary rate, before tax.

Before tax, not including super.

Starts at 38, the National Employment Standards maximum ordinary hours for full-time employees (Fair Work Ombudsman).

On-costs

Starts at 12%, the super guarantee rate from 1 July 2025 (ATO).

As a % of wages, from your insurer or state scheme. Rates vary by state and industry.

As a % of wages. For example leave loading, or payroll tax if your business pays it.

Paid leave and holidays

Change these to match the employee. Part-time leave is based on their ordinary hours.

Starts at 4 weeks for full-time employees under the National Employment Standards (Fair Work Ombudsman).

Varies by state.

Starts at 10 days a year paid sick and carer's leave for full-time employees (Fair Work Ombudsman). Enter what's usually taken if it's less.

Paid training days, toolbox days and similar.

Productive time

Hours on work you can charge for. Travel, yard time, waiting and admin usually aren't.

Other yearly costs for this employee

If they have a work vehicle.

Your result

Enter your figures to see your result straight away. Nothing is sent anywhere.

How it's worked out

Everything the business pays for the year is added up, then divided by the hours they're paid for, the hours they actually work, and the hours that produce chargeable work.

  1. Yearly wageHourly rate × ordinary hours a week × 52, or the annual salary
  2. On-costsWage × (super % + workers compensation % + other on-costs %)
  3. Total employment costWage + on-costs + uniforms, tools, phone, vehicle, training and other costs
  4. Paid leave and holidaysAnnual leave weeks × weekly hours + (public holidays + sick and carer's leave + other paid days) × daily hours
  5. Hours workedPaid hours (52 weeks) − paid leave and holidays
  6. Productive hoursWeeks worked × productive hours a week
  7. True cost per hourTotal cost ÷ paid hours, ÷ hours worked, and ÷ productive hours

Leave is paid for but not worked, so every hour actually worked has to carry it.

Worked example

A qualified tradesperson on $32 an hour for 38 hours a week, with 12% super, a 3% workers compensation premium and 2% other on-costs. They take 4 weeks' leave, 10 public holidays, 10 sick days and 3 training days, and do 32 productive hours in a normal week. Uniforms, tools, phone and training add $3,000 a year.

Worked example figures
Hourly rate$32
Ordinary hours38 a week
Super / workers comp / other12% / 3% / 2%
Other yearly costs$3,000
Productive hours32 a week
Worked example results
Wage$63,232
Total employment cost$76,981
True cost per paid hour$38.96
True cost per productive hour$55.43

A $32 hourly rate costs the business about $55 for every productive hour.

Assumptions

  • Super starts at 12%, the super guarantee rate from 1 July 2025 (ATO).
  • Ordinary hours start at 38, annual leave at 4 weeks and paid sick and carer's leave at 10 days, the National Employment Standards figures for full-time employees (Fair Work Ombudsman, checked 30/09/2026).
  • Public holidays vary by state. Workers compensation rates vary by state and industry. Enter your own.
  • Awards and agreements can add allowances, penalty rates, overtime and leave loading. Add these as other on-costs.
  • Payroll tax only applies above state thresholds. Include it in other on-costs if your business pays it.
  • Wages must meet the relevant award or agreement. Check with Fair Work or your adviser.

This calculator estimates employment costs from the figures and assumptions you enter. It isn't employment-law, tax, accounting or financial advice. Wages and entitlements must meet the relevant award or agreement.

FAQ

Employee Cost questions. Answered.

Why is the cost per productive hour so much higher than the hourly rate?

Because the business pays for leave, public holidays and on-costs, and not every hour at work is chargeable. All of that has to be covered by the hours that produce work.

What on-costs should I include?

Super, workers compensation and anything else you pay because you employ someone: leave loading, allowances, payroll tax if it applies to you. The award or agreement that covers the employee sets many of these.

Does this work for part-time employees?

Yes. Enter their ordinary hours. Leave for part-time employees is based on their ordinary hours, so the leave figures stay in weeks and days.

Does it include payroll tax?

Not automatically. Payroll tax depends on your state and total wages. If your business pays it, add it as a percentage in other on-costs.

What should I charge for this employee's time?

At least the true cost per productive hour, plus a share of overheads and a profit margin. The hourly rate calculator's team mode can work that out.

Is this employment or tax advice?

No. It's an estimate from your figures. Check award rates and entitlements with the Fair Work Ombudsman or your adviser.

Your next step

BuzzBrain Time Boost

Knowing what an hour of your team really costs changes how you quote. BuzzBrain Time Boost works out the true cost of each job before you quote, keeps quotes moving and shows what each job actually made. Free during private beta testing on iPhone and iPad.

See BuzzBrain Time Boost →

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