What this employee cost calculator separates

The model has two layers. First it builds annual employer cash cost from base salary, expected variable cash pay, super, an entered payroll-tax provision, an entered workers compensation provision and fixed employment costs. Second it estimates productive days by subtracting paid leave and other non-productive days from a 260-weekday planning year. Dividing cash cost by productive hours produces a planning cost per productive hour.

This separation prevents a common double count. Annual salary already continues while a permanent employee takes paid annual leave or paid personal leave. The calculator therefore does not add another four weeks of salary as a cash line. Instead, those days reduce available productive capacity. Leave loading, overtime, shift penalties, paid parental leave costs and replacement labour can create additional cash costs; enter verified annual amounts in variable pay or other cash costs.

Cash wages and ordinary time earnings

Cash wages are base salary plus expected bonus and allowances. The OTE share controls how much of that amount enters this simplified super calculation. The ATO’s ordinary time earnings rules determine the earnings base for super guarantee; not every payment has identical treatment. A bonus may be OTE in one circumstance while overtime payments can be treated differently. Use payroll classification rather than assuming all cash is automatically included or excluded.

The general super guarantee rate reached 12% on 1 July 2025 and remains 12% for 2026–27. Eligibility, the maximum contribution base, fund choice, timing and industrial instrument obligations still matter. Salary packages can state “plus super” or “inclusive of super”. This page assumes salary and variable cash pay are exclusive of the calculated super. If a package is inclusive, first separate its cash salary and super components.

Payroll tax is an employer-level calculation

Payroll tax is administered by states and territories. Liability normally depends on the employer’s total Australian taxable wages, local wages, threshold, grouping and applicable deductions, not on one employee in isolation. Taxable wages can include salary, allowances, bonuses, commissions, super contributions, fringe benefits and contractor payments depending on the jurisdiction and facts. The input is an effective percentage planning provision, not a legal rate selector.

If the employer is below the applicable threshold after grouping rules, a zero provision may be reasonable. If liable, divide the expected annual payroll-tax assessment attributable to the relevant payroll by its cost base to derive an effective rate, then document the method. Do not apply a headline marginal rate to a single salary without considering the threshold and deduction formula.

Workers compensation and fixed employment costs

Workers compensation schemes operate in each jurisdiction, and premiums depend on the scheme, industry classification, remuneration and employer history. The calculator multiplies cash wages by the entered rate as a planning provision only. Use the insurer or regulator’s wage definition and premium notice for budgeting. High-risk roles can have a materially different rate from office roles.

Training and certification can include licences, continuing professional development and course time. Equipment and workspace can include computer hardware, software, uniforms, phone, tools, security, desk space and IT support. Recruitment can include advertising, agency fees, screening, onboarding and the manager’s time; allocating it over expected tenure can be more useful than charging the full amount to every year. Other cash can include insurance, wellbeing, travel or benefits not modeled elsewhere.

Paid absence and productive capacity

Fair Work says full-time and part-time employees generally accrue four weeks of paid annual leave each year, with eligible shiftworkers potentially receiving an additional week. Full-time employees generally receive ten days of paid personal/carer’s leave, with part-time accrual pro rata. Awards, enterprise agreements and contracts can provide more. The defaults are planning assumptions, not an entitlement ruling for every worker.

Public holidays vary by location and roster. Enter only holidays that fall on days the employee would otherwise work and are not worked. Other non-productive days can represent training, internal meetings, administration or an expected utilisation gap. Do not subtract the same training time both as a full day and again through a utilisation factor outside this model.

Productive days start from 52 weeks multiplied by five weekdays. The calculator subtracts annual-leave weeks multiplied by five, personal-leave days, public holidays and other days. Productive hours multiply remaining days by ordinary weekly hours divided by five. It assumes an even five-day week; part-time or compressed rosters require a tailored day model.

Using cost per productive hour

The resulting productive-hour cost can support pricing, workforce planning and make-or-buy comparisons. It is not automatically a billable rate. A service business also needs to recover management, sales, rent, finance, bad debts, non-billable project time, profit and GST where applicable. Capacity can be constrained by demand rather than employee availability.

Compare roles using the same scope. If one model includes a laptop and recruitment while another excludes them, the hourly comparison is unreliable. Run a base case, a higher-absence case and a lower-utilisation case. Review actual payroll, super, insurance and expense ledgers after several months and replace assumptions with evidence.

Part-time, casual and contractor comparisons

For a part-time employee, enter the actual annual salary and ordinary weekly hours, then reduce leave days to the employee’s rostered equivalent. Four weeks of annual leave means four weeks of that employee’s ordinary roster, not automatically twenty full-time days. Public holidays only reduce productive capacity when they fall on a day the employee would ordinarily work. A tailored roster model is preferable when hours vary across days.

Casual loading is part of cash wages and casual employees generally do not receive paid annual leave or paid personal leave under the same permanent-employee settings. Set those leave fields to zero only after checking the actual entitlement, award and arrangement. Casuals can still create super, payroll tax, workers compensation, equipment and training costs. Do not compare a casual hourly rate with a permanent salary-derived rate until both include the same on-cost scope and realistic paid capacity.

A contractor invoice is not automatically comparable with employee cost, and calling someone a contractor does not decide legal status or tax obligations. Contracting can involve GST, insurance, equipment, minimum engagement and management costs, while employment can trigger super and workplace entitlements. Obtain advice about worker classification before using this page for an engagement decision.

Payroll planning checklist

Frequently asked questions