Most Australian small businesses reach a point where HR can no longer be handled informally. Headcount grows, compliance obligations stack up, and the cost and complexity of managing people becomes a real drag on the business. The traditional answer has been to hire a people and culture manager. But for many businesses, that hire is either too expensive, too soon, or simply not the right fit for where they are right now.
Fractional HR is the alternative. It is a model that gives growing businesses access to professional HR support on a part-time, embedded basis, without the overhead of a permanent hire. It is still relatively new in Australia, but it is gaining serious traction among SMEs that want to run a proper people function without the cost of running a full HR department.
This article explains what fractional HR actually is, how it works in practice, and how to know whether it makes sense for your business.
Fractional HR means engaging an external HR professional or team to handle your people and culture function on a part-time or shared basis. Rather than hiring a full-time HR manager, you access the same level of expertise at a fraction of the cost, because that expertise is shared across a small number of clients.
The word "fractional" refers to the fact that you are buying a fraction of someone's time and capacity, not all of it. But in a well-run fractional model, that fraction is dedicated, consistent, and genuinely embedded in your business. It is not a consultant who calls once a month. It is a professional who is active in your Slack channel, across your Employment Hero platform, and managing your people operations on an ongoing basis.
Fractional HR is distinct from HR consulting, which tends to be project-based and advisory. It is also distinct from HR software, which automates tasks but does not replace human judgement or relationship. Fractional HR combines the operational delivery of an internal hire with the flexibility and cost structure of an outsourced service.
The scope of a fractional HR engagement varies depending on the provider and the business, but a well-structured fractional service typically covers the following.
Recruitment coordination involves managing your hiring process end-to-end: briefing recruiters or running direct sourcing, tracking candidate pipelines, coordinating interviews, conducting reference checks, and preparing offer letters. For businesses doing one to four hires per quarter, this alone can consume significant internal time.
Onboarding and offboarding means taking ownership of the processes that surround people joining and leaving your business. This includes Employment Hero setup, documentation, induction coordination, exit interviews, and final pay coordination. These are the moments that matter most for culture and compliance, and they are often handled poorly when left to a busy operations team.
People operations covers the day-to-day administrative and compliance work that keeps a business running smoothly: leave management, employee records, contract maintenance, and policy updates. Left unmanaged, these tasks accumulate into risk.
Culture and engagement work includes pulse surveys, performance tracking frameworks, recognition initiatives, and team events. This is the area that most small businesses deprioritise, and it is often where turnover problems originate.
Ongoing advisory support means having someone available via Slack or Zoom to answer the people questions that come up constantly in a growing business: how to handle a performance issue, whether a flexible work request is reasonable, how to restructure a role. Having a professional available daily for these conversations is one of the most underrated benefits of a fractional model.
The key difference is cadence and depth. A traditional HR consultant is typically engaged for a specific project, such as a policy review, an investigation, or a restructure. They come in, complete the work, and leave. They are not embedded in your business and they are not available for the day-to-day.
A fractional HR partner, by contrast, is present and operational on a continuous basis. They know your team, your culture, your open roles, and your employment history. They are not starting from scratch every time you call them. That continuity makes a significant difference in the quality and speed of support.
The other difference is accountability. A consultant delivers a report or a document. A fractional HR partner owns the outcome. If a hire falls through, a policy lapses, or an onboarding is poorly handled, that is on them to fix. The accountability structure is much closer to an internal hire.
Fractional HR in Australia is typically priced as a monthly retainer, ranging from around $2,500 to $6,000 per month depending on the scope of services, the size of the business, and the seniority of the team delivering the work.
At the lower end of that range, you might expect basic people operations support: Employment Hero administration, leave management, and light recruitment coordination. At the higher end, you get a more comprehensive service including strategic oversight, quarterly engagement surveys, recruitment management, and access to a senior HR professional for complex matters.
By comparison, a full-time people and culture manager in Australia typically costs between $80,000 and $120,000 per year in base salary alone. Add superannuation, leave entitlements, and recruitment costs, and the total employment cost of an internal HR hire is typically between $100,000 and $140,000 annually. A fractional arrangement at $3,750 per month comes in at $45,000 per year, and delivers both operational and strategic capability through a two-person team.
Fractional HR tends to work best for businesses in a specific growth band. If you have fewer than ten employees, your people operations are likely manageable internally. If you have more than 80 or 100 employees, you probably need a dedicated internal hire or a full HR team. The sweet spot for fractional HR is businesses with roughly 10 to 60 employees, where the complexity of people management has outgrown informal handling but the scale does not yet justify a full-time specialist.
It is also particularly well suited to businesses that are growing quickly and need to build their HR function from a low base, businesses going through a period of significant hiring, businesses that have just lost an internal HR or operations person and need continuity fast, and businesses that want the strategic input of a senior HR professional without paying for it full-time.
Scale Suite provides embedded fractional HR services to Australian SMEs. We operate as part of your team for people operations. Our model is built around daily availability rather than monthly check-ins, which means your people questions get answered when they come up, not a week later.
We cover recruitment coordination, onboarding and offboarding, leave management, Employment Hero administration, pulse surveys, and culture initiatives. We do not handle Fair Work legal matters or formal workplace investigations, which are referred to specialist providers.
If you are a Sydney-based or Australian SME considering your first HR hire, or looking for a better alternative to your current arrangements, we would be glad to have a conversation.
Book a free discovery call with Scale Suite
What is fractional HR?
Fractional HR is a model where a business engages an external HR professional or team on a part-time, embedded basis. Rather than hiring a full-time people and culture manager, you access the same expertise at a fraction of the cost, with the provider working across a small number of clients simultaneously.
How is fractional HR different from HR consulting?
HR consulting is typically project-based and advisory. Fractional HR is ongoing and operational. A fractional HR partner is embedded in your business, available daily, and accountable for outcomes rather than just deliverables.
How much does fractional HR cost in Australia?
Most fractional HR engagements in Australia are priced between $2,500 and $6,000 per month as a retainer, depending on scope and the size of the business. This is significantly less than the full employment cost of an internal HR manager.
What size business is fractional HR suited to?
Fractional HR works best for businesses with roughly 10 to 60 employees, where people management has become too complex to handle informally but the scale does not yet justify a full-time HR hire.
What does a fractional HR service cover?
A typical fractional HR engagement covers recruitment coordination, onboarding and offboarding, leave management, Employment Hero administration, people policies, culture and engagement initiatives, and ongoing HR advisory support via Slack or Zoom.
Does fractional HR include Fair Work legal advice?
No. Fractional HR focuses on operational people and culture delivery. Fair Work matters, employment disputes, and formal workplace investigations are specialist legal areas and should be referred to an employment lawyer or specialist provider.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses.Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire - without the recruitment risk, training time, or full-time salary commitment.
Considering building an internal finance team?
We'll show you exactly what our three-tier model covers, how it compares to internal hires, and what it would cost for your business.
We'll reply within 24 hours to book your free 30-minute call.
No lock-in contracts and 30-day money-back guarantee.
Prefer to book directly? Schedule your free 30-minute call here
