Published: April 2026 | Updated: August 2026 | Last reviewed: August 2026
Payroll outsourcing in Australia costs $5 to $20 per employee per pay run, $500 to $4,000+ per month on a flat retainer, or $100 to $500 per pay run as a fixed fee. A 30-employee business paying fortnightly typically spends $13,000 to $17,000 a year all-in, against $87,000 to $116,000 for an in-house payroll officer. Award complexity, pay frequency and the number of states you operate in drive most of the variation.
Payroll is the finance function with the least margin for error and the highest consequences when things go wrong. Pay someone incorrectly and you face Fair Work penalties that apply per employee, per pay period. Miss a superannuation deadline and the Superannuation Guarantee Charge is non-deductible, meaning it costs more than the original amount owed. Get an award interpretation wrong and you could be looking at back-pay claims stretching back years.
From 1 July 2026, Payday Super adds another layer. Super contributions must reach the employee's fund within seven business days of each payday, replacing the previous quarterly system. For a business running fortnightly payroll, that means processing and remitting super 26 times per year instead of four.
This guide covers what payroll outsourcing costs in Australia in 2026, what should be included at any price point, and how to compare that cost against running payroll in-house.
There is an important distinction between the two, and quotes rarely make it clear.
Processing means someone runs your pay cycle when you tell them to. They take the hours you provide, push the button, and generate payslips. If you give them the wrong hours, the wrong rate, or the wrong leave balance, the output is wrong. The responsibility stays with you.
Outsourced or managed payroll means someone owns the entire function. They interpret the relevant Modern Award, calculate correct rates including penalty rates and overtime, manage leave accruals, process STP Phase 2 reporting to the ATO, calculate and remit superannuation, handle payroll tax calculations and lodgements across states, manage onboarding and offboarding paperwork, and calculate termination entitlements including notice, accrued leave and redundancy.
The difference matters because errors in interpretation, timing and compliance are where the real cost lies. A payroll processor running the wrong penalty rate for 12 months creates a back-pay liability. A managed payroll provider catches the rate change at the annual wage review and updates it proactively. Our guide to the employee underpayment remediation process covers what fixing that liability costs once it exists.
The most common model. Price varies with award complexity, pay frequency and scope.
At the lower end, a trades business in Western Sydney with 20 employees paid fortnightly under the Building and Construction General On-site Award at $12 per employee per pay run costs $240 per fortnight, or roughly $6,240 per year. That covers wage calculations, STP reporting, super processing and leave accrual tracking.
At the higher end, a hospitality group in Melbourne with 45 employees across three venues, a mix of full-time and casual, three different awards (Hospitality Industry General, Restaurant Industry, and Clerks Private Sector for back-of-house admin) and a weekly pay cycle at $18 per employee per run costs $810 per week, or roughly $42,120 per year. The higher rate reflects award complexity, casual loading, penalty rate variation across days and times, and weekly frequency.
A fixed monthly fee regardless of the number of pay runs, giving cost certainty. It works well for businesses with stable employee counts.
A marketing agency in Surry Hills with 8 employees on the Clerks Private Sector Award paid fortnightly might pay a $650 monthly retainer covering all processing, STP, super and leave management. That is $7,800 a year, equivalent to roughly $15.60 per employee per run, which sits mid-range.
A flat fee per run regardless of employee count, which favours larger payrolls. A 50-employee business paying $400 per fortnightly run is effectively paying $8 per employee, well below the typical per-employee rate.
Regardless of pricing model, any payroll outsourcing engagement in 2026 should include wage calculation and payment processing, payslip generation compliant with Fair Work requirements, STP Phase 2 reporting to the ATO, superannuation calculation and remittance, leave accrual tracking across annual, personal and long service leave, and award interpretation for applicable Modern Awards.
From July 2026, Payday Super compliance should be included as standard. If your provider is charging extra for this, question why, as it is now a core payroll obligation rather than an enhancement. For the full picture on how Payday Super changes your obligations, see our Payday Super guide.
The quoted per-employee or monthly rate is rarely the total cost. Watch for these.
Payroll tax lodgements across multiple states run $200 to $500 per state per month. If you operate in NSW and Queensland, that is $400 to $1,000 per month on top of your base fee. Check our payroll tax thresholds guide to see whether this applies to you.
Termination and redundancy calculations run $200 to $500 per event. These are complex, covering notice period, accrued leave, redundancy entitlements and pro-rata long service leave in some states, so most providers charge per occurrence.
Back-pay calculations and rectifications run $100 to $300 per hour. If an award rate change was missed or a classification error needs correcting, remediation is usually billed hourly.
Workers compensation reporting runs $100 to $300 per quarter. Some providers include it, others do not.
Onboarding and offboarding administration runs $50 to $150 per event, covering tax file number declarations, super choice forms, contracts and exit paperwork.
Platform subscriptions for Employment Hero, Xero Payroll or KeyPay at $10 to $25 per employee per month are sometimes billed through on top of the service fee.
A 25-employee business quoted $12 per employee per fortnightly run has a headline cost of $7,800 a year. Add payroll tax lodgement across two states at the low end ($4,800), three terminations at $200 each ($600), workers compensation reporting at $100 per quarter ($400), and platform subscriptions at the low end ($3,000).
Actual annual cost: $16,600, more than double the headline. Always ask for the all-in figure.
The previous system allowed employers 28 days after the end of each quarter to pay super. From 1 July 2026, contributions must reach the employee's fund within seven business days of each payday.
For a business running fortnightly payroll with 30 employees, that means processing and remitting super 26 times a year instead of four. Each payment must be correctly calculated, allocated to the right fund, and confirmed as received within the seven-day window.
Late contributions attract redesigned Superannuation Guarantee Charge penalties with additional surcharges. The SGC was already non-deductible; the new structure is designed to make late payment materially more expensive than timely compliance. Our guide to the SGC penalty mechanics under Payday Super covers the calculation.
The Small Business Superannuation Clearing House closed on 1 July 2026. If you were using it, you need a private clearing house or a payroll platform with integrated super processing; our comparison of clearing house options covers the alternatives.
Expect providers to price 10 to 20 per cent higher than pre-Payday Super quotes to handle the additional processing volume and compliance monitoring. Factor that into anything you are comparing now.
Running payroll yourself, or having the office manager do it, saves money until it does not.
Fair Work penalties for underpayment apply per employee, per pay period, with substantially higher maximums for serious contraventions. A systematic underpayment affecting 10 employees over 12 months is not one contravention, it is potentially 260 of them. Current penalty amounts are published on the Fair Work Ombudsman site and rise with the Commonwealth penalty unit.
Since 1 January 2025, intentional underpayment of wages has been a criminal offence under federal law, applying nationally rather than only in the states that legislated first. Honest mistakes remain civil matters, which is precisely why process discipline matters.
The Superannuation Guarantee Charge is non-deductible and includes unpaid super plus 10 per cent interest plus an administration fee per employee per quarter. Because it is non-deductible, a $10,000 SGC effectively costs around $13,300 to $14,300 depending on your company tax rate.
ATO penalties for late STP reporting accrue per 28-day period overdue, at $364 per period for small entities at the 2026-27 penalty unit rate, with higher multiples for larger entities.
Director penalty notices for unpaid super and PAYG create personal liability. The ATO can make a director personally responsible even if the company goes into liquidation.
See our payroll late penalties guide for the full breakdown of what goes wrong and what it costs.
For a 30-employee business:
An in-house payroll officer costs $65,000 to $85,000 base salary, plus 12 per cent super ($7,800 to $10,200), plus payroll tax where applicable (roughly $3,500 to $5,000), plus leave entitlements ($7,500 to $10,000), plus workers compensation ($400 to $1,300), plus software and training ($3,000 to $5,000). Loaded cost: $87,000 to $116,000 per year, plus recruitment every three to four years at $10,000 to $20,000. Model your own version with the employee cost calculator.
Outsourced at $12 per employee per fortnightly run: 30 employees × $12 × 26 runs = $9,360. Add platform costs of $3,600 and payroll tax lodgement fees of $2,400. Total: $15,360 per year.
Annual saving: $72,000 to $101,000. Across five years including one turnover event, roughly $370,000 to $520,000.
The advantage beyond cost is compliance certainty. A dedicated provider processes hundreds of pay runs a month across multiple awards and catches rate changes, entitlement updates and legislative changes as part of core business. An office manager doing payroll as one of eight responsibilities catches these things when the Fair Work inspector calls.
In many Australian SMEs, payroll is handled by the office manager, the owner's partner, or whoever was in the room when it needed doing. That creates two structural problems.
The first is single point of failure. What happens when they take leave? What happens when they resign, taking undocumented knowledge of your pay rules with them?
The second is award interpretation. Non-specialists use software defaults rather than understanding the underlying obligations, which produces a predictable set of errors: incorrect penalty rates on weekends and public holidays, wrong leave accruals for part-time employees, missed superannuation deadlines (now a fortnightly or weekly compliance event rather than quarterly), and incorrect casual loading.
Each error creates a liability that compounds with every pay period it goes uncorrected. Our guide to award classification errors covers the most common ones and how to check for them.
How much does payroll outsourcing cost per employee?
$5 to $20 per employee per pay run in 2026, depending on award complexity, pay frequency and scope. A single-award payroll processed fortnightly sits at the lower end. Multiple awards, a casual and part-time mix, and weekly processing sit at the higher end. Always ask for the all-in cost including platform fees, payroll tax lodgement and per-event charges.
Is outsourced payroll cheaper than in-house?
Almost always. An in-house payroll officer costs $87,000 to $116,000 loaded per year, against roughly $13,000 to $17,000 for the same 30-employee business outsourced. The exception is very large payrolls of 100-plus employees, where volume can justify a dedicated full-time resource.
What changed with Payday Super in July 2026?
Super must reach the employee's fund within seven business days of each payday, replacing quarterly payment. Fortnightly payrolls now remit 26 times a year instead of four. Late payments attract redesigned SGC penalties with surcharges, and the Small Business Superannuation Clearing House has closed.
Do I need to change payroll providers for Payday Super?
Not necessarily, but confirm your current provider is ready. Ask whether their system calculates super per pay run, whether it can process payments inside seven business days, whether it is SuperStream compliant, and what clearing house solution they use now the SBSCH has closed. Vague answers are the answer.
What is included in a typical outsourced payroll package?
At minimum: wage calculation and processing, payslip generation, STP Phase 2 reporting, super calculation and remittance, and leave accrual tracking. Better providers add award interpretation updates when rates change, onboarding and offboarding administration, and payroll tax calculation. The best add compliance monitoring, error correction at no extra charge, and direct support for employee payroll queries.
How do I compare payroll outsourcing quotes?
Get the total annual cost from each provider based on your employee count, pay frequency and number of awards, including every add-on: platform fees, payroll tax lodgement, termination calculations, workers comp reporting and onboarding. Compare all-in annual figures, not headline per-employee rates. A $10 per employee quote with $5,000 of add-ons costs more than a $14 quote with everything included.
Can I outsource payroll for just a few employees?
Yes, though per-employee cost is higher for small payrolls because there is minimum overhead in any engagement. For 1 to 5 employees, expect $300 to $500 per month on a flat fee, which is a higher per-employee rate but still cheaper and safer than carrying the compliance risk yourself.
Should payroll sit with my bookkeeper or a separate provider?
Either works, provided one party owns the boundary between award classification and the pay run. Where those sit with different providers, agree in writing who classifies new employees, who verifies the pay run against those classifications, and who owns the super deadline. Most underpayments start in that gap.
Scale Suite is a Sydney-based provider of outsourced finance teams and fractional CFO services for Australian SMEs. We deliver weekly bookkeeping, payroll, BAS/IAS lodgement, cashflow reporting, management accounts, and strategic fractional CFO oversight, all as a fully embedded team that works inside your business.
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Learn more about our embedded finance model at scalesuite.com.au/services/finance
We review and check this guide periodically. At the time of writing (August 2026), all information was current. Scale Suite is a registered BAS Agent, not a licensed tax advisor or financial advisor. This content is general information only and does not constitute professional tax, financial, or legal advice. Some details may change over time.
Sources
Fair Work Ombudsman, penalties for contraventions: https://www.fairwork.gov.au
Australian Taxation Office, About Payday Super: https://www.ato.gov.au/businesses-and-organisations/super-for-employers/payday-super/about-payday-super
Australian Taxation Office, failure to lodge on time penalty: https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/penalties-and-interest
Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented finance and HR processes with one responsive, senior-level function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
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