Published: June 2025
Are you planning to hire your first employee in Australia? The shock might surprise you. What seems like a $70,000 salary actually costs your business closer to $95,000 when you factor in all the mandatory and hidden expenses Australian employers face.
If you're a business owner who's been putting off hiring because you're unsure about the real costs, this comprehensive guide breaks down every expense you'll encounter - from the obvious superannuation contributions to the sneaky costs that catch new employers off guard.
Bottom line: Expect to pay 25-40% more than the base salary you advertise. For every $1,000 in wages, you're looking at an additional $250-$400 in mandatory costs, plus ongoing operational expenses.
Here's the reality check most business owners need:
The superannuation guarantee rate increases to 12% from July 2025, making it your largest additional expense after the base salary.
Current cost: 11.5% of ordinary time earningsFrom July 2025: 12% of ordinary time earnings
Real example:
Hidden trap: Super is calculated on ordinary time earnings, which includes allowances, bonuses, and overtime for full-time employees.
For 2024-2025, the average premium rate is 1.73% of total wages, but this varies dramatically by industry.
Industry examples:
Real example:
Payroll tax rates and thresholds vary between states and territories. Once you hit the threshold, you pay tax on ALL wages, not just the excess.
State thresholds and rates (2025):
The killer: Many businesses don't realise they're approaching the threshold until it's too late. Then suddenly ALL wages become taxable.
Four weeks annual leave = 7.7% of salary as an ongoing liability.
The calculation:
Cash flow impact: You're paying someone NOT to work, while potentially paying someone else to cover their duties.
Ten days sick leave per year = 3.8% of salary.
Real cost: $70,000 salary = $2,660 potential sick leaveThe problem: Unlimited accumulation in many states means long-term employees can accrue months of sick leave.
Australia has 10-13 public holidays depending on your state.
Calculation: 11 public holidays = 4.2% of working daysReal cost: $70,000 salary = $2,940 in paid non-productive time
Conservative estimate: 2-4 weeks of reduced productivityRealistic costs:
Total: $5,200-15,000 for professional roles
Essential equipment per employee:
DIY recruitment: $2,000-5,000
Using recruiters: $15,000-25,000
Basic compliance costs:
Casual employees get 25% loading instead of leave entitlements. Sounds expensive, but it's often cheaper than permanent employees when you factor in all entitlements.
Casual costs: Base salary + 25% = Total costPermanent costs: Base salary + 35-40% = Total cost
Part-time employees get ALL the same entitlements, just pro-rated. This means:
Result: Part-time employees often cost more per hour worked.
When employees resign, you must pay out:
Real example: An employee with 6 weeks unused leave earning $70,000 costs you $8,077 on resignation.
Position: Administrative Assistan tAdvertised salary: $55,000 Real annual cost: $74,250 (+35%) First-year cost: $89,250 (including setup)
Breakdown:
Total wages: $750,000 (VIC) Payroll tax liability: $36,375 Cost per employee increase: +4.85%
The shock: This business went from no payroll tax to $36K annually by crossing the threshold.
Position: Site Supervisor
Advertised salary: $85,000 Real annual cost: $127,500 (+50%)
Higher costs due to:
When it makes sense:
Savings: 15-25% lower costs, but higher hourly rates
Benefit: Reduces recruitment risk and setup costs
Getting it wrong costs:
Essential costs:
Plus contingencies:
Monthly outgoings:
Quarterly lumps:
Managing all these costs manually is overwhelming for growing businesses. That's where Scale Suite comes in - we help Australian businesses to:
For most Australian businesses, budget 35-40% above the advertised salary for your first hire, and 25-30% above for subsequent hires (as setup costs reduce).
It varies by state, but generally when your Australia-wide wages exceed $700K-$1.5M annually. The tax applies to ALL wages once you cross the threshold.
Some costs, yes. But be careful - the ATO has strict rules about genuine contractors vs employees. Getting it wrong can result in huge back-payments.
Underestimating cash flow impact. Many businesses budget the salary but forget about quarterly super payments, annual leave accumulation, and equipment costs hitting all at once.
Casual staff cost more per hour (25% loading) but give you flexibility and lower setup costs. For ongoing roles lasting 6+ months, permanent staff are usually more cost-effective.
This article was last updated in June 2025 and reflects current Australian employment regulations. Employment costs can vary significantly based on industry, location, and specific circumstances. For personalised advice, consult with ScaleSuite or your business advisor.
Scale Suite delivers finance and human resource services to support the growth of Australian businesses. Our Sydney-based team creates custom packages tailored to your needs, seamlessly integrating with your existing teams. From comprehensive finance services and strategic business support to recruitment and HR services, we reduce costs, save time, and help you scale confidently.
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