Salary is only the starting point
The advertised salary is $70,000.
The actual cost to the business is genuinely higher than that — but by how much depends entirely on the role, the award, the industry and where you're located.
The short answer
Salary is only the starting point. There's no single, reliable percentage that applies to every hire — the true cost depends on the specific employee, the applicable award or agreement, your industry, your state or territory, and your own circumstances as an employer. What's consistent is the list of items worth costing out properly: compulsory superannuation, workers' compensation insurance, payroll tax where it applies, relevant allowances or overtime, recruitment and onboarding, equipment, training, and management time.
The main on-costs to work through
| Cost | What determines it |
|---|---|
| Superannuation guarantee | 12% of qualifying earnings — compulsory, paid on every payday under current rules |
| Workers' compensation insurance | Compulsory, but the actual premium varies by industry risk classification and by state or territory |
| Payroll tax | Only applies once your total payroll exceeds your state or territory's threshold — the rate and threshold both vary by jurisdiction |
| Allowances, overtime and leave loading | Depends entirely on the applicable award or enterprise agreement, and the nature of the role |
Paid annual leave, personal/carer's leave and public holidays are a different kind of consideration. For an employee on a fixed annual salary, this leave is generally already contained within that salary — it isn't a second wage cost stacked on top. What it does affect is productive capacity: a role that includes four weeks of annual leave, personal leave and public holidays represents genuine time the business is paying for without receiving working hours in return, which matters for staffing coverage and for understanding the real return on the role — just not as an additional dollar cost added to the salary figure.
The less visible costs
Recruitment and onboarding. Advertising, interview time, and the admin of getting someone set up — a genuine cost, even if it doesn't appear as a single line item.
Equipment and setup. A laptop, phone, uniform, tools — whatever the role requires to actually function.
Management and supervision time. Particularly in the first few months, existing staff — including you — spend real time training and supporting a new hire, time that isn't going toward other work.
Productivity ramp-up. A new employee is rarely at full productivity from day one — there's a genuine cost to the gap between what they're paid and what they're producing early on.
A simple worked example
A role advertised at $70,000 a year:
Base salary: $70,000 — this already includes the employee's paid annual leave, personal/carer's leave and public holidays.
Superannuation at 12% (assuming the salary forms part of qualifying earnings for super guarantee purposes): approximately +$8,400.
Workers' compensation insurance: varies by industry and state — needs to be quoted for your specific circumstances, rather than assumed.
Payroll tax: only applies if your total payroll is above your state or territory's threshold.
Other costs: recruitment, equipment, training, and any award-specific allowances or overtime relevant to the role.
Adding these up gives a genuinely more accurate picture than the $70,000 headline figure — but the final number depends on your specific circumstances, not a fixed formula. What it isn't is $70,000 plus a separate charge for the leave already built into that salary.
Why this matters before you make an offer
Budgeting on the advertised salary alone is one of the most common ways a new hire quietly strains cash flow — not because the wage itself was unaffordable, but because the full on-cost wasn't accounted for. Knowing the real number before extending an offer means the decision to hire is made on an accurate picture, not an optimistic one.
A quick self-check
Have I calculated the full on-cost of this role, not just the advertised salary?
Do I know my state's payroll tax threshold, and where my total payroll currently sits against it?
Have I budgeted for onboarding time and equipment, not just ongoing wages?
Does my cash-flow forecast reflect the true cost, including payday super, from the employee's first pay?
When should you get professional help?
you're deciding whether a role is genuinely affordable and want an accurate all-in cost calculated;
you're close to your state's payroll tax threshold and want to understand the implications of crossing it;
you're budgeting for multiple hires and want a reliable ongoing cost model; or
you want your cash-flow forecast to properly reflect the true cost of your team, not just base wages.
Continue learning
→ I'm Hiring My First Employee — What Financial Obligations Do I Need to Understand?
→ Can I Afford to Hire Another Employee?
→ How Do I Build a Realistic Business Budget?
SKC Accounting | Knowledge Centre | Knowledge Guide 032
Last reviewed: August 2026
General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.