Are contractors cheaper than employees?

Only if they are genuinely independent. The ATO and Fair Work look at the real working relationship, and you may still owe super for some contractors.

Where do I check award rates?

On the Fair Work Ombudsman website, which lists the awards and current minimum rates.

Do I need payroll software?

Single Touch Payroll reporting means payroll is reported to the ATO each pay day, so most employers use compatible software.

← Answers

What does it really cost to hire someone in Australia?

More than the wage. You pay superannuation at the super guarantee rate of 12% of ordinary time earnings, now paid with each pay rather than quarterly, withhold PAYG tax, carry workers’ compensation insurance in your state, and owe at least four weeks of paid annual leave. Larger payrolls also pay state payroll tax. Then add tools, training and ramp up time.

Superannuation

The super guarantee is 12% of an employee’s ordinary time earnings, on top of their wage. Super is now due with each pay cycle rather than quarterly, so it comes out of your cash at the same time as wages.

PAYG withholding and payroll tax

You withhold tax from wages and pass it to the ATO. Each state also charges payroll tax once your total wages pass that state’s threshold, which varies.

Workers’ compensation and leave

Workers’ compensation insurance is compulsory and run by your state or territory. Full time employees are entitled to at least four weeks of paid annual leave under the National Employment Standards, plus personal leave.

Awards and the rest

Many roles are covered by a modern award that sets minimum pay rates, penalty rates and allowances, so check the award for your industry. Then add a ute or mileage, tools, safety gear and training.

Also asked

Are contractors cheaper than employees?: Only if they are genuinely independent. The ATO and Fair Work look at the real working relationship, and you may still owe super for some contractors.
Where do I check award rates?: On the Fair Work Ombudsman website, which lists the awards and current minimum rates.
Do I need payroll software?: Single Touch Payroll reporting means payroll is reported to the ATO each pay day, so most employers use compatible software.

Written for your trade

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