The true costs of employing staff are higher than just their hourly rate?
The hourly rate is the face value but the real costs of staff is higher.
A staff member employed at $40.00 p/h,
is costing you roughly $54.50 p/h.
Super @ 10%
Annual Leave @ 7%
Sick Leave @ 3%
Public Holidays @ 4%
Workers Compensation @ 7% (this could be more)
Payroll Tax @ 5.45%
Payroll Administrative Costs @ $5 per week
How do these calculations work?
- Firstly there is superannuation, which is paid on top of the base salary for any employee earning over $450 in a calendar month.
- Next is annual leave which is on average 20 days per year. Although this is built into their wage, you are effectively paying for 48 weeks of work in the year but what does it cost you to cover that role whilst the employee is away?
- In addition you have sick leave, which is generally 10 sick days per annum.
- Next you have public holidays, again there are usually 13 public holidays in Australia each year.
- Compulsory workers compensation varies depending on the industry you’re in, but can be in excess of 12.5% of the total annual wages.
- Payroll tax is payable in each state when you pay over a certain threshold in wages, the threshold and percentages vary from state to state. Even though you may not have passed the threshold yet, if you are planning on expanding your business, you may pass it in the future, and thus should account for it.
- Another cost you must consider is the cost of the administrative task of processing the payroll of employees, on average this will cost around $5.00 per employee per week.
Keeping in mind that these aren’t all the costs associated with employing a staff member, you would also need to consider ongoing training and professional development, office space, stationary, computers, office furniture, staff amenities etc. to get the full cost.
