The real cost of your next hire in 2026

You know you need another pair of hands. The question that usually decides whether the hire goes smoothly isn’t whether you can afford the wage. It’s whether you’ve counted everything the role costs, when that money leaves your account, and how long before the new person’s work brings it back. Here’s how to cost it properly.

What goes into the full cost of an employee?

Business.gov.au’s hiring guide lists the main costs: wages at or above the award, super, workers compensation insurance, and potentially payroll tax and fringe benefits tax. A complete costing looks like this:

Cost	Notes
Wages	At or above the relevant award or agreement
Super guarantee	12% of qualifying earnings in 2025–26 and 2026–27
Workers compensation	Required in every state and territory; premium depends on industry and wages
Payroll tax	Only if total wages exceed your state or territory threshold
Leave	Annual leave, personal leave and public holidays are paid time not worked
Equipment and tools	Vehicle, tools, laptop, phone, uniform, safety gear
Training and induction	Your time and theirs, plus any courses or licences
Recruitment	Ads, agency fees, time spent interviewing
Overheads	Software seats, insurance changes, extra space

The ATO lists the super guarantee rate at 12% for both 2025–26 and 2026–27.

How does payday super change the timing?

Until mid-2026, many employers paid super quarterly. That meant super for a new hire might not leave the account for up to three months. From 1 July 2026, the ATO’s payday super rules require super to be paid at the same time as wages, and received by the employee’s fund within 7 business days. The Fair Work Ombudsman’s summary of the new rules notes a longer window for a new employee’s first contribution.

For costing a hire, this means: treat super as part of every pay run, not a quarterly bill you can plan around later.

What is the ramp-up gap?

Almost no one is fully productive on day one. The ramp-up gap is the period between their first pay and the point where their work covers their full cost.

• Billable roles (a tradesperson, a consultant, a salesperson on commission) may cover their cost within weeks to a few months, once their schedule fills.
• Apprentices and trainees may take longer, though they bring long-term value.
• Support roles (admin, operations) may never “earn” revenue directly but free up your time or reduce other costs. Estimate the value of that.

The ramp-up gap is what most businesses actually need to fund. Not the salary forever, just the stretch before the role pays its way.

Thinking about funding a hire? Tell us the role and start date; a specialist will help size the gap, with no credit check to ask.

A worked example: costing a second tradesperson

Illustrative only. Figures are rounded and made up to show the method; check award rates, premiums and thresholds for your own situation.

A plumbing business plans to hire a second qualified plumber.

Monthly cost of the role:

Item	Monthly
Wages	$7,000
Super at 12%	$840
Workers compensation (estimate)	$250
Leave and public holidays (allowance)	$600
Vehicle running costs and phone	$1,100
Total	about $9,790

One-off costs: tools and safety gear $6,000; recruitment ad and onboarding $1,500. The van is bought on asset finance separately.

Ramp-up: the owner expects the new plumber’s billable work to cover about 40% of their cost in month one, 70% in month two, 90% in month three, and their full cost from month four.

Month	Cost	Covered by their work	Gap
1	$9,790	$3,900	$5,890
2	$9,790	$6,850	$2,940
3	$9,790	$8,800	$990
4	$9,790	$9,790+	$0

Total ramp-up gap: about $9,820, plus $7,500 in one-off costs, so roughly $17,300. Adding a margin for a slower start, the owner plans to fund about $22,000.

That’s a very different number from “an $84,000 salary”. It’s also a number a small unsecured loan or line of credit can comfortably cover.

Which funding structure fits a hire?

Hiring pattern	Structure that tends to fit
One hire, predictable ramp-up	Unsecured loan sized to the gap
Several hires over time, or seasonal staff	Business line of credit
A whole new team or site	Property-secured working capital
A vehicle or tools for the new hire	Asset finance

Our verdict on the best way to fund hiring staff compares these in detail, and the recruitment finance page covers agency and contractor scenarios. For revolving needs, see our business line of credit verdict.

What can go wrong, and how do you plan for it?

• The ramp-up takes longer. Build in a margin, and review after three months.
• Work dries up. If the hire was for a single contract, plan what happens when it ends. Our page on the best loan for a slow quarter covers seasonal dips.
• Growth stacks up. Hiring several people at once while taking on more work is a classic overtrading pattern. See overtrading warning signs.
• Super falls behind. With payday super, late super is visible quickly. Keep it in every pay run.

Checklist: costing your next hire

1. Wages at the correct award or agreement rate.
2. Super at 12%, paid with every pay run from 1 July 2026.
3. Workers compensation, and payroll tax if you’re over your state threshold.
4. Leave and public holiday allowance.
5. Equipment, tools, vehicle and overheads.
6. Recruitment and training.
7. Ramp-up percentages, month by month.
8. Total gap, plus a margin.
9. A structure that funds the gap and then gets out of the way.

Employee or contractor?

Some owners consider engaging a contractor instead of hiring. That can make sense for genuinely independent, project-based work, but whether someone is legally an employee or a contractor depends on the real working relationship, not the label you choose. Getting it wrong can create liabilities for unpaid entitlements and super. If the person will work set hours, under your direction, using your equipment, as part of your business, treat the role as an employee and cost it that way. Business.gov.au and the Fair Work Ombudsman both have guidance on the difference, and your accountant can help.

What about payroll tax?

Payroll tax is a state and territory tax that applies once your total Australian wages exceed the relevant threshold. Thresholds and rules differ between states and territories, and grouping rules can combine related businesses. If a new hire takes your wages bill close to or over the threshold, check with your state revenue office or accountant before you finalise the costing, because it applies to your whole payroll above the threshold, not just the new person.

How should you time the start date?

Timing changes the cost of the ramp-up more than most owners expect. A new hire who starts just as demand is building fills their schedule quickly and shortens the gap. One who starts as the business heads into its quiet months may take twice as long to cover their cost, because there simply isn’t the work.

Look at last year’s monthly sales. If you can, line the start date up with the beginning of a busier stretch, and give yourself a few weeks for recruitment and onboarding before it arrives. If the hire is tied to a new contract, start them close to mobilisation rather than weeks ahead. And check your own cash position for the first two pay runs: with super paid alongside wages from 1 July 2026, the first month carries the full cost straight away.

Ready to grow the team?

When you’ve costed the role, funding the ramp-up is a straightforward conversation. Start your enquiry with the role, the start date and your estimate of the ramp-up.

There’s no credit check when you first enquire, and your details go to one specialist rather than a round of lenders. Realistic wage figures and an honest ramp-up estimate help us suggest a facility that covers the gap without lingering after it.