True Cost of an Employee Calculator
What an employee costs beyond salary — the loaded figure, and what it means per hour worked.
Salary is typically 65 to 80% of what an employee costs.
How the true cost of an employee calculator works
Salary is typically 65 to 80% of what an employee costs. The rest is on-costs: employer retirement contributions, payroll taxes, insurance, equipment, software licences and a share of premises.
The loaded hourly rate is the figure that matters for pricing work and for build-versus-buy decisions. It divides total cost not by contracted hours but by hours actually worked — after leave, public holidays and typical sick days, a nominal 1,976-hour year is usually closer to 1,700.
Enter the on-cost percentages that apply to you. They are deliberately inputs rather than defaults, because retirement contribution rates and payroll taxes are statutory, differ by market and change.
Formula: total cost = salary × (1 + on-costs) + fixed costs; hourly = total / hours actually worked
Worked examples
| Inputs | Total annual cost | Note |
|---|---|---|
| A 95,000 salary with typical on-costs | $119,550.00 | about 1.29× salary |
| No payroll tax | $114,800.00 | a lower multiplier |
| Heavy equipment costs | $138,050.00 | on-costs dominate |
FAQFrequently asked questions
What does an employee really cost?
Typically 1.25 to 1.4 times salary once retirement contributions, payroll taxes, insurance and equipment are included.
Why divide by hours actually worked?
Because you pay for the leave but get no output from it. A nominal 1,976-hour year is usually closer to 1,700 worked.
Why are the on-cost rates inputs rather than defaults?
Because retirement contribution rates and payroll taxes are statutory, differ by market, and change. A default would be wrong somewhere and stale eventually.
Does this include management overhead?
No — only direct costs. Adding a share of management, HR and finance time raises the figure further.
What should I charge for this person's time?
More than the loaded cost. The loaded rate is break-even before any margin, utilisation gap or non-billable time.
Where these figures come from
- CIPD — Employee turnover and retention factsheet — the turnover and stability index definitions used here
- Fair Work Ombudsman — the Australian workplace regulator
Last checked: September 2026. These are standard management definitions; where practice varies, the page says which convention it uses.