Ask ten business owners what a worker costs and most will tell you the hourly rate. That's the number on the timesheet — and it's the smallest part of the real figure.
If you've ever asked a labour hire provider for a rate and thought why is a $30-an-hour worker costing me $44?, this is the honest answer. Spoiler: most of the gap isn't margin.
The costs that don't show up on the payslip
Employing anyone in Australia comes with a stack of on-costs that sit on top of the wage. They're easy to forget because you don't see them every week — but they're real money, and they apply whether you employ someone directly or through an agency.
- Superannuation — 12% of ordinary earnings since 1 July 2025. On a $30 wage, that's $3.60 an hour on top.
- Workers' compensation — a percentage of payroll set by your industry and claims history. It varies by state, but figure on roughly 1.3%–1.9% for general work, and more for higher-risk trades.
- Payroll tax — a state tax on your total wages bill, usually 4%–6.85%, but only once you're over the state threshold (which ranges from about $900,000 to $2 million in annual payroll). Plenty of small businesses don't pay it at all; bigger ones do.
And none of that has touched leave, recruitment, or the cost of someone not turning up.
Option 1: hire a casual yourself
Casuals get a 25% casual loading baked into their rate. That loading isn't a bonus — it's compensation for everything they don't get: no paid annual leave, no sick leave, no notice, no redundancy. It's the trade-off for flexibility.
So a casual on a $30 flat rate already includes that loading. On top, you still pay super, workers' comp and (maybe) payroll tax. You also do the work: writing the ad, screening, reference-checking, inducting, running payroll, and chasing a replacement when someone calls in sick at 5am. Cheap on paper, but the rate is only the start.
Option 2: hire permanent
Permanent staff don't get the 25% loading, but they do get the full set of entitlements — four weeks' annual leave, ten days' paid personal/carer's leave, public holidays, notice, and often 17.5% leave loading on annual leave where an award provides it. Add super, workers' comp, payroll tax, and the cost of recruiting the right person.
Permanent is usually the cheapest per hour for a role you need filled 38 hours a week, every week. It's the most expensive if the work is seasonal, uncertain, or a short ramp — because you carry the leave and the entitlements whether the work is there or not.
Option 3: labour hire
Here's what a labour hire charge rate actually bundles in. When we quote, say, $44 an hour, that single number covers:
- the worker's wage and their casual loading
- superannuation (12%)
- workers' compensation insurance
- payroll tax
- payroll processing, timesheets and award interpretation
- recruitment, screening and right-to-work checks
- a replacement if someone doesn't work out or doesn't show
- and our margin — typically 15%–25%
Strip all that out and the margin is a slice, not the whole gap. You're not paying $44 for a $30 worker; you're paying $44 to never think about super, workers' comp, payroll tax, recruitment, compliance or cover — and to scale the crew up and down without carrying leave liabilities.
A like-for-like example
Take a general warehouse casual on a $30 base. Here's the rough shape of it:
| What you're paying for | Hire the casual yourself | Through a labour hire provider |
|---|---|---|
| Hourly rate | $30.00 | included |
| Superannuation (12%) | + $3.60 | included |
| Workers' comp (~2%) | + $0.60 | included |
| Payroll tax (~5%, if over threshold) | + $1.50 | included |
| Recruiting, screening, payroll admin | your time | included |
| Cover for sick days & no-shows | your problem | included |
| Where you land | ~$35.70/hr + your time + risk | ~$43–45/hr, all-in |
Indicative only — your real numbers depend on the award, your state, your workers'-comp rate and whether you're over the payroll-tax threshold.
The direct-hire column looks cheaper until you price in the hours you'll spend recruiting and running payroll, and the cost of a line going down because two people didn't show and you had no bench.
So which one should you use?
A rough rule of thumb:
- Permanent for stable, ongoing roles you'd keep busy 38 hours a week.
- Labour hire for variable demand, seasonal peaks, short-notice cover, trial-before-you-hire, or when you simply don't want to carry the admin and compliance.
- Casual direct when the volume is tiny, predictable, and you genuinely have the time and systems to recruit, pay and cover it yourself.
Most operations we work with run a core-and-flex model: a permanent core for the baseline, topped up with labour hire for the peaks. It's usually the cheapest and the least stressful way to run a variable workload.
How we quote
We quote a single, transparent charge rate with the on-costs and margin already in it — no surprise add-ons, and we'll happily show you what's inside the number. If a rate looks too good to be true, ask what's not in it; the usual culprits are super, workers' comp, or a real replacement guarantee.
Want a rate for a specific role and site? Tell us what you need and we'll come back with a number you can actually compare. And if you're hiring in Victoria, Queensland or South Australia, it's worth reading which states require a labour hire licence before you choose a provider.
General information only, current at the time of writing — not legal advice. Workplace and licensing laws change; confirm anything decision-critical with the relevant regulator or a qualified adviser.