Australia Employee vs Contractor Cost

Primary formula: capacity gap = max(0, required productive hours − selected workforce productive hours)

By Duc Nguyen X.· Founder, Margin101Last reviewed: 31 July 2026View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: No account is required. Tool inputs and results stay in this browser. Anonymous categorical usage analytics send only governed page, tool, cluster and action identifiers; tool inputs and results are never sent. Error monitoring is disabled. Optional saved state stays only on this device.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Australian small-business planning using your own assumptions.

What this comparison calculator helps you decide

Best for

Australian businesses comparing bounded employee, contractor, overtime and hiring capacity scenarios without classifying a worker.

Outputs

Loaded annual and productive-hour cost, capacity gap, workforce-mix comparison and hire-or-overtime threshold.

Start here

Confirm the supported employment scope and policy fixture, then enter demand, headcount, productive time and alternative delivery costs.

Use a different tool when: Do not use this to compare overtime and hire cost at an entered demand level, including capacity and exact overtime-cost contribution; use Overtime vs Hire Comparison for that decision. Use this tool to plan loaded employee and contractor cost, selected workforce mix, demand capacity and the overtime-or-hire threshold.

Profit & break-even

Australia Employee vs Contractor Cost: loaded annual and productive-hour cost

Loaded annual and productive-hour cost, capacity gap, workforce-mix comparison and hire-or-overtime threshold.

Workforce cost, mix and demand records

Use one annual basis. Enter costs, headcount mix and productive-hour demand for the same decision period.

Your numbers stay in this browser

Annual base salary

Ordinary salary before super and other employer on-costs.

Other annual employee on-costs

User-entered payroll tax, insurance, workers compensation, equipment, benefits and other applicable costs.

Contractor hourly rate excluding GST

The quoted commercial rate before GST.

Contractor hours per year

Hours bought under the comparison scenario.

Employee headcount

Whole employees using the entered annual employee cost and productive-hours fixture.

Contractor headcount

Whole contractors using the entered annual contractor cost and productive-hours fixture.

Required productive hours

Demand the selected employee and contractor mix needs to cover in the annual decision period.

Policy scope, capacity and overtime-versus-hire thresholdOpen the assumptions you are less likely to change on every comparison.

Paid weeks per year

Paid weeks on the selected annual basis.

Leave weeks per year

Editable leave assumption; the default comes from the reviewed non-shiftworker NES starting point.

Non-productive hours per working week

Paid administration, training and other non-delivery time.

Other annual contractor-side costs

User-entered procurement, equipment, insurance or engagement costs paid by the business.

Comparison boundary

This calculator compares entered cost only and cannot classify the worker.

Worker age policy fixture

This bounded version supports only an adult worker starting point; junior, apprentice and trainee rules need a separate review.

Employment status policy fixture

The reviewed ordinary-hours and annual-leave starting point is limited to the supported full-time scenario.

Industrial and region scope

This version is limited to a confirmed award-free national-system starting point.

Contractor productive hours per person

Annual delivery capacity for one contractor in the selected mix.

Overtime cost multiplier

Scenario multiplier applied to the calculated employee cost per productive hour; confirm the actual entitlement separately.

Fixed cost per additional hire

Recruitment, onboarding and other one-off cost applied to every whole hire required.

Commercial cost comparison

Compare annual cost, selected headcount mix, productive capacity and the exact overtime-versus-hire threshold. The result does not determine worker status.

PDF and CSV exports stay on this device. Clean page links contain no inputs.

Contractor minus employee annual cost: $15,000.00
Employee annual cost: $120,000.00
Contractor annual cost: $135,000.00
Employee cost per productive hour: $78.13
Contractor cost per purchased hour: $96.43
Break-even contractor hourly rate: $84.29
Employee productive hours per person: 1,536 hours
Contractor minus employee hours per person: -136 hours
Selected workforce headcount: 3
Selected workforce productive capacity: 4,472 hours
Selected workforce annual cost: $375,000.00
Workforce cost per productive hour: $83.86
Demand capacity gap: 528 hours
Overtime cost for the capacity gap: $61,875.00
Whole hires required for the capacity gap: 1
Whole-hire cash cost for the capacity gap: $128,000.00
Lower-cost capacity-gap option: Overtime
Overtime-to-hire crossover hours: 1,093 hours

Cost comparison only. Confirm worker classification, super, award, leave, withholding, payroll-tax, insurance and safety obligations separately before choosing an engagement model.

Policy basis: ato-super-guarantee-rate-au@2026-07-13;fair-work-annual-leave-au@2026-07-13;fair-work-ordinary-hours-au@2026-07-13.

Scenario comparison

Compare the selected headcount mix against 10% lower and higher productive-hour demand. The scenario value is the remaining capacity gap.

ScenarioResultDifference

Entered comparison528 hoursBaseline

Required productive hours −10%28 hours-500 hours

Required productive hours +10%1,028 hours500 hours

Save these results, change an input, then compare the updated figures with this baseline.

The baseline is temporary in this tab and is not added to shared scenario links or generated reports.

Calculation details

View calculation detailsView the formulas and inputs used for these results.

Contractor minus employee annual cost

Contractor minus employee annual costcontractor annual cost − employee annual cost15,000 AUD

Result$15,000.00

Uses reviewed policy inputs only for the confirmed bounded worker fixture; other costs, headcount, capacity and demand are entered by the user. The engine retains raw precision; display rounding never feeds the comparison.

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Contractor minus employee annual costAnnual Base Salary: 100,000
Contractor minus employee annual costAnnual Employee On Costs: 8,000
Contractor minus employee annual costPaid Weeks Per Year: 52
Contractor minus employee annual costLeave Weeks Per Year: 4
Contractor minus employee annual costNon Productive Hours Per Working Week: 6
Contractor minus employee annual costContractor Hourly Rate Ex Tax: 95
Contractor minus employee annual costContractor Hours Per Year: 1,400
Contractor minus employee annual costAnnual Contractor Additional Costs: 2,000
Contractor minus employee annual costComparison Scope Code: 1
Contractor minus employee annual costWorker Age Class Code: 1
Contractor minus employee annual costEmployment Status Code: 1
Contractor minus employee annual costIndustrial Scope Code: 1
Contractor minus employee annual costEmployee Headcount: 2
Contractor minus employee annual costContractor Headcount: 1
Contractor minus employee annual costContractor Productive Hours Per Person: 1,400
Contractor minus employee annual costRequired Productive Hours: 5,000
Contractor minus employee annual costOvertime Multiplier: 1.5
Contractor minus employee annual costHire Fixed Cost: 8,000

Employee annual cost

Employee annual costbase salary + engine-calculated super + entered employee on-costs120,000 AUD

Result$120,000.00

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Employee annual costAnnual Base Salary: 100,000
Employee annual costAnnual Employee On Costs: 8,000
Employee annual costPaid Weeks Per Year: 52
Employee annual costLeave Weeks Per Year: 4
Employee annual costNon Productive Hours Per Working Week: 6
Employee annual costContractor Hourly Rate Ex Tax: 95
Employee annual costContractor Hours Per Year: 1,400
Employee annual costAnnual Contractor Additional Costs: 2,000
Employee annual costComparison Scope Code: 1
Employee annual costWorker Age Class Code: 1
Employee annual costEmployment Status Code: 1
Employee annual costIndustrial Scope Code: 1
Employee annual costEmployee Headcount: 2
Employee annual costContractor Headcount: 1
Employee annual costContractor Productive Hours Per Person: 1,400
Employee annual costRequired Productive Hours: 5,000
Employee annual costOvertime Multiplier: 1.5
Employee annual costHire Fixed Cost: 8,000

Contractor annual cost

Contractor annual costcontractor hourly rate × contractor hours + entered contractor-side costs135,000 AUD

Result$135,000.00

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Contractor annual costAnnual Base Salary: 100,000
Contractor annual costAnnual Employee On Costs: 8,000
Contractor annual costPaid Weeks Per Year: 52
Contractor annual costLeave Weeks Per Year: 4
Contractor annual costNon Productive Hours Per Working Week: 6
Contractor annual costContractor Hourly Rate Ex Tax: 95
Contractor annual costContractor Hours Per Year: 1,400
Contractor annual costAnnual Contractor Additional Costs: 2,000
Contractor annual costComparison Scope Code: 1
Contractor annual costWorker Age Class Code: 1
Contractor annual costEmployment Status Code: 1
Contractor annual costIndustrial Scope Code: 1
Contractor annual costEmployee Headcount: 2
Contractor annual costContractor Headcount: 1
Contractor annual costContractor Productive Hours Per Person: 1,400
Contractor annual costRequired Productive Hours: 5,000
Contractor annual costOvertime Multiplier: 1.5
Contractor annual costHire Fixed Cost: 8,000

Employee cost per productive hour

Employee cost per productive houremployee annual cost ÷ employee productive hours78.13 AUD

Result$78.13

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Employee cost per productive hourAnnual Base Salary: 100,000
Employee cost per productive hourAnnual Employee On Costs: 8,000
Employee cost per productive hourPaid Weeks Per Year: 52
Employee cost per productive hourLeave Weeks Per Year: 4
Employee cost per productive hourNon Productive Hours Per Working Week: 6
Employee cost per productive hourContractor Hourly Rate Ex Tax: 95
Employee cost per productive hourContractor Hours Per Year: 1,400
Employee cost per productive hourAnnual Contractor Additional Costs: 2,000
Employee cost per productive hourComparison Scope Code: 1
Employee cost per productive hourWorker Age Class Code: 1
Employee cost per productive hourEmployment Status Code: 1
Employee cost per productive hourIndustrial Scope Code: 1
Employee cost per productive hourEmployee Headcount: 2
Employee cost per productive hourContractor Headcount: 1
Employee cost per productive hourContractor Productive Hours Per Person: 1,400
Employee cost per productive hourRequired Productive Hours: 5,000
Employee cost per productive hourOvertime Multiplier: 1.5
Employee cost per productive hourHire Fixed Cost: 8,000

Contractor cost per purchased hour

Contractor cost per purchased hourcontractor annual cost ÷ contractor hours96.43 AUD

Result$96.43

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Contractor cost per purchased hourAnnual Base Salary: 100,000
Contractor cost per purchased hourAnnual Employee On Costs: 8,000
Contractor cost per purchased hourPaid Weeks Per Year: 52
Contractor cost per purchased hourLeave Weeks Per Year: 4
Contractor cost per purchased hourNon Productive Hours Per Working Week: 6
Contractor cost per purchased hourContractor Hourly Rate Ex Tax: 95
Contractor cost per purchased hourContractor Hours Per Year: 1,400
Contractor cost per purchased hourAnnual Contractor Additional Costs: 2,000
Contractor cost per purchased hourComparison Scope Code: 1
Contractor cost per purchased hourWorker Age Class Code: 1
Contractor cost per purchased hourEmployment Status Code: 1
Contractor cost per purchased hourIndustrial Scope Code: 1
Contractor cost per purchased hourEmployee Headcount: 2
Contractor cost per purchased hourContractor Headcount: 1
Contractor cost per purchased hourContractor Productive Hours Per Person: 1,400
Contractor cost per purchased hourRequired Productive Hours: 5,000
Contractor cost per purchased hourOvertime Multiplier: 1.5
Contractor cost per purchased hourHire Fixed Cost: 8,000

Break-even contractor hourly rate

Break-even contractor hourly rate(employee annual cost − contractor-side fixed costs) ÷ contractor annual hours84.29 AUD

Result$84.29

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Break-even contractor hourly rateAnnual Base Salary: 100,000
Break-even contractor hourly rateAnnual Employee On Costs: 8,000
Break-even contractor hourly ratePaid Weeks Per Year: 52
Break-even contractor hourly rateLeave Weeks Per Year: 4
Break-even contractor hourly rateNon Productive Hours Per Working Week: 6
Break-even contractor hourly rateContractor Hourly Rate Ex Tax: 95
Break-even contractor hourly rateContractor Hours Per Year: 1,400
Break-even contractor hourly rateAnnual Contractor Additional Costs: 2,000
Break-even contractor hourly rateComparison Scope Code: 1
Break-even contractor hourly rateWorker Age Class Code: 1
Break-even contractor hourly rateEmployment Status Code: 1
Break-even contractor hourly rateIndustrial Scope Code: 1
Break-even contractor hourly rateEmployee Headcount: 2
Break-even contractor hourly rateContractor Headcount: 1
Break-even contractor hourly rateContractor Productive Hours Per Person: 1,400
Break-even contractor hourly rateRequired Productive Hours: 5,000
Break-even contractor hourly rateOvertime Multiplier: 1.5
Break-even contractor hourly rateHire Fixed Cost: 8,000

Employee productive hours per person

Employee productive hours per person(paid weeks − leave weeks) × (ordinary weekly hours − non-productive weekly hours)1,536 hours

Result1,536 hours

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Employee productive hours per personAnnual Base Salary: 100,000
Employee productive hours per personAnnual Employee On Costs: 8,000
Employee productive hours per personPaid Weeks Per Year: 52
Employee productive hours per personLeave Weeks Per Year: 4
Employee productive hours per personNon Productive Hours Per Working Week: 6
Employee productive hours per personContractor Hourly Rate Ex Tax: 95
Employee productive hours per personContractor Hours Per Year: 1,400
Employee productive hours per personAnnual Contractor Additional Costs: 2,000
Employee productive hours per personComparison Scope Code: 1
Employee productive hours per personWorker Age Class Code: 1
Employee productive hours per personEmployment Status Code: 1
Employee productive hours per personIndustrial Scope Code: 1
Employee productive hours per personEmployee Headcount: 2
Employee productive hours per personContractor Headcount: 1
Employee productive hours per personContractor Productive Hours Per Person: 1,400
Employee productive hours per personRequired Productive Hours: 5,000
Employee productive hours per personOvertime Multiplier: 1.5
Employee productive hours per personHire Fixed Cost: 8,000

Contractor minus employee hours per person

Contractor minus employee hours per personcontractor hours − employee productive hours-136 hours

Result-136 hours

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Contractor minus employee hours per personAnnual Base Salary: 100,000
Contractor minus employee hours per personAnnual Employee On Costs: 8,000
Contractor minus employee hours per personPaid Weeks Per Year: 52
Contractor minus employee hours per personLeave Weeks Per Year: 4
Contractor minus employee hours per personNon Productive Hours Per Working Week: 6
Contractor minus employee hours per personContractor Hourly Rate Ex Tax: 95
Contractor minus employee hours per personContractor Hours Per Year: 1,400
Contractor minus employee hours per personAnnual Contractor Additional Costs: 2,000
Contractor minus employee hours per personComparison Scope Code: 1
Contractor minus employee hours per personWorker Age Class Code: 1
Contractor minus employee hours per personEmployment Status Code: 1
Contractor minus employee hours per personIndustrial Scope Code: 1
Contractor minus employee hours per personEmployee Headcount: 2
Contractor minus employee hours per personContractor Headcount: 1
Contractor minus employee hours per personContractor Productive Hours Per Person: 1,400
Contractor minus employee hours per personRequired Productive Hours: 5,000
Contractor minus employee hours per personOvertime Multiplier: 1.5
Contractor minus employee hours per personHire Fixed Cost: 8,000

Selected workforce headcount

Selected workforce headcountemployee headcount + contractor headcount3 number

Result3

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Selected workforce headcountAnnual Base Salary: 100,000
Selected workforce headcountAnnual Employee On Costs: 8,000
Selected workforce headcountPaid Weeks Per Year: 52
Selected workforce headcountLeave Weeks Per Year: 4
Selected workforce headcountNon Productive Hours Per Working Week: 6
Selected workforce headcountContractor Hourly Rate Ex Tax: 95
Selected workforce headcountContractor Hours Per Year: 1,400
Selected workforce headcountAnnual Contractor Additional Costs: 2,000
Selected workforce headcountComparison Scope Code: 1
Selected workforce headcountWorker Age Class Code: 1
Selected workforce headcountEmployment Status Code: 1
Selected workforce headcountIndustrial Scope Code: 1
Selected workforce headcountEmployee Headcount: 2
Selected workforce headcountContractor Headcount: 1
Selected workforce headcountContractor Productive Hours Per Person: 1,400
Selected workforce headcountRequired Productive Hours: 5,000
Selected workforce headcountOvertime Multiplier: 1.5
Selected workforce headcountHire Fixed Cost: 8,000

Selected workforce productive capacity

Selected workforce productive capacityemployee headcount × employee productive hours + contractor headcount × contractor productive hours4,472 hours

Result4,472 hours

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Selected workforce productive capacityAnnual Base Salary: 100,000
Selected workforce productive capacityAnnual Employee On Costs: 8,000
Selected workforce productive capacityPaid Weeks Per Year: 52
Selected workforce productive capacityLeave Weeks Per Year: 4
Selected workforce productive capacityNon Productive Hours Per Working Week: 6
Selected workforce productive capacityContractor Hourly Rate Ex Tax: 95
Selected workforce productive capacityContractor Hours Per Year: 1,400
Selected workforce productive capacityAnnual Contractor Additional Costs: 2,000
Selected workforce productive capacityComparison Scope Code: 1
Selected workforce productive capacityWorker Age Class Code: 1
Selected workforce productive capacityEmployment Status Code: 1
Selected workforce productive capacityIndustrial Scope Code: 1
Selected workforce productive capacityEmployee Headcount: 2
Selected workforce productive capacityContractor Headcount: 1
Selected workforce productive capacityContractor Productive Hours Per Person: 1,400
Selected workforce productive capacityRequired Productive Hours: 5,000
Selected workforce productive capacityOvertime Multiplier: 1.5
Selected workforce productive capacityHire Fixed Cost: 8,000

Selected workforce annual cost

Selected workforce annual costemployee headcount × employee annual cost + contractor headcount × contractor annual cost375,000 AUD

Result$375,000.00

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Selected workforce annual costAnnual Base Salary: 100,000
Selected workforce annual costAnnual Employee On Costs: 8,000
Selected workforce annual costPaid Weeks Per Year: 52
Selected workforce annual costLeave Weeks Per Year: 4
Selected workforce annual costNon Productive Hours Per Working Week: 6
Selected workforce annual costContractor Hourly Rate Ex Tax: 95
Selected workforce annual costContractor Hours Per Year: 1,400
Selected workforce annual costAnnual Contractor Additional Costs: 2,000
Selected workforce annual costComparison Scope Code: 1
Selected workforce annual costWorker Age Class Code: 1
Selected workforce annual costEmployment Status Code: 1
Selected workforce annual costIndustrial Scope Code: 1
Selected workforce annual costEmployee Headcount: 2
Selected workforce annual costContractor Headcount: 1
Selected workforce annual costContractor Productive Hours Per Person: 1,400
Selected workforce annual costRequired Productive Hours: 5,000
Selected workforce annual costOvertime Multiplier: 1.5
Selected workforce annual costHire Fixed Cost: 8,000

Workforce cost per productive hour

Workforce cost per productive hourtotal workforce cost ÷ total productive hours83.86 AUD

Result$83.86

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Workforce cost per productive hourAnnual Base Salary: 100,000
Workforce cost per productive hourAnnual Employee On Costs: 8,000
Workforce cost per productive hourPaid Weeks Per Year: 52
Workforce cost per productive hourLeave Weeks Per Year: 4
Workforce cost per productive hourNon Productive Hours Per Working Week: 6
Workforce cost per productive hourContractor Hourly Rate Ex Tax: 95
Workforce cost per productive hourContractor Hours Per Year: 1,400
Workforce cost per productive hourAnnual Contractor Additional Costs: 2,000
Workforce cost per productive hourComparison Scope Code: 1
Workforce cost per productive hourWorker Age Class Code: 1
Workforce cost per productive hourEmployment Status Code: 1
Workforce cost per productive hourIndustrial Scope Code: 1
Workforce cost per productive hourEmployee Headcount: 2
Workforce cost per productive hourContractor Headcount: 1
Workforce cost per productive hourContractor Productive Hours Per Person: 1,400
Workforce cost per productive hourRequired Productive Hours: 5,000
Workforce cost per productive hourOvertime Multiplier: 1.5
Workforce cost per productive hourHire Fixed Cost: 8,000

Demand capacity gap

Demand capacity gapmax(0, required productive hours − selected workforce productive hours)528 hours

Result528 hours

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Demand capacity gapAnnual Base Salary: 100,000
Demand capacity gapAnnual Employee On Costs: 8,000
Demand capacity gapPaid Weeks Per Year: 52
Demand capacity gapLeave Weeks Per Year: 4
Demand capacity gapNon Productive Hours Per Working Week: 6
Demand capacity gapContractor Hourly Rate Ex Tax: 95
Demand capacity gapContractor Hours Per Year: 1,400
Demand capacity gapAnnual Contractor Additional Costs: 2,000
Demand capacity gapComparison Scope Code: 1
Demand capacity gapWorker Age Class Code: 1
Demand capacity gapEmployment Status Code: 1
Demand capacity gapIndustrial Scope Code: 1
Demand capacity gapEmployee Headcount: 2
Demand capacity gapContractor Headcount: 1
Demand capacity gapContractor Productive Hours Per Person: 1,400
Demand capacity gapRequired Productive Hours: 5,000
Demand capacity gapOvertime Multiplier: 1.5
Demand capacity gapHire Fixed Cost: 8,000

Overtime cost for the capacity gap

Overtime cost for the capacity gapcapacity gap × employee productive-hour cost × overtime multiplier61,875 AUD

Result$61,875.00

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Overtime cost for the capacity gapAnnual Base Salary: 100,000
Overtime cost for the capacity gapAnnual Employee On Costs: 8,000
Overtime cost for the capacity gapPaid Weeks Per Year: 52
Overtime cost for the capacity gapLeave Weeks Per Year: 4
Overtime cost for the capacity gapNon Productive Hours Per Working Week: 6
Overtime cost for the capacity gapContractor Hourly Rate Ex Tax: 95
Overtime cost for the capacity gapContractor Hours Per Year: 1,400
Overtime cost for the capacity gapAnnual Contractor Additional Costs: 2,000
Overtime cost for the capacity gapComparison Scope Code: 1
Overtime cost for the capacity gapWorker Age Class Code: 1
Overtime cost for the capacity gapEmployment Status Code: 1
Overtime cost for the capacity gapIndustrial Scope Code: 1
Overtime cost for the capacity gapEmployee Headcount: 2
Overtime cost for the capacity gapContractor Headcount: 1
Overtime cost for the capacity gapContractor Productive Hours Per Person: 1,400
Overtime cost for the capacity gapRequired Productive Hours: 5,000
Overtime cost for the capacity gapOvertime Multiplier: 1.5
Overtime cost for the capacity gapHire Fixed Cost: 8,000

Whole hires required for the capacity gap

Whole hires required for the capacity gapceil(capacity gap ÷ one employee productive hours)1 number

Result1

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Whole hires required for the capacity gapAnnual Base Salary: 100,000
Whole hires required for the capacity gapAnnual Employee On Costs: 8,000
Whole hires required for the capacity gapPaid Weeks Per Year: 52
Whole hires required for the capacity gapLeave Weeks Per Year: 4
Whole hires required for the capacity gapNon Productive Hours Per Working Week: 6
Whole hires required for the capacity gapContractor Hourly Rate Ex Tax: 95
Whole hires required for the capacity gapContractor Hours Per Year: 1,400
Whole hires required for the capacity gapAnnual Contractor Additional Costs: 2,000
Whole hires required for the capacity gapComparison Scope Code: 1
Whole hires required for the capacity gapWorker Age Class Code: 1
Whole hires required for the capacity gapEmployment Status Code: 1
Whole hires required for the capacity gapIndustrial Scope Code: 1
Whole hires required for the capacity gapEmployee Headcount: 2
Whole hires required for the capacity gapContractor Headcount: 1
Whole hires required for the capacity gapContractor Productive Hours Per Person: 1,400
Whole hires required for the capacity gapRequired Productive Hours: 5,000
Whole hires required for the capacity gapOvertime Multiplier: 1.5
Whole hires required for the capacity gapHire Fixed Cost: 8,000

Whole-hire cash cost for the capacity gap

Whole-hire cash cost for the capacity gapwhole hires required × (new-hire fixed cost + loaded annual employee cost)128,000 AUD

Result$128,000.00

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Whole-hire cash cost for the capacity gapAnnual Base Salary: 100,000
Whole-hire cash cost for the capacity gapAnnual Employee On Costs: 8,000
Whole-hire cash cost for the capacity gapPaid Weeks Per Year: 52
Whole-hire cash cost for the capacity gapLeave Weeks Per Year: 4
Whole-hire cash cost for the capacity gapNon Productive Hours Per Working Week: 6
Whole-hire cash cost for the capacity gapContractor Hourly Rate Ex Tax: 95
Whole-hire cash cost for the capacity gapContractor Hours Per Year: 1,400
Whole-hire cash cost for the capacity gapAnnual Contractor Additional Costs: 2,000
Whole-hire cash cost for the capacity gapComparison Scope Code: 1
Whole-hire cash cost for the capacity gapWorker Age Class Code: 1
Whole-hire cash cost for the capacity gapEmployment Status Code: 1
Whole-hire cash cost for the capacity gapIndustrial Scope Code: 1
Whole-hire cash cost for the capacity gapEmployee Headcount: 2
Whole-hire cash cost for the capacity gapContractor Headcount: 1
Whole-hire cash cost for the capacity gapContractor Productive Hours Per Person: 1,400
Whole-hire cash cost for the capacity gapRequired Productive Hours: 5,000
Whole-hire cash cost for the capacity gapOvertime Multiplier: 1.5
Whole-hire cash cost for the capacity gapHire Fixed Cost: 8,000

Lower-cost capacity-gap option

Lower-cost capacity-gap optioncompare exact overtime cost and whole-hire cash cost for the capacity gapovertime

ResultOvertime

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Lower-cost capacity-gap optionAnnual Base Salary: 100,000
Lower-cost capacity-gap optionAnnual Employee On Costs: 8,000
Lower-cost capacity-gap optionPaid Weeks Per Year: 52
Lower-cost capacity-gap optionLeave Weeks Per Year: 4
Lower-cost capacity-gap optionNon Productive Hours Per Working Week: 6
Lower-cost capacity-gap optionContractor Hourly Rate Ex Tax: 95
Lower-cost capacity-gap optionContractor Hours Per Year: 1,400
Lower-cost capacity-gap optionAnnual Contractor Additional Costs: 2,000
Lower-cost capacity-gap optionComparison Scope Code: 1
Lower-cost capacity-gap optionWorker Age Class Code: 1
Lower-cost capacity-gap optionEmployment Status Code: 1
Lower-cost capacity-gap optionIndustrial Scope Code: 1
Lower-cost capacity-gap optionEmployee Headcount: 2
Lower-cost capacity-gap optionContractor Headcount: 1
Lower-cost capacity-gap optionContractor Productive Hours Per Person: 1,400
Lower-cost capacity-gap optionRequired Productive Hours: 5,000
Lower-cost capacity-gap optionOvertime Multiplier: 1.5
Lower-cost capacity-gap optionHire Fixed Cost: 8,000

Overtime-to-hire crossover hours

ceil((new-hire fixed cost + loaded annual employee cost) ÷ overtime hourly cost), when no greater than one employee productive capacity

1,093 hours

Result1,093 hours

Australia employee, contractor and workforce capacity formulas →

Inputs used by these formula steps

Overtime-to-hire crossover hoursAnnual Base Salary: 100,000
Overtime-to-hire crossover hoursAnnual Employee On Costs: 8,000
Overtime-to-hire crossover hoursPaid Weeks Per Year: 52
Overtime-to-hire crossover hoursLeave Weeks Per Year: 4
Overtime-to-hire crossover hoursNon Productive Hours Per Working Week: 6
Overtime-to-hire crossover hoursContractor Hourly Rate Ex Tax: 95
Overtime-to-hire crossover hoursContractor Hours Per Year: 1,400
Overtime-to-hire crossover hoursAnnual Contractor Additional Costs: 2,000
Overtime-to-hire crossover hoursComparison Scope Code: 1
Overtime-to-hire crossover hoursWorker Age Class Code: 1
Overtime-to-hire crossover hoursEmployment Status Code: 1
Overtime-to-hire crossover hoursIndustrial Scope Code: 1
Overtime-to-hire crossover hoursEmployee Headcount: 2
Overtime-to-hire crossover hoursContractor Headcount: 1
Overtime-to-hire crossover hoursContractor Productive Hours Per Person: 1,400
Overtime-to-hire crossover hoursRequired Productive Hours: 5,000
Overtime-to-hire crossover hoursOvertime Multiplier: 1.5
Overtime-to-hire crossover hoursHire Fixed Cost: 8,000

Inputs used

Annual base salary: 100,000
Other annual employee on-costs: 8,000
Paid weeks per year: 52
Leave weeks per year: 4
Non-productive hours per working week: 6
Contractor hourly rate excluding GST: 95
Contractor hours per year: 1,400
Other annual contractor-side costs: 2,000
Comparison boundary: 1
Worker age policy fixture: 1
Employment status policy fixture: 1
Industrial and region scope: 1
Employee headcount: 2
Contractor headcount: 1
Contractor productive hours per person: 1,400
Required productive hours: 5,000
Overtime cost multiplier: 1.5
Fixed cost per additional hire: 8,000

Open this calculator with preset values

This calculator supports documented, shareable scenario URLs. Compatible assistants and applications can construct links using the parameters below.

Scenario links contain only allowlisted numeric and closed-choice inputs shown in the URL; Margin101 excludes free text and identifying fields. Anyone you share the URL with can read those numbers, so do not include private or identifying data.

Example: https://margin101.com/en-au/tools/au-employee-vs-contractor/?sv=1&annualBaseSalary=100000&annualContractorAdditionalCosts=2000&annualEmployeeOnCosts=8000&comparisonScopeCode=1&contractorHeadcount=1&contractorHourlyRateExTax=95&contractorHoursPerYear=1400&contractorProductiveHoursPerPerson=1400&employeeHeadcount=2&employmentStatusCode=1&hireFixedCost=8000&industrialScopeCode=1&leaveWeeksPerYear=4&nonProductiveHoursPerWorkingWeek=6&overtimeMultiplier=1.5&paidWeeksPerYear=52&requiredProductiveHours=5000&workerAgeClassCode=1

Parameter	Meaning	Unit	Allowed values	Presence	Default
annualBaseSalary	Ordinary salary before super and other employer on-costs.	AUD/employee/year before super and employer on-costs	0 to 10000000	Required	100000
annualContractorAdditionalCosts	User-entered procurement, equipment, insurance or engagement costs paid by the business.	AUD/contractor/year	0 to 10000000	Required	2000
annualEmployeeOnCosts	User-entered payroll tax, insurance, workers compensation, equipment, benefits and other applicable costs.	AUD/employee/year outside the super calculation	0 to 10000000	Required	8000
comparisonScopeCode	This calculator compares entered cost only and cannot classify the worker.	—	1 (Commercial cost comparison only), 0 (I need a worker-classification decision — unsupported)	Required	Commercial cost comparison only
contractorHeadcount	Whole contractors using the entered annual contractor cost and productive-hours fixture.	whole contractors/selected workforce scenario	0 to 1000	Required	1
contractorHourlyRateExTax	The quoted commercial rate before GST.	AUD/contractor hour, ex GST	0 to 100000	Required	95
contractorHoursPerYear	Hours bought under the comparison scenario.	purchased hours/contractor/year	1 to 10000	Required	1400
contractorProductiveHoursPerPerson	Annual delivery capacity for one contractor in the selected mix.	productive hours/contractor/year	0 to 10000	Required	1400
employeeHeadcount	Whole employees using the entered annual employee cost and productive-hours fixture.	whole employees/selected workforce scenario	0 to 1000	Required	2
employmentStatusCode	The reviewed ordinary-hours and annual-leave starting point is limited to the supported full-time scenario.	—	1 (Full-time employee scenario confirmed), 0 (Part-time, casual or uncertain — unsupported)	Required	Full-time employee scenario confirmed
hireFixedCost	Recruitment, onboarding and other one-off cost applied to every whole hire required.	AUD/additional hire	0 to 10000000	Required	8000
industrialScopeCode	This version is limited to a confirmed award-free national-system starting point.	—	1 (Award-free national-system scenario confirmed), 0 (Award, agreement, state system or uncertain — unsupported)	Required	Award-free national-system scenario confirmed
leaveWeeksPerYear	Editable leave assumption; the default comes from the reviewed non-shiftworker NES starting point.	paid leave weeks/employee/year	0 to 52	Required	4
nonProductiveHoursPerWorkingWeek	Paid administration, training and other non-delivery time.	non-productive paid hours/employee/working week	0 to 37.5	Required	6
overtimeMultiplier	Scenario multiplier applied to the calculated employee cost per productive hour; confirm the actual entitlement separately.	decimal cost multiplier on employee cost/productive hour	1 to 5	Required	1.5
paidWeeksPerYear	Paid weeks on the selected annual basis.	paid weeks/employee/year	1 to 53	Required	52
requiredProductiveHours	Demand the selected employee and contractor mix needs to cover in the annual decision period.	required productive hours/year	0 to 10000000	Required	5000
workerAgeClassCode	This bounded version supports only an adult worker starting point; junior, apprentice and trainee rules need a separate review.	—	1 (Adult worker (21 or older) confirmed), 0 (Junior, apprentice, trainee or uncertain — unsupported)	Required	Adult worker (21 or older) confirmed

Australia Employee vs Contractor Cost: loaded annual and productive-hour cost

Use the result to compare entered commercial capacity and cost scenarios; it does not determine worker status, award coverage or legal obligations.

Formula summary

Primary formula: capacity gap = max(0, required productive hours − selected workforce productive hours)

Read the full methodology

Data used here

Australian super guarantee planning rate: Australian Taxation Office; verified; checked 2026-07-13.
Annual leave planning weeks: Fair Work Ombudsman; verified; checked 2026-07-13.
Award-free ordinary weekly hours: Fair Work Ombudsman; verified; checked 2026-07-13.

Decision checks

Act on the result

Reconcile demand, productive capacity and every included on-cost before choosing the workforce scenario.

Stress-test the decision

Retest demand, productive hours, overtime and hire cost separately, including an adverse capacity case.

Assumptions and sources

Australian super guarantee planning rate: Australian Taxation Office super guarantee rate Checked 2026-07-13.
Primary source →
Annual leave planning weeks: Fair Work Ombudsman annual leave guidance Checked 2026-07-13.
Primary source →
Award-free ordinary weekly hours: Fair Work Ombudsman award-free conditions guidance Checked 2026-07-13.
Primary source →

When this estimate can be misleading

This tool compares commercial cost scenarios only. It does not classify a worker or determine employment, tax, superannuation, award, leave, withholding, payroll-tax, insurance or safety obligations.
Employee on-costs and contractor additional costs are user-entered and must include every amount relevant to the actual engagement.
Productive hours are an operating assumption, not a promise of output, quality or availability.
The default super, ordinary-hours and leave inputs are bounded Australian source assumptions; confirm the rule that applies to the actual worker and arrangement.
The comparison excludes demand, delivery quality, continuity, intellectual property, equipment ownership and other non-cost differences.
The overtime-versus-hire result compares only the entered capacity gap, calculated productive-hour cost, overtime multiplier and hire fixed cost; it does not determine an award entitlement or hiring decision.
Use the result to compare entered commercial capacity and cost scenarios; it does not determine worker status, award coverage or legal obligations.

Educational estimate, not advice. See all assumptions & limitations →

Guides to interpret the decision and its assumptions.

Employee vs Contractor: Economics Before Classification
Compare like-for-like economics and operating trade-offs before a separate jurisdictional legal classification.
Read guide
Total Employee Cost in Australia: Cost per Productive Hour
Reconcile annual pay, applicable employer costs and productive capacity using bounded Australian planning starts without treating the result as payroll or legal advice.
Read guide

Frequently asked questions

How do I plan loaded employee and contractor cost, selected workforce mix, demand capacity and the overtime-or-hire threshold?

Reconcile demand, productive capacity and every included on-cost before choosing the workforce scenario.

Does this decide whether someone is an employee or contractor?

No. It only compares entered commercial costs. Worker status depends on the actual legal and working arrangement and must be checked separately.

Why compare productive hours with purchased contractor hours?

Annual cost alone can hide a material capacity difference. The tool keeps both entered hour bases visible without assuming equal output.

Does Margin101 store my salary or rate?

Tool inputs and results stay in this browser. Anonymous categorical usage analytics send only governed page, tool, cluster and action identifiers; tool inputs and results are never sent. Error monitoring is disabled. Optional saved state stays only on this device.

Is this tax, employment or legal advice?

No. It is educational cost planning. Check the actual arrangement with the relevant authorities and qualified advisers.

What should stay consistent when I compare the options?

Keep the time basis, units and included costs consistent across options, then verify the assumptions that create the largest difference.

What this comparison calculator helps you decide

Best for

Outputs

Start here

Australia Employee vs Contractor Cost: loaded annual and productive-hour cost

Workforce cost, mix and demand records

Commercial cost comparison

Scenario comparison

Calculation details

Contractor minus employee annual cost

Employee annual cost

Contractor annual cost

Employee cost per productive hour

Contractor cost per purchased hour

Break-even contractor hourly rate

Employee productive hours per person

Contractor minus employee hours per person

Selected workforce headcount

Selected workforce productive capacity

Selected workforce annual cost

Workforce cost per productive hour

Demand capacity gap

Overtime cost for the capacity gap

Whole hires required for the capacity gap

Whole-hire cash cost for the capacity gap

Lower-cost capacity-gap option

Overtime-to-hire crossover hours

Inputs used

Australia Employee vs Contractor Cost: loaded annual and productive-hour cost

Formula summary

Decision checks

Act on the result

Stress-test the decision

Assumptions and sources

When this estimate can be misleading

Related reading

Frequently asked questions