Methodology
Australia Total Employee Cost Planner methodology
Educational only: Business decision support, not accounting, tax or legal advice.
Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.
Update policy: Reviewed when formulas or official dependencies change.
Scope: Australian small-business planning using your own assumptions.
1. Formulas and units
Hₑ = (W − L) × (h − n)Where
- W
- Paid weeks per year (weeks/year)Source: User assumption
- L
- Paid leave weeks (weeks/year)Source: Reviewed official rule · Annual leave planning weeks
- h
- Ordinary weekly hours (hours/week)Source: Reviewed official rule · Award-free ordinary weekly hours
- n
- Non-productive weekly hours (hours/week)Source: User assumption
- Hₑ
- Productive hours per employee (hours/year)Source: Calculated output
Cw = Nₑ × E + Nc × CcWhere
- E
- Loaded employee cost (AUD/year)Source: Calculated output
- Cw
- Selected workforce cost (AUD/year)Source: Calculated output
- Nₑ
- Employee headcount (people)Source: Business record
- Nc
- Contractor headcount (people)Source: Business record
- Cc
- Annual contractor cost per contractor (AUD/year)Source: Calculated output
Hw = Nₑ × Hₑ + Nc × HcWhere
- Hₑ
- Productive hours per employee (hours/year)Source: Calculated output
- Nₑ
- Employee headcount (people)Source: Business record
- Nc
- Contractor headcount (people)Source: Business record
- Hw
- Total productive workforce hours (hours/year)Source: Calculated output
- Hc
- Contractor annual hours for the relevant cost or capacity term (hours/year)Source: Business record
Cph = Cw ÷ HwWhere
- Cw
- Selected workforce cost (AUD/year)Source: Calculated output
- Hw
- Total productive workforce hours (hours/year)Source: Calculated output
- Cph
- Workforce cost per productive hour (AUD/hour)Source: Calculated output
G = max(0, D − Hw)Where
- D
- Required productive hours (hours/year)Source: User assumption
- G
- Capacity gap (hours/year)Source: Calculated output
- Hw
- Total productive workforce hours (hours/year)Source: Calculated output
- max
- Maximum operator (operator)Source: Calculated output
Co = G × Ce × MoWhere
- G
- Capacity gap (hours/year)Source: Calculated output
- Co
- Overtime cost for the capacity gap (AUD)Source: Calculated output
- Ce
- Employee cost per productive hour (AUD/hour)Source: Calculated output
- Mo
- Overtime cost multiplier (multiplier)Source: User assumption
Nh = ceil(G ÷ Hₑ)Where
- Hₑ
- Productive hours per employee (hours/year)Source: Calculated output
- G
- Capacity gap (hours/year)Source: Calculated output
- ceil
- Round up to the next whole unit (operator)Source: Calculated output
- Nh
- Whole hires required for the capacity gap (whole people)Source: Calculated output
Ch = Nh × (Fh + E)Where
- E
- Loaded employee cost (AUD/year)Source: Calculated output
- Ch
- Whole-hire cash cost for the capacity gap (AUD)Source: Calculated output
- Fh
- Fixed cost per additional hire (AUD/hire)Source: Business record
- Nh
- Whole hires required for the capacity gap (whole people)Source: Calculated output
E = S + B + Cs + OWhere
- S
- Annual base salary (AUD/year)Source: Business record
- B
- Annual other cash remuneration (AUD/year)Source: Business record
- O
- Other annual employee on-costs (AUD/year)Source: Business record
- Cs
- Total employer statutory contribution (AUD/year)Source: Calculated output
- E
- Loaded employee cost (AUD/year)Source: Calculated output
Cs = Σ(max(0, min(Q, Uᵢ) − Lᵢ) × rᵢ)Where
- Q
- Confirmed annual statutory contribution earnings basis (AUD/year)Source: Business record
- Lᵢ
- Contribution earnings floor (AUD)Source: Reviewed official rule · Australian super guarantee planning rate
- Uᵢ
- Contribution earnings ceiling (AUD)Source: Reviewed official rule · Australian super guarantee planning rate
- rᵢ
- Super guarantee (decimal rate)Source: Reviewed official rule · Australian super guarantee planning rate
- Cs
- Total employer statutory contribution (AUD/year)Source: Calculated output
- max
- Maximum operator (operator)Source: Calculated output
- min
- Minimum operator (operator)Source: Calculated output
Ce = E ÷ HₑWhere
- E
- Loaded employee cost (AUD/year)Source: Calculated output
- Hₑ
- Productive hours per employee (hours/year)Source: Calculated output
- Ce
- Employee cost per productive hour (AUD/hour)Source: Calculated output
Cc = Rc × Hc + OcWhere
- Cc
- Annual contractor cost per contractor (AUD/year)Source: Calculated output
- Hc
- Contractor annual hours for the relevant cost or capacity term (hours/year)Source: Business record
- Rc
- Contractor hourly rate excluding tax (AUD/hour)Source: Business record
- Oc
- Other annual contractor costs (AUD/year)Source: Business record
X = ceil((Fh + E) ÷ (Ce × Mo)), when X ≤ HₑWhere
- E
- Loaded employee cost (AUD/year)Source: Calculated output
- Hₑ
- Productive hours per employee (hours/year)Source: Calculated output
- X
- Overtime-to-hire crossover (hours)Source: Calculated output
- ceil
- Round up to the next whole unit (operator)Source: Calculated output
- Ce
- Employee cost per productive hour (AUD/hour)Source: Calculated output
- Mo
- Overtime cost multiplier (multiplier)Source: User assumption
- Fh
- Fixed cost per additional hire (AUD/hire)Source: Business record
Money inputs and outputs use AUD. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.
2. Worked example
Input assumptions
The worked Australia fixture starts with $100,000.00 annual salary and $8,000.00 of user-entered other on-costs. Where MyFutureFund applies, the example confirms an active payroll instruction; the live default remains unconfirmed.
Calculation and outputs
Example
The worked Australia fixture starts with $100,000.00 annual salary and $8,000.00 of user-entered other on-costs. Where MyFutureFund applies, the example confirms an active payroll instruction; the live default remains unconfirmed.
- Total workforce cost
- $375,000.00
- Total productive hours
- 4,472 hours
- Workforce cost per productive hour
- $83.86
- Capacity gap
- 528 hours
- Overtime cost for gap
- $61,875.00
- Whole hires required for gap
- 1
- Whole-hire cash cost for gap
- $128,000.00
- Employee annual cost
- $120,000.00
- Super guarantee
- $12,000.00
- Employee cost per productive hour
- $78.13
- Contractor annual cost
- $135,000.00
- Overtime-to-hire crossover
- 1,093 hours
The exact engine returns $12,000.00 for the displayed official contribution components, $120,000.00 loaded employee cost and $375,000.00 total entered workforce cost.
Interpretation
Use the Australian result as a bounded commercial workforce plan, not a worker-classification, payroll or employment-law determination.
3. Validation and boundary checks
- Contribution components validate finite rates, floors and ceilings and retain full calculation precision.
- Age/status/industry scope codes must match the displayed supported policy fixture.
- Market-specific category, province, residency, wage-type and effective-period controls fail closed outside the verified fixture.
- Annual salary must remain inside any source-versioned earnings range declared by the market adapter.
- The statutory contribution earnings basis is validated separately from total salary.
- Leave and non-productive time cannot eliminate all productive capacity.
- Headcounts are whole non-negative numbers and overtime multiplier cannot be below 1.
- A capacity gap is covered by the ceiling of gap hours divided by one employee’s productive capacity; no-gap scenarios require zero hires.
- Unsupported policy scope fails closed instead of falling back to a global percentage.
4. Assumptions and source classification
- Adult full-time award-free national-system employee
- All contribution and threshold dates match the displayed source version.
- Every cost not listed as an automatic contribution component is entered by the user.
- Productive-time, contractor, demand, overtime and hire-cost inputs use a consistent annual basis; every required hire carries one full annual loaded employee cost plus the entered fixed cost.
Official dependencies used by this planner are captured in the Margin101 evidence register and version-acknowledged in this page history. User-entered commercial assumptions remain separate from those official inputs.
5. Limitations
- The automatic row is statutory minimum SG on entered qualifying earnings, capped at the 2026–27 maximum contribution base. Awards, agreements, eligibility exceptions, payroll tax and workers compensation remain outside scope.
- The tool is not payroll software and does not calculate employee deductions, withholding, benefits, awards, leave liability, insurance or filing obligations.
- The overtime-versus-hire comparison uses entered commercial costs and does not determine whether overtime or a hire is lawful or available.
- The tool does not classify a worker or provide tax, employment, payroll or legal advice.
This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply in Australia and seek qualified advice where appropriate.
6. Update and evidence policy
Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. Registered official sources block dependent public workflows when their evidence or version acknowledgement is unavailable or invalid. Commercial inputs remain user-supplied because they vary by business and contract.
Change history
- : Initial public release of the planner and methodology after pre-launch calculation, content, source and interaction review.
Related reading
Guides to interpret the decision and its assumptions.
- 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