A hiring decision is usually made on the salary figure, and the salary is the smallest part of what the hire costs. Superannuation, award leave loading, workers compensation, payroll tax, recruitment, and the laptop and software the person needs all land somewhere in the accounts, and in most small and mid-sized Australian businesses they land in different places with different timing. The salary line moves in the month the person starts. The recruitment invoice arrives before that. The workers compensation rate changes at renewal.

A headcount model brings those pieces together in one place. The plan lists each role with the month it starts, its full-time equivalent and its base salary. A cost layer converts each role into a fully loaded annual figure. A timing layer turns that annual figure into a monthly charge from the start month onward, which feeds the salary and on-cost lines in the profit and loss, the payroll accruals on the balance sheet and the cash flow.

The result is a plan that can be argued with line by line. A board can see what the third hire costs, what the plan costs across the financial year against a full year of the same roles, and what a sales hire has to produce before the role pays for itself.

Start With a Hire-by-Role Plan

The plan is a single table with one row per role, and it is deliberately plain. Each row carries the role title, the department, the month the person starts, the full-time equivalent, the base salary at full-time equivalent, and a flag for whether the role generates revenue.

Four columns do the work. The start month drives the timing, which is the single largest source of error in a headcount plan. The FTE drives the cost, since a 0.6 FTE role carries 0.6 of the full-time equivalent package. Holding the base salary at full-time equivalent keeps part-time and full-time roles comparable in the same column. The revenue flag drives the productivity ramp, which applies to the roles that bring income in and to nothing else.

The Fully Loaded Cost of a Role

Salary is the starting point. The fully loaded cost is the salary plus the statutory and discretionary on-costs that attach to employing a person in Australia, plus the one-off costs of getting someone started, plus the equipment and subscriptions they need on day one.

fully loaded cost (annual, per role) =
    base salary
  * (1 + super rate + leave loading rate * 4 / 52 + workers comp rate)
  + payroll tax rate * taxable wages
  + recruitment and onboarding
  + laptop + software seat + phone + training

In Excel, with the on-cost rates held in named cells on an assumptions sheet, that becomes one formula per role that can be filled across the plan.

=$C5 * (1 + Super_rate + Leave_loading_rate*4/52 + Workers_comp_rate + Payroll_tax_rate)
      + Recruitment_cost + Laptop + Software_seat + Phone + Training

The payroll tax term is the one to think about. Where the business already sits above its state threshold, every additional dollar of taxable wages attracts the marginal rate and the formula works as written. Where the business sits below the threshold, the threshold is consumed by the roles that cross it, so the test belongs in a separate entity-level calculation and the per-role term should be set to zero.

Worked through on a $90,000 base salary, with super at 12 percent, leave loading at 17.5 percent of four weeks, workers compensation at 1.8 percent and a marginal payroll tax rate of 5 percent used purely to show the mechanics, the employment cost is about $108,100 a year. Adding $6,000 of recruitment and onboarding and $4,433 of annualised non-salary items brings the first-year total to about $118,600, which is roughly 32 percent above the base salary.

Applied across the plan, the same rates produce the following.

The employment cost column is what feeds the profit and loss. The total cost of hire column is what the budget and the cash flow need to see, because recruitment is a one-off charge in the first year and the equipment is a genuine cost of adding a person.

Australian On-Costs That Belong in the Model

Each on-cost has its own basis, and treating them as a single percentage is how a plan ends up materially wrong.

Superannuation guarantee sits at 12 percent of ordinary time earnings. Ordinary time earnings is narrower than total salary for some roles, since it excludes items such as overtime and some allowances, so the base for the rate is worth confirming against the payroll system rather than assuming the total salary figure.

Award leave loading is commonly 17.5 percent on four weeks of annual leave for award-covered staff. Four weeks out of fifty-two is 4/52 of a year, so the loading adds about 1.35 percent to annual salary. On a $90,000 base that is $1,212. The loading is usually paid when leave is taken, which means the cash profile differs from the accrual, and the plan should be able to show both.

Workers compensation is rated by state and by industry, and the rate moves with the claims history of the business. Set it as a percentage input per state, and revisit it at each renewal. A business with operations in two states needs two rates, and a business that has had a claim needs to model the rate increase that follows.

Payroll tax is the on-cost most often modelled as an afterthought. The threshold differs by state and changes with each state budget, and the rate differs too. Hold the threshold and the rate as separate inputs, apply the threshold once at the entity level to total taxable wages, and treat each additional hire above the threshold as attracting the marginal rate. A plan built with a single blended payroll tax percentage will misprice the first hire of the year and the last one.

Recruitment and onboarding covers agency fees, advertising and the internal time spent interviewing and inducting. It belongs in year one only, and it is worth keeping separate from salary so the second year of the plan can be compared with the first on a like basis.

Non-salary items round out the cost. A laptop, a software seat, a phone and a training allowance are real costs of adding a person, and a plan that leaves them out understates the budget request. Some of them scale with FTE and others travel with the individual, which matters once part-time roles are in the plan.

Timing: What a Mid-Year Hire Actually Costs

Timing is built from two lines of logic, and both belong in the model rather than in someone's head at budget time.

monthly employment cost  = fully loaded annual employment cost / 12
charge in month m        = IF(m >= start month, monthly employment cost, 0)
months charged in year 1 = 13 - start month

A January start in a July to June financial year is month seven, so six months of cost fall into that year and $45,000 of a $90,000 base salary is charged. The role costs $108,132 in a full year of employment, and the first financial year carries only the portion from January onward.

The effect across a plan is larger than most people expect. The four roles above carry a year-one employment cost of $268,527 against $379,902 for a full year of the same roles, which is about 71 percent. Nothing changed except the start months. A plan that costs every role at a full year will overstate the year by close to a third whenever the hires are phased.

FTE, Part-Time and Marginal Cost

A 0.6 FTE role on a $72,000 full-time equivalent base pays $43,200 of salary. Most on-costs follow the wage, so superannuation, leave loading, workers compensation and payroll tax all scale with the pay. The non-salary items partly scale and partly travel with the person, since a laptop, a software seat and a phone are needed by each individual regardless of the hours worked. Two 0.5 FTE roles therefore cost more than one 1.0 FTE role on the same full-time equivalent base, and showing that difference in the plan is worth the extra column.

Headcount and FTE should both be reported from the same table. The plan above finishes the year with four people and 3.6 FTE. Headcount alone overstates capacity, since the support officer works three days a week. FTE alone understates the cost of the equipment and software, since those items are bought per person.

Average and marginal cost are two different numbers and the plan needs both. Average employment cost across the four roles is about $94,976, which is $379,902 divided by four. The next hire, a senior role at $140,000 fully loaded, sits 47 percent above that average and adds $45,000 more than a plan costed at the average would show. Budgeting every new role at the average cost produces a salary line that undershoots, and the gap widens as the plan gets more senior.

Productivity Ramp in the First Year

A new hire costs the full amount from the first month and produces at a fraction of capacity for a while. For revenue-generating roles, that gap belongs in the model as an explicit ramp.

A revenue role with a full-year contribution target of $400,000 delivers about $150,000 in its first year. The four quarters average (0 + 0.25 + 0.50 + 0.75) / 4, which is 37.5 percent, and 37.5 percent of $400,000 is $150,000. Putting the full cost of the role against that first-year contribution is the comparison a board should see when it approves the hire.

The ramp belongs on revenue roles only. Applying it to a finance or support role creates a fictitious first-year saving with no counterpart anywhere in the accounts. Months to full productivity should be a per-role input, because induction for a coordinator runs to weeks and induction for a business development manager runs to quarters.

The Monthly Cost Build and the Profit and Loss Link

Monthly cost is the employment cost divided by twelve, charged from the start month. Recruitment is charged once, in the month the person starts. Non-salary items are charged as they are incurred, with the laptop capitalised and depreciated.

The monthly total flows into the profit and loss in the month it is incurred, and the split matters as much as the total. Base salary sits in the salaries and wages line. Superannuation and leave loading sit in on-costs. Payroll tax takes its own line where the chart of accounts carries one. Recruitment lands in professional fees or in a dedicated line. Holding that split inside the model means the profit and loss, the payroll accrual on the balance sheet and the PAYG withholding liability all reconcile at each month end.

The same build answers the cash question. Superannuation is paid quarterly on most cycles, payroll tax is paid monthly or quarterly depending on the state, and PAYG withholding is remitted on the activity statement cycle. A plan that charges all of it evenly across the month will show a smoother cash profile than the bank account actually experiences.

A headcount model earns its keep when it can answer three questions quickly, covering what the plan costs this financial year, what it costs at full run rate, and what has to be true for each hire to pay for itself. Those answers come from the start-month column, the fully loaded cost table and the productivity ramp, and they are worth having before the offer letter goes out.

Related reading

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• Australian Tax Models in Excel
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