Field notes › Running the business
How to calculate a labour hire charge out rate that covers every cost
To calculate a labour hire charge out rate, start with the hourly rate the worker is legally owed for the hours they will actually work, then add every cost that exists because they are on that site: super, payroll tax, workers compensation, leave, licensing, getting them there, and a share of overheads and risk. Margin goes on last. Most calculators in the search results are built for trades businesses billing their own time, and they skip the on-costs that belong to labour hire.
Why a trades calculator gets labour hire wrong
A typical charge out rate calculator takes a wage, adds a loading for overheads, divides by billable hours and stops. A labour hire firm employs a worker who takes direction on someone else's site, so payroll tax, the workers compensation premium, the licence and the compliance paperwork all sit with you, while the client sets the shift pattern that drives the wage bill. Build the rate in layers and check each one against the body that sets it. The figures change, so the table names where to check each one.
The cost layers from pay rate to charge out rate
| Layer | What it includes | Where to check the current figure |
|---|---|---|
| Pay rate | Classification rate, casual loading, allowances | Fair Work Ombudsman pay guide, or your enterprise agreement |
| Penalties and overtime | Nights, weekends, public holidays, overtime | The same pay guide or agreement |
| Super guarantee | Contributions each payday | ATO super guarantee rates page |
| Payroll tax | Tax on wages above the threshold | State revenue office, such as the Queensland Revenue Office |
| Workers compensation | Premium tied to wages, industry, claims | WorkCover Queensland, or your state authority |
| Leave and public holidays | Paid leave and holidays for permanent staff | Fair Work Ombudsman |
| Licensing | Licence, reporting, records | Labour Hire Licensing Queensland, or your state scheme |
| Getting to site | Tickets, inductions, medicals, PPE, travel | Your costs and the client contract |
| Overheads and risk | Office, insurance, bad debt, funding wages | Your accounts and accountant |
| Margin | The profit you chose | Your pricing decision |
Start with what the worker is actually paid
The base is the minimum rate for the classification the worker is really doing. The Fair Work Ombudsman's pay guides set out minimum pay rates for full-time, part-time and casual employees under each award, with the monetary allowances and the most frequently used penalty rates. They don't apply where an enterprise agreement covers the worker, so use the agreement then.
Price the hours the client will actually roster, because a rate built on day shift goes underwater quietly when the crew moves onto nights. Fair Work says casuals are paid a casual loading or a specific casual pay rate and don't get most types of paid leave. Permanent staff need leave provided for, and under the National Employment Standards, employees other than casuals who normally work on the day a public holiday falls are paid their base rate for those ordinary hours, according to Fair Work's page on not working on public holidays.
On-costs that move with wages
Super is set nationally. As at September 2026, the ATO's super guarantee page lists the general rate as 12% for 1 July 2026 to 30 June 2027, and under Payday Super it is paid for each payday on qualifying earnings. On long client payment terms, super now leaves the account well before the invoice is paid, and that funding cost belongs in the rate.
Payroll tax is set by each state and territory, and labour hire gets specific treatment. In Queensland, the Revenue Office says an employment agent is considered the employer of the worker it supplies, and amounts it pays under the contract, including fringe benefits and super contributions, are taken to be wages. As at September 2026 it lists a $1.3 million annual threshold, with a rate of 4.75% for employers or groups paying $6.5 million or less in Australian taxable wages, 4.95% above that, and a mental health levy above separate thresholds. Other states differ, so check with their revenue office and your accountant.
Workers compensation is priced by each scheme. WorkCover Queensland bases the accident insurance premium on wage costs, industry and claims history, with an industry classification code on every policy. Check the classification matches the work.Safe Work Australia keeps a list of workers compensation authorities for the other states and territories.
Licensing and getting a worker onto site
Licensing is a cost the trades calculators never see. Labour Hire Licensing Queensland requires licensees to report every six months, within 28 days after each period ends, covering workers supplied, industries, locations, accommodation and compliance. In Victoria, the Labour Hire Authority says providers must be licensed to operate legally. The state schemes are covered in labour hire licensing in Australia.
Then the costs that never appear on a payslip: tickets you pay for, inductions that take a paid day before any billable hour, medicals, drug and alcohol testing, PPE and travel. Spread each across the billable hours it supports. An induction for someone who lasts a fortnight costs far more per billed hour than for someone who stays the year, so your turnover assumption changes the rate.
Overheads, risk and then margin
Recruitment, the rosterer's time, compliance checking, payroll, insurance and software don't belong to one worker, but they exist because of the work, so spread them across billed hours. Allow for bad debt, funding wages while you wait to be paid, backfill for sick workers and crews stood down for weather. Then add margin, a number you chose on purpose. For what eats into a rate after the contract starts, read where labour hire margins quietly leak.
Revisit the build whenever the award, super, your premium or the shift pattern changes.Seeing pay and bill on the shifts helps. Mustr has optional rates, switched on per organisation: per-day bill and pay rates at organisation, client, role, day or night and weekday or weekend level, most specific winning, plus per-employee rates that override the site or role rate. Admins see bill, pay and margin on each shift, and workers and clients never see dollar figures. It won't build the rate for you, but it shows a shift losing money while there's time to fix it.
Questions people ask
What is the difference between a charge out rate and an hourly rate?
The hourly rate is what the worker is paid for an hour. The charge out rate is what the client is billed for that hour, covering the wage plus super, payroll tax, workers compensation, leave, site costs, overheads, risk and margin. In labour hire, all of those costs live in the gap between the two.
How do you calculate an overtime charge out rate?
Build it the same way, starting from the overtime rate the award or agreement sets for that classification. Costs tied to wages, such as payroll tax, rise with it, so recalculate the stack rather than adding a flat amount. Check with the ATO which payments super is calculated on, and quote overtime as its own rate.
How much does labour hire cost per hour?
There is no single figure. The pay rate depends on the award and classification, and the on-costs depend on the state, the industry, your claims history and the site.
Can I use a charge out rate calculator for labour hire?
A spreadsheet is fine for the arithmetic. Most online calculators are built for trades businesses billing their own time and leave out payroll tax on on-hired wages, licensing and the cost of getting workers to site. Use one only if you can add those layers yourself.
To see bill, pay and margin sitting on a working roster, book a demo.