2026 Cost Comparison
Labour Hire vs Permanent Staff: Which Is Cheaper?
A complete 2026 breakdown of the true cost of permanent employment versus labour hire in Australia — including every on-cost most employers miss. Covering construction, civil, manufacturing, warehousing, and admin across SA, NSW & QLD.
Labour Hire That Works For You.
By Adam Keegan, General Manager — South Australia, EIR Labour Hire.
Direct answer
Labour hire is typically cheaper than permanent employment for short-to-medium engagements (under 12 months), seasonal work, and high-turnover roles. For genuinely full-time roles needed continuously for 2+ years, the comparison narrows.
The most important number: a permanent employee on a $65,000 base salary actually costs $97,000–$116,000 per year when you add all on-costs — superannuation, WorkCover, payroll tax, leave loading, long service leave accrual, recruitment, onboarding, and HR overhead. Most hiring managers budget for the salary only.
Source: EIR Labour Hire 2026 cost analysis. Permanent employment costs based on current Modern Award rates, SA/NSW/QLD payroll tax rates, and industry-average WorkCover premiums. Labour hire rates from EIR's live workforce data.
$65k
What most employers budget
(base salary)
$97k–$116k
What they actually spend
(all on-costs included)
1.5–1.8×
True cost multiplier
(base salary to total cost)
Full cost breakdown
Permanent vs Labour Hire: True Annual Cost (2026)
Based on a worker earning $65,000 base salary (approximately $33.25/hr for a 38-hour week). Labour hire column assumes a mid-range EIR charge rate, e.g. $50–$55/hr for a warehousing role.
| Cost Component | Permanent Hire | Labour Hire (EIR) |
|---|---|---|
| Base Salary / Wages | $65,000/year | Included in rate |
| Superannuation (12%) | $7,800 | Included |
| Workers’ Compensation¹~3–8% of wages; varies by industry and state | $1,950 – $5,200 | Included |
| Payroll Tax²SA 4.95%, NSW 5.45%, QLD 4.75% | $3,088 – $3,543 | Included |
| Annual Leave (4 wks + 17.5% loading) | $5,875 | Included |
| Long Service Leave Accrual³ | $1,086 | Included |
| Personal / Sick Leave (10 days) | $2,500 | Included |
| Recruitment CostsPer hire; one-time but real | $5,000 – $15,000 | $0 |
| Onboarding & Training | $2,000 – $5,000 | $0 |
| HR & Admin OverheadPer FTE, allocated share | $3,000 – $5,000 | $0 |
| Total true cost | $97,299 – $116,004/yr | Charge rate × hours only |
¹ Workers' compensation: varies by industry. Warehousing ~1.8%, construction ~3–8%, manufacturing ~2–4%. Premium is calculated on wages.
² Payroll tax applies once you exceed your state payroll tax threshold (SA $1.5M, NSW $1.2M, QLD $1.3M). Rate: SA 4.95%, NSW 5.45%, QLD 4.75%. Applies only to wages above the threshold.
³ Long service leave: vests at 1.67% of wages per year in SA, NSW and QLD. Becomes a cash liability payable at 7 or 10 years of service (state-dependent).
Decision guide
When labour hire is the better choice
Seasonal or variable demand
When your headcount requirement fluctuates by 20%+ across weeks or quarters, labour hire eliminates the carrying cost of workers who aren't needed. You pay for hours used — not FTE entitlements year-round.
Short-to-medium engagements (< 12 months)
The recruitment and onboarding cost per permanent hire ($7,000–$20,000) is front-loaded. Below 12 months, those costs are rarely amortised — labour hire pays no setup cost.
High-turnover roles
For roles with >30% annual turnover (common in warehousing, food production, and labour-intensive manufacturing), each exit triggers another recruitment cycle. Labour hire transfers that replacement burden to EIR.
Workforce risk management
Permanent redundancies cost 4–8 weeks pay per year of service. Labour hire creates no redundancy exposure — the engagement can end with appropriate notice at no penalty.
Speed to deployment
EIR can place qualified workers same-day or next-morning. A typical permanent recruitment cycle (advertise, screen, interview, reference check, offer, notice period) runs 4–8 weeks.
When permanent employment is the better choice
Steady-state roles needed 40+ hours/week, 50+ weeks/year
When a role is genuinely full-time and permanent, the effective annual cost of labour hire is higher than a permanent employee’s fully-loaded cost because you’re also paying for the agency’s margin on every hour. The crossover point is typically 12–18 months of consistent full-time need.
Highly specialised roles requiring deep institutional knowledge
Where the role requires 3–6+ months of ramp-up time and the worker’s value is tied to relationships, IP, or product-specific knowledge that you’d lose on exit, permanent headcount is the better structure.
Culture and leadership roles
Team leads, supervisors, and managers where influence, trust, and longevity of relationships are the primary output. Labour hire can provide supervisors, but permanent employment is usually more appropriate for roles where continuity is the whole point.
Common questions
Labour hire vs permanent: FAQs
Is labour hire cheaper than hiring permanent staff in Australia?
It depends on the duration and nature of the role. For seasonal peaks, project-based work, and short-to-medium engagements (under 12 months), labour hire is typically cheaper — primarily because it eliminates the recruitment cost ($5,000–$15,000 per permanent hire), onboarding ($2,000–$5,000), and leave liability. For genuine full-time permanent roles needed continuously for 2+ years, the hourly cost comparison narrows, but labour hire still removes compliance risk, admin burden, and redundancy exposure.
What does a permanent employee really cost vs what they get paid?
A permanent employee on a $65,000 base salary actually costs $97,000–$116,000 per year when you add all on-costs: 12% superannuation ($7,800), workers' compensation ($1,950–$5,200), payroll tax ($3,088–$3,543), annual leave loading ($5,875), long service leave accrual ($1,086), personal leave ($2,500), plus recruitment ($5,000–$15,000 per hire), onboarding ($2,000–$5,000), and HR overhead ($3,000–$5,000). The ratio is roughly 1.5–1.8x base salary.
What are the hidden costs of hiring permanent staff directly?
The most commonly overlooked costs in direct permanent employment are: (1) WorkCover premiums, which in high-risk industries like construction and manufacturing can run 3–8% of wages; (2) long service leave accruals, which vest silently at ~1.67% of wages per year and become a lump liability at 7 or 10 years; (3) payroll tax, which only applies once you exceed the state threshold; and (4) redundancy payments if the role no longer exists — 4 weeks' pay per year of service for the first 10 years under the Fair Work Act.
What does labour hire cost compared to a $65k salary worker?
A $65,000/year worker (roughly $33.25/hr for a 38-hour week) costs you $47–$103/hr through EIR Labour Hire depending on classification. The EIR rate includes all on-costs: super, WorkCover, payroll tax, leave entitlements, and management. For blue-collar warehouse and manufacturing roles, the EIR rate ($47–$55/hr) is often comparable to the true all-in cost of direct employment once you factor recruitment, onboarding, and HR overhead into the permanent hire cost.
Can I convert a labour hire worker to permanent staff?
Yes — EIR supports conversion of workers from casual labour hire to permanent employment. The process, timing, and any conversion fee depend on the terms of your arrangement with EIR. Call 1800 LABOUR to discuss. Many clients trial workers through EIR before converting high performers to permanent roles.
What are the tax and compliance advantages of labour hire?
Through labour hire, EIR is the employer of record. This means EIR handles all PAYG withholding, superannuation contributions, STP Phase 2 reporting, payroll tax lodgement, and workers' compensation premium management — not you. This reduces your compliance burden, eliminates payroll tax exposure for the relevant workers (the threshold applies to EIR's total payroll, not your spend with EIR), and removes WorkCover classification risk.
Want to compare the actual cost for your role?
Use EIR's free calculator to get an all-in charge rate for your specific role, state, and hours — then compare it directly against your permanent employment cost. Covering labourers, operators, tradies, and admin support across civil, construction, manufacturing, and warehousing. Australian family-owned since 2003.
Or call us directly: 1800 LABOUR (1800 522 687). Phones open 6am–9pm. Visit www.eirlabourhire.com.au.