2.6 Estimating total on-costs
Check first whether your home university has an on-cost calculator on its website. If so, it will provide you with the current on-cost percentages. The on-costs may vary according to whether the length of a contract is less than or greater than 2 years. Generally, you will not have to estimate all the different on-costs. Your university will advise you of the overall multiplier that needs to be added. However, it is helpful to understand what is included in that estimate. The following outlines the key costs that are covered.
1. Superannuation
There are a number of different superannuation schemes. For Australian superannuation schemes, the difference will normally be whether it is university-funded scheme, in which case the on-cost could be around 17%, or if not, 9%.
2. Long service leave
For Australian university employees, long service leave accrues at 6.5 weekdays per year. Based on historical and actuarial data, an on-cost percentage of 3.4–3.5% is required to cover costs associated with future long service leave payments and it includes salary increments, promotions, and enterprise bargaining increases that occur between the time of leave accrual and the time of actual payment.
While casual employees are entitled to accrue long service leave, because most projects operate for a short time most employees in this category will not reach a paid entitlement, and so for budgetary purposes this item is usually set at 0%. Check however, that your university does not require that funds be set aside for this purpose.
3. Annual leave
Non-casual staff will normally be entitled to 4 weeks annual leave for 12 months service and they should be encouraged to take that leave in the year it is accrued. To ensure that the cost of leave is reflected in the year that the entitlement is accrued and that there are sufficient funds to cover the salary, funds are is placed in a 'Provision' account and a portion of the cost of each fortnightly salary is charged to that account. The Provision account reflects the monetary value of annual leave liabilities that have been accrued at that point in time. When annual leave is actually taken, a corresponding reduction in the relevant faculty/division's outstanding liability occurs.
4. Payroll tax
Payroll tax varies between states. In Western Australia the on-cost is 5–7% of total gross salary and all loadings plus superannuation. This is levied by the state government and applies to all employees.
5. Workers' compensation/work cover
Every employer is obliged to pay workers’ compensation if a staff member is injured. The university will therefore have insurance to cover this and this charge will vary from one university to another.
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