What is a Burden Rate? Definition or Meaning

Hiring an employee costs more than just their hourly rate. It includes paying for all the benefits they are entitled to such as annual leave, sick leave, workers compensation and superannuation contributions. When all of these entitlements are added to the employee’s pay, it reveals the true cost of hiring the employee or the burden rate to be paid to employ them.

For example…

Personalised Gifts is a new Australian business wanting to sell items such as dinnerware, mouse mats or T-shirts. They want to hire workers to help organise and pack the orders for customers. The owner wants to understand what the true cost or burden rate of hiring a permanent worker is. After adding the base rate of twenty-five dollars an hour to benefits such as superannuation contributions of nine and a half percent and leave loading of seventeen and a half percent, the total cost of hiring an employee comes to a rate of forty dollars an hour.