The salary on an offer letter is not what the employee costs. Employers pay their own share of social security, accrue gratuity or leave loading, and cover benefits and equipment.
Here's what's added in each of the three countries, with an example for each.
What employers pay on top of salary
| India | US | Australia | |
|---|---|---|---|
| Retirement | PF 12% of basic (₹15,000 a month cap unless paid on full basic) | 401(k) match, if offered | Super 12% of ordinary pay |
| Social security and insurance | EDLI and admin ~1%; ESI 3.25% for pay up to ₹21,000 a month | Social Security 6.2%, Medicare 1.45% | Workers' compensation (varies) |
| Unemployment and payroll taxes | None | FUTA 0.6% on $7,000; state unemployment | State payroll tax above the threshold |
| Accruals | Gratuity 4.81% of basic | None required | Leave loading 17.5% under many awards |
Worked examples
Example: US: $90,000 salary
Social Security $5,580 + Medicare $1,305 + FUTA $42 + state unemployment $189 (2.7% on $7,000).
401(k) match $3,600, health insurance $9,000, workers' compensation $450, equipment $3,000.
Total: about $113,166 a year, 1.26× salary.
Example: India: ₹12 lakh gross salary, basic 50%
Basic ₹50,000 a month. Employer PF on the ₹15,000 ceiling: ₹21,600 a year; EDLI and admin ₹1,800.
Gratuity accrual: 4.81% × ₹6 lakh = ₹28,860. Health insurance ₹15,000, equipment ₹60,000.
Total: about ₹13.27 lakh, 1.11× salary.
Example: Australia: A$100,000 salary
Super A$12,000, workers' compensation A$1,500 (1.5%), equipment A$3,000.
Total: about A$116,500, 1.17× salary, before payroll tax if you're above your state's threshold.
To price that employee's time for clients, use the burdened rate calculator.
How to use this calculator
- Pick India, the US or Australia at the top.
- Enter the salary and the country's settings, such as basic pay share, state unemployment rate or payroll tax.
- Add health insurance, equipment and any one-off hiring costs.
FAQs
How much more than salary does an employee cost?
Typically 1.1–1.15× in India, 1.2–1.3× in the US with health insurance, and 1.15–1.2× in Australia, before office space.
Is CTC the same as the cost to the employer in India?
Close, but not always. CTC usually includes employer PF and gratuity, but EDLI, admin charges and some benefits can push the real cost a little higher.
When does Australian payroll tax apply?
When your total Australian wages pass your state's threshold, which is around A$1 million or more in most states. Most small businesses don't pay it.
Do I pay this for a contractor?
No. Contractors invoice you and pay their own taxes. But misclassifying an employee as a contractor can mean back-paying taxes and contributions.
Sources
- IRS: Topic 759, Form 940 (FUTA)
- SSA: 2026 Social Security changes (wage base $184,500)
- ATO: Key superannuation rates and thresholds
- PIB: Code on Social Security, 2020 (in force 21 Nov 2025)
Results are estimates and aren't financial advice. For decisions about your own money, check with a qualified adviser. Spotted a mistake? Tell us.