Locum vs Permanent Cost Comparator
The true cost of a locum, including the 49% no-ABN trap, versus a permanent hire.
Locum engagement
If not, 49% must be withheld.
Permanent equivalent
Comparison
Locum total outlay
$10,560
$132/hr
Permanent total cost
$8,341
$167/hr
Permanent is cheaper by $2,219 (27%)
Engaging a locum looks cheaper on paper because there is no super, no payroll tax and no long-term commitment. But the true cost includes agency fees, the 49% no-ABN withholding rule, and the fact that a locum who leaves takes their patient relationships with them. This calculator compares the total cost of both models over the same period.
The 49% no-ABN trap
If a locum does not quote an ABN, the practice must withhold 49% of the payment and remit it to the ATO. That money leaves the practice even though it is not a cost in the traditional sense — but it is cash gone, and the locum may increase their rate to compensate.
The withholding is reported on a PAYG payment summary and the locum can claim it as a credit on their tax return. But the practice bears the administrative burden and the cash flow impact.
Hidden permanent costs
A permanent employee carries costs that do not appear on the payslip: superannuation guarantee, payroll tax, workers compensation, recruitment, and training. Together these can add 20–30% to the headline salary.
Recruitment is particularly easy to forget because it is paid once and then ignored. Amortised over the expected tenure, it can add several thousand dollars per year.
When locums make sense
Locums are the right tool for short-term gaps — parental leave, unexpected departures, or seasonal demand. They are also useful when you are testing whether a new service line has enough volume to justify a permanent hire.
For ongoing need, the per-day cost of a locum almost always exceeds the fully-loaded cost of a permanent employee. The calculator shows the crossover point for your specific numbers.
Frequently asked questions
Why is a locum sometimes more expensive than the day rate suggests?
Agency fees, the 49% no-ABN withholding trap, and the loss of patient relationships when the locum leaves all add to the true cost. The 49% withheld is cash gone from the practice even though it is not a traditional cost.
What hidden costs does a permanent hire carry?
Superannuation, payroll tax, workers compensation, recruitment and training. Together these can add 20–30% to the headline salary, and recruitment is easy to forget because it is paid once and then ignored.
When do locums make sense?
For short-term gaps — parental leave, unexpected departures, seasonal demand — and to test whether a new service line has enough volume to justify a permanent hire. For ongoing need, the fully-loaded cost of a permanent employee usually wins.
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This calculator provides general information only and is not tax advice. It does not account for your individual circumstances. Confirm figures against the relevant legislation or with a registered tax agent before relying on them for a lodgement.
Reviewed by eHealth Systems Pty Ltd