Owner-Driver or Employee Driver? The Full Cost Compared

Sep 28, 2026

Summary

The award rate is not the true cost of a driver. Once super, leave, workers compensation and long service leave are counted, a full-time semi-trailer driver in NSW costs about $72,088 a year, or $42.73 for every hour actually worked, against an award rate of $29.00 an hour.

  • Employee cost is about 26% above base wages. For a Grade 6 driver on $1,102.00 a week (from 1 July 2026), entitlements add $14,784.14 a year before overtime, penalties and allowances.
  • Productive hours are lower than paid hours. After annual leave, personal leave and public holidays, a full-time driver works about 1,687 of 1,976 paid hours.
  • Owner-drivers must fund every entitlement themselves. To match an employee’s total income while taking the same leave, an owner-driver’s rate needs about $42.73 an hour for labour alone, before any truck or business costs.
  • Owner-drivers are the fastest-growing and most vulnerable group. Non-employing road freight businesses rose 53.6% between 2021 and 2025, but only 45.6% of non-employing road transport businesses survived four years.
  • The rules have changed. The Fair Work Commission can now set binding standards for owner-drivers, and made its first order, on fuel cost recovery, in April 2026.

Whether you employ drivers, engage owner-drivers or are one, price the labour at its full cost first, then add the truck.

The employee driver: award minimum rates

Truck drivers employed in the road transport and distribution industry are covered by the Road Transport and Distribution Award 2020 [MA000038], except while doing long-distance work. From the first full pay period on or after 1 July 2026, the Fair Work Commission’s 2026 Annual Wage Review increased modern award minimum wages by 4.75% (Fair Work Ombudsman, Annual Wage Review 2026).

The driver’s grade depends on the vehicle. The table shows the heavy-vehicle grades most relevant to line-haul and distribution work.

Grade

Vehicle driven (Schedule B)

Weekly rate (38 hours)

Hourly rate

Casual hourly (incl. 25% loading)

6

Articulated vehicle with more than three axles and GCM over 22.4 t; rigid and heavy trailer over 22.4 t to 53.4 t GCM

$1,102.00

$29.00

$36.25

7

Double articulated vehicle up to 53.4 t GCM, including B-doubles

$1,118.00

$29.42

$36.78

8

Rigid and trailer(s) or double articulated vehicle over 53.4 t GCM, including B-doubles

$1,150.50

$30.28

$37.85

9

Rigid or articulated vehicle with trailer combinations over 94 t GCM

$1,169.70

$30.78

$38.48

Source: MTA SA, Road Transport and Distribution Award Wage & Classification Schedule, 1 July 2026, which reproduces award clause 17.1 and Schedule B.

Cross-check. These figures match the award’s official 1 July 2025 rates increased by 4.75%, rounded to the nearest 10 cents. For example, Grade 6 was $1,052.00 a week from 1 July 2025 (Fair Work Commission, MA000038 clause 17.1), and $1,052.00 × 1.0475 = $1,101.97, published as $1,102.00. Always confirm current rates in the Fair Work Ombudsman pay guide.

Long-distance work is different. Drivers on long-distance operations (interstate trips over 200 km, or return journeys over 500 km) are covered by the Road Transport (Long Distance Operations) Award 2020 [MA000039] while doing that work. That award uses different pay methods, including cents per kilometre, so the figures in this article apply to local and short-distance work only.

The award also sets overtime (150% for the first 2 hours, then 200%), weekend penalties (150% Saturday, 200% Sunday) and allowances such as a $41.03 per day travelling allowance and dangerous goods allowances, which add to the cost when they apply.

The full cost of employing a driver

The award rate is only the starting point. An employer also pays super, leave loading, workers compensation and long service leave, and pays for weeks when the driver is on leave rather than on the road.

Entitlements and on-costs

Item

Rule

Source

Annual leave

4 weeks paid a year (5 for some shiftworkers)

National Employment Standards

Annual leave loading

17.5% of the minimum rate on annual leave (or weekend penalties, if greater)

Award clause 24.4

Personal/carer’s leave

10 days paid a year

National Employment Standards

Family and domestic violence leave

10 days paid a year, when needed

National Employment Standards

Public holidays

Paid day off; 8 national days plus state holidays

National Employment Standards

Superannuation

12% of ordinary time earnings, paid with wages from 1 July 2026 (Payday Super)

ATO

Workers compensation (NSW example)

Road Freight Transport – Short Distance: 10.440% of wages plus 0.044% dust diseases contribution; Long Distance: 9.230% plus 0.004%

icare 2025–26 rates, held for 2026–27

Long service leave (NSW example)

2 months (8.67 weeks) after 10 years, about 0.867 weeks a year

NSW Government

Payroll tax (NSW example)

5.45% of wages above $1.2 million a year (2025–26)

Revenue NSW

icare has frozen its industry rates for 2026–27, so the 2025–26 rates above apply to NSW policies issued or renewed from 30 June 2026 (icare, Premium updates 2026–27). Workers compensation, long service leave and payroll tax all vary by state; the NSW figures are an example.

Worked example: one full-time driver in NSW

The calculation below includes every entitlement that accrues each year for a full-time driver working ordinary hours. Entitlements that arise only in particular circumstances are listed after the table. It uses the rules in the table above; the only assumptions are those stated.

Annual cost

Grade 6 (semi-trailer)

Grade 8 (B-double over 53.4 t)

Wages: weekly rate × 52 (includes paid annual leave, personal leave and public holidays)

$57,304.00

$59,826.00

Annual leave loading: 17.5% × 4 weeks

$771.40

$805.35

Superannuation: 12% of wages plus leave loading

$6,969.05

$7,275.76

Workers compensation: 10.484% of wages plus leave loading (NSW short distance)

$6,088.62

$6,356.59

Long service leave provision: 0.8667 weeks a year (NSW)

$955.07

$997.10

Total annual cost

$72,088.14

$75,260.80

Total as a percentage above base wages

25.8%

25.8%

Award hourly rate

$29.00

$30.28

Cost per productive hour (1,687.2 hours)

$42.73

$44.61

Productive hours are 38 hours × 44.4 weeks: 52 weeks less 4 weeks’ annual leave, 2 weeks’ personal leave (10 days, assumed fully used) and 1.6 weeks for the 8 national public holidays. Most states have more public holidays, which would raise the cost per productive hour further.

The example assumes that the annual leave loading is ordinary time earnings, which the ATO’s view supports unless the loading relates to lost overtime (atotaxrates.info, citing SGR 2009/2). It applies workers compensation to wages and leave loading only; icare’s definition of wages can include other items, so the actual premium may be higher, and it varies with claims history and incentives.

Not included, because they depend on the job: overtime, weekend and shift penalties, allowances (such as travelling, meal and dangerous goods), paid family and domestic violence leave and compassionate leave when taken, notice and redundancy pay on termination, payroll tax (only above the state threshold), recruitment, training, licences and medicals, uniforms, and the cost of the truck itself. Each of these increases the real cost of an employee driver.

The owner-driver: what the rate must cover

An owner-driver’s rate has to pay for two things: the truck, and the driver. It is easy to price the truck and underprice the driver. The employee cost above shows what the driver’s labour is really worth once every entitlement is included.

Owner-drivers are now the dominant business type in road freight. At June 2025, 40,759 of Australia’s 65,225 road freight businesses (62.5%) had no employees, up from 26,531 in June 2021. They also have the lowest survival rate: only 45.6% of non-employing road transport businesses trading in June 2021 were still trading four years later (ABS, Counts of Australian Businesses, 8165.0, data cubes 2 and 4, December 2025 release).

What an employee gets that an owner-driver must fund

Employee entitlement

Owner-driver position

4 weeks’ paid annual leave plus 17.5% loading

No pay when not driving; holidays must be funded from the rate

10 days’ paid personal leave

No pay when sick; income protection or savings needed

Paid public holidays

No pay on public holidays unless working

12% super paid by the employer

Owner-driver funds their own super, unless paid wholly or principally for labour (see below)

Workers compensation cover

May have no cover unless deemed a worker under state law or privately insured

Long service leave

None

Truck supplied by the employer

Owner-driver pays finance, depreciation, fuel, tyres, maintenance, registration and insurance

Overtime, penalties and allowances

Only if the rate includes them

Super. The ATO treats an independent contractor who is paid wholly or principally for their labour as an employee for super purposes, even if they have an ABN; super is then payable on the labour component of their invoice (ATO, Super guarantee eligibility). The contract must be with the individual, not through a company, trust or partnership (ATO, Super from your employer). Whether an owner-driver supplying their own truck meets that test depends on the contract, so check with the ATO’s employee or contractor tool or an adviser.

Building the owner-driver rate

The minimum sustainable rate covers three layers:

  1. At least the full employee cost for the same grade of work. For a semi-trailer driver in NSW, that is $72,088.14 a year, or $42.73 per productive hour, before overtime and allowances.
  2. The truck. Finance or depreciation, fuel, tyres, maintenance, registration, insurance and road charges, from the operator’s own records.
  3. The business. Accounting, phone and IT, licences and medicals, income protection or personal accident cover, and a margin for risk and reinvestment.

Fuel is the most volatile layer. The ACCC reported average diesel in the five largest cities rising from 176.6 cents a litre on 20 February 2026 to 322.4 cents on 31 March 2026, and it was 286.8 cents on 23 September 2026 (ACCC Weekly fuel price monitoring report, 24 September 2026). An owner-driver on a fixed rate absorbs that change directly, while an employee’s wage does not move with the fuel price.

The Freight Metrics Truck Operating Cost Calculator calculates the truck layer, and the Freight Metrics drivers wages calculator covers the labour layer.

Side by side

The comparison works both ways. A transport business deciding whether to employ a driver or engage an owner-driver needs the same numbers as an owner-driver deciding what to charge.

The labour component per hour

Using the Grade 6 (semi-trailer, NSW) figures from the worked example:

Scenario

Annual labour cost

Hours worked

Labour cost per hour

Employee driver, all entitlements, typical leave taken

$72,088.14

1,687.2

$42.73

Owner-driver matching that income but taking the same leave

$72,088.14

1,687.2

$42.73

Owner-driver matching that income with no leave at all

$72,088.14

1,976.0

$36.48

Award hourly rate alone

—

—

$29.00

Hours for the no-leave row are 38 hours × 52 weeks. Labour costs per hour are calculated from the figures shown.

The gap between the award rate ($29.00) and the full labour cost ($42.73) is $13.73 an hour, or 47%. An owner-driver who prices their time at the award hourly rate is effectively giving away super, leave, workers compensation and long service leave. The only way to close that gap without raising the rate is to work every week of the year, which means going without holidays.

The decision for a transport business

\text{Employee option} = \text{Full employee cost} + \text{Own truck cost} + \text{Supervision and admin}

\text{Owner-driver option} = \text{Owner-driver’s quoted rate} \times \text{Hours or kilometres}

An owner-driver quote below the employee option can look like a saving. If it is also below the owner-driver’s own full cost, the arrangement is unlikely to last, and the business risks losing the contractor or facing legal exposure (see the next section).

The decision for an owner-driver

An owner-driver can check a rate offer in three steps:

  1. Work out the labour cost per hour for the grade of work, including every entitlement, as above.
  2. Add the truck cost per hour from actual records or the Truck Operating Cost Calculator.
  3. Add business costs and a margin. If the offered rate is below the total, the work is being subsidised by the owner-driver’s unpaid leave, super or truck equity.

The rules: contractor or employee?

Choosing between an owner-driver and an employee is a commercial decision, but the label on the contract does not decide which one a driver legally is.

Sham contracting is unlawful. Under section 357 of the Fair Work Act 2009, an employer must not misrepresent an employment relationship as an independent contracting arrangement. In one case, a company that told seven bus drivers they were independent contractors when they were employees was ordered to pay $252,120 in penalties, and its director $47,784 (Fair Work Commission, Misrepresenting employment). In March 2026 the ATO and the Fair Work Ombudsman said they were stepping up action on sham contracting, naming road freight among the industries of concern (Staffing Industry Analysts, 13 March 2026).

Owner-drivers now have minimum-standard protections. Since 26 August 2024, the Fair Work Commission can set minimum standards for regulated road transport contractors and make road transport contractual chain orders that bind businesses along the contracting chain (Fair Work Commission, Regulated worker standards). When setting road transport standards, the Commission must be satisfied the order will not unduly affect the viability or competitiveness of owner-drivers.

The first order dealt with fuel. The Road Transport Contractual Chain Order – Fuel Cost Recovery – 2026 started on 21 April 2026 after the fuel price surge (Fair Work Commission). It required parties in road transport contractual chains to adjust rates fortnightly or twice a month so contractors recovered the increased cost of fuel, with those obligations applying from 21 April to 7 June 2026 (Victorian Government guidance). The Fair Work Amendment (Fairer Fuel) Act 2026 also lets the Commission set standards more quickly during sudden disruptions (Fair Work Ombudsman).

Future orders may cover payment times, fuel levies, rate reviews, cost recovery and termination (Coleman Greig Lawyers). Transport businesses that engage owner-drivers, and owner-drivers themselves, should monitor active cases before the Commission.

This section is general information, not legal advice. Operators should get advice on how their own arrangements are classified.

About the data

  • Award rates are the Road Transport and Distribution Award 2020 minimum rates from the first full pay period on or after 1 July 2026, as published by MTA SA and cross-checked against the Fair Work Commission’s 1 July 2025 award rates plus the 4.75% Annual Wage Review increase. The Fair Work Ombudsman pay guide is the authoritative source.
  • The worked example is for one full-time adult employee in NSW, working 38 ordinary hours a week on local or short-distance work. Only the stated assumptions are used: personal leave fully taken, 8 public holidays, annual leave loading treated as ordinary time earnings, and workers compensation at the NSW short-distance industry rate applied to wages plus leave loading.
  • Workers compensation premiums depend on the insurer, claims history and incentives, so the icare industry rate is a starting point, not a quote.
  • Other states have different workers compensation rates, long service leave rules, payroll tax thresholds and public holidays. Recalculate with the rules for your state.
  • ABS business counts are for ANZSIC class 4610 (Road Freight Transport); survival rates are for subdivision 46 (Road Transport), which also includes buses, taxis and rideshare.
  • This article is general information, not legal, tax or financial advice.

References

  1. Fair Work Ombudsman, Annual Wage Review 2026.
  2. Fair Work Commission, Road Transport and Distribution Award 2020 [MA000038] (clauses 11, 17, 19, 21, 23 and 24; version incorporating amendments to 1 July 2025).
  3. Fair Work Ombudsman, Pay guide – Road Transport and Distribution Award [MA000038], effective 1 July 2026.
  4. Motor Trade Association of SA/NT, Road Transport and Distribution Award Wage & Classification Schedule, 1 July 2026.
  5. Fair Work Commission, National Employment Standards.
  6. Australian Taxation Office, What payments are qualifying earnings and Super guarantee eligibility.
  7. Australian Taxation Office, Super from your employer.
  8. info, Superannuation Guarantee (ATO view on annual leave loading, SGR 2009/2).
  9. icare NSW, Workers compensation premium rates 2025–26 and Premium updates 2026–27.
  10. NSW Government, Long service leave.
  11. Revenue NSW, Payroll tax thresholds and rates.
  12. Australian Bureau of Statistics, Counts of Australian Businesses, including Entries and Exits (cat. 8165.0), data cubes 2 and 4, released 16 December 2025.
  13. Australian Competition and Consumer Commission, Weekly fuel price monitoring report, 24 September 2026.
  14. Fair Work Commission, Misrepresenting employment.
  15. Staffing Industry Analysts (13 March 2026), Australian regulators step up crackdown on sham contracting.
  16. Fair Work Commission, About regulated worker minimum standards orders and guidelines and Road transport contractual chain order issued.
  17. Victorian Government, Guidance on Road Transport Contractual Chain Order – Fuel Cost Recovery – 2026.
  18. Fair Work Ombudsman, Fairer Fuel: Reforms to road transport orders.
  19. Coleman Greig Lawyers, Road transport contracting reforms.
  20. Freight Metrics, Truck Operating Cost Calculator Trial.

All sources accessed 28 September 2026. Calculations in the worked example are based on the figures shown.