By SEO Team | 10 September 2026 | 7 min read
Is outsourcing HR worth it for businesses with 20 to 100 employees?
You have 28 employees. Last month you terminated someone who wasn’t performing, and you’re not completely sure you did it right. The month before that, a casual asked about going permanent and you stalled the conversation because you didn’t know the answer.
That’s where most business owners at this headcount actually are. Not in crisis. Just aware, somewhere, that the HR side of the business is running on instinct rather than process.
The question isn’t whether you need help with HR. At 20 employees, you do. The question is whether paying an external provider is worth the spend at your current size, or whether there are cheaper or better ways to cover the same ground.
That calculation is different at 25 employees than at 75. This post works through each band honestly, including the situations where outsourcing HR isn’t the right answer.
KEY TAKEAWAYS
- At 20 to 50 employees, compliance obligations are already in force -- unfair dismissal, casual conversion, STP2, Modern Awards -- and the admin quietly consumes days each month.
- At 50 to 100 employees, HR becomes a function. Investigations, WHS obligations, and workers' compensation all require active, documented management.
- WGEA gender equality reporting is mandatory at 100 employees. Setting up your data before you cross that line is far easier than after.
- Outsourcing pays for itself most reliably when it covers specialist risk -- terminations, investigations, complex award questions -- not routine tasks.
- It is not worth it if you have a capable internal HR person, if your industry needs a sector-specialist, or if your headcount has a deliberate ceiling.
How HR changes as your headcount grows
Each band brings new workload, new obligations, and a different outsourcing calculation.
20-50
Employees
HR workload
Leave tracking, contracts, onboarding paperwork, and ad hoc performance conversations that are starting to need written records.
Key obligations
- Standard unfair dismissal rules (6-month threshold)
- Casual conversion under the NES
- Single Touch Payroll Phase 2
- Modern Award compliance
Outsourcing verdict
Worth it for compliance cover
50-100
Employees
HR workload
Formal investigations, structured performance cycles, grievance procedures, and return-to-work programs. HR is a function now, not a task.
Key obligations
- WHS documented risk assessments
- Workers' compensation management
- Formal investigation procedures
- WGEA data prep (threshold at 100)
Outsourcing verdict
Worth it for specialist depth
100+
Employees
HR workload
Enterprise Agreement negotiations, WGEA annual reporting, and HR complexity that typically warrants an internal hire alongside specialist external support.
Key obligations
- WGEA gender equality reporting (mandatory)
- EA negotiation and consultation
- Payroll tax in most states
- Complex multi-Award environments
Outsourcing verdict
Worth it alongside an internal hire
HR outsourcing at the 20 to 50 employee stage
At 25 staff, most business owners are still doing HR themselves, or it’s sitting with the office manager alongside three other jobs. It’s not a disaster. But by this point the compliance picture has already changed, and most owners don’t realise how much.
What the workload actually looks like?
By 20 employees, you’re managing:
- Modern Award classification for every role, sometimes across two or three different Awards in a single team
- Leave tracking: annual leave, personal leave, long service leave (which varies by state – seven years in Victoria, ten in New South Wales, seven in Queensland), and parental leave requests including the government-funded scheme through Services Australia
- Onboarding documentation, including the Fair Work Information Statement the Fair Work Act requires you to give every new employee
- Employment contracts and variation letters whenever someone changes role, hours, or status
- Performance records – which matter the moment any situation could become a claim
None of those tasks is complex on its own. Together, for most owners at this size, they add up to two or three days of management time each month. That’s time spent on administration rather than the business. It’s also time spent by someone who may not know exactly what they’re doing, which is where the risk actually sits.
Compliance obligations that apply at this size :
You’re past the Fair Work Act’s 15-employee small business threshold. That changes things. Standard unfair dismissal provisions now apply: an employee with six months’ service can bring a claim to the Fair Work Commission, and the barrier to lodging one is low. You need written documentation to defend it, a verbal warning and a vague recollection of what was said won’t hold up.
Genuine redundancy obligations sit with you if you restructure. Casual conversion is a live obligation under the National Employment Standards: a regular casual employed for 12 months has the right to request conversion to permanent employment, and you have 21 days to respond in writing with a clear reason if you’re refusing.
Single Touch Payroll Phase 2 reporting to the ATO is mandatory at your size. Modern Award compliance, including correct classification, penalty rates, and applicable allowances for every role, is an ongoing obligation, not something you set up once and leave.
If your annual wages bill is approaching $700,000 in Victoria, or lower thresholds in some other states, payroll tax also enters the picture. Most businesses at 20 to 30 employees are near or above that figure without realising it.
Free Download: Is Outsourcing HR Right for Your Business? 10 Questions to Ask
A practical checklist for business owners at the 20 to 100 employee stage, covering what to look for in a provider and when to consider bringing HR in-house.
Does outsourcing HR pay off here?
For most businesses in this band, yes. But the value is in the right things.
A retained HR provider at this size isn’t doing leave calculations for you. The value is in the situations you don’t handle every day: the termination where you’re not sure you’ve followed the right process, the casual conversion request you’ve never dealt with before, the performance issue that’s been simmering for three months and is about to get worse.
To put a number on it: a single unfair dismissal claim that goes to conciliation typically costs between $2,000 and $5,000 in legal fees, before you factor in your own time. A misconduct termination handled incorrectly can cost considerably more. A retained HR advisory arrangement for a 25-person business generally costs less than one Fair Work claim per year. That is not an argument to outsource automatically. It is an argument to be honest about where the real risk sits in your business right now.
VeiraMal’s outsourced HR services are structured around exactly this model: targeted support for the situations that carry real cost, not billing hours for tasks you can manage yourself. If you’re not sure where your exposure is, you can fill in the contact form or call the team directly.
Your HR obligations by headcount band
20 to 50 employees
Standard unfair dismissal rules - An employee with 6 months' service can bring a claim. Written documentation is your only defence.
Casual conversion obligations - A regular casual at 12 months can request permanent employment. You must respond in writing within 21 days.
Single Touch Payroll Phase 2 - Mandatory ATO reporting for all employers at this size.
Modern Award compliance - Correct classification, penalty rates, and allowances for every role, across every Award that applies.
50 to 100 employees
Formal investigation procedures - Complaints about conduct or bullying require documented processes, trained investigators, and written outcomes.
WHS documented risk management - The Work Health and Safety Act 2011 requires risk assessments, incident reporting procedures, and return-to-work programs.
Workers' compensation management - Premium costs grow with headcount. Active claims management directly affects what you pay each year.
WGEA reporting preparation - Mandatory at 100 employees. Payroll data by gender, level, and type needs to be structured before you cross the threshold.
HR outsourcing at the 50 to 100 employee stage
At 60 or 70 employees, the question changes shape. The HR workload has grown enough that some businesses start wondering whether they should hire someone internally rather than continue outsourcing.
That question, whether to hire or outsource HR altogether, is covered in our post on when to bring on your first HR manager. The two articles overlap, so if you’ve already read that one, here’s the distinct question this one answers: given the HR work you face at 50 to 100 employees, is outsourcing still worth what you’ll pay for it?
What the HR workload looks like at this scale?
HR at 70 employees is not the same thing as HR at 25 employees. The tasks are different, the complexity is higher, and the consequences of getting things wrong are more serious.
You’re running structured performance review cycles, not just ad hoc check-ins. Terminations require investigation procedures, show-cause letters, response periods, and written records. A workplace complaint about bullying or misconduct may require a formal investigation: gathering evidence, interviewing witnesses, maintaining procedural fairness throughout, and producing a written outcome. A well-run investigation takes 30 to 50 hours of management time. A poorly run one can generate a second complaint, or a legal challenge to the first one.
Grievance procedures need to be written down and actually followed. Return to work after illness or injury requires a documented plan. Onboarding at 60 or 70 employees cannot be left to whoever has time that week, because inconsistency in what employees receive creates its own compliance exposure.
Most owners at this size are not doing all of this themselves. The question is who is doing it, and how well.
Compliance obligations that grow from 50 to 100:
WHS obligations under the Work Health and Safety Act 2011 require documented risk assessments and formal incident reporting procedures. Safe Work Australia publishes the standards that apply. The gap between what most businesses at this size actually have documented and what they’re legally required to have is usually larger than the owner expects.
Workers’ compensation premiums are now a material line in your budget. Insurers assess your risk partly based on your claim history and your return-to-work procedures. A good managed return-to-work process costs less in premiums over time than a business that just waits for injured employees to come back on their own timeline.
WGEA gender equality reporting becomes mandatory at 100 employees. If you’re at 80, that’s not far off. The Workplace Gender Equality Act requires you to report on gender composition, pay equity data, and policies across several indicators. It’s manageable if your payroll data is structured correctly by gender, level, and employment type. Setting that up at 85 employees is considerably easier than trying to reconstruct it after you’ve crossed the threshold.
VeiraMal’s HR support packages are built specifically for this band: compliance coverage that matches the size of the obligations, without the overhead of a full-time senior hire.
What outsourcing provides that an internal hire doesn’t?
An internal HR coordinator at 60 to 80 employees is typically good at day-to-day administration. Processing leave. Onboarding paperwork. Keeping records tidy. Where they run into trouble is the work that requires deep employment law knowledge: an award interpretation in an unusual situation, a complex misconduct investigation, a redundancy in a politically sensitive part of the business.
Outsourcing covers that specialist depth without the salary overhead of a senior HR professional. For most businesses at this size, the value is exactly that: expertise available on demand, for the situations that actually need it, rather than a full-time salary for someone whose skills aren’t needed five days a week.
Key Australian HR thresholds every growing business crosses
15
Employees. The Fair Work Act small business threshold. Above it, standard unfair dismissal and redundancy rules apply.
6
Months. Minimum employment period before an employee at a 15+ employee business can make an unfair dismissal claim.
21
Days. Your window to respond in writing to a casual conversion request under the National Employment Standards.
100
Employees. The WGEA reporting threshold. Gender pay equity and composition data reporting becomes mandatory at this point.
Source: Fair Work Ombudsman / Workplace Gender Equality Agency
What changes as you approach 100 employees
Two things shift materially as you head toward 100 staff, and both of them require preparation that most businesses leave too late.
The first is WGEA reporting. The Workplace Gender Equality Act requires businesses with 100 or more employees to report annually on gender composition across the workforce, pay equity data by level and employment type, and policies covering several HR indicators. The reporting itself is manageable if your data is clean and structured correctly. It’s a problem if it isn’t. Most businesses that scramble at the threshold do so because they never set up their payroll data to capture what the report requires. Starting the data collection at 85 or 90 employees is significantly easier than trying to reconstruct it after you’ve crossed 100.
The second is Enterprise Agreement negotiations. You’re not obligated to enter one. But at 90 to 100 employees, if Modern Award conditions are creating retention problems or roster complications, an EA conversation often becomes unavoidable. That process involves formal consultation with your employees, mandated notice obligations, and a Fair Work Commission approval process that very few internal coordinators have navigated before.
Most businesses at this scale are either hiring, or actively looking to hire, an in-house HR person. When that happens, the outsourcing question shifts again: it’s no longer about whether to outsource, but whether external specialist support sits alongside your internal person for the work that requires it. For most businesses at this point, it does.
Not sure if you've outgrown your current HR arrangement?
A short conversation with VeiraMal will tell you whether your headcount, contracts, and processes are actually in line with what the Fair Work Act and your Awards require - before a claim arrives to tell you otherwise.
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When outsourcing HR is not worth it
Most articles on outsourcing HR don’t include this section, or they include a version of it that’s designed to lead you back to buying something. This one won’t do that.
You already have someone who genuinely does HR. There’s a difference between a payroll officer who also handles contracts and someone who actually manages HR: performance conversations, written warnings, terminations handled correctly from start to finish, investigations conducted properly. If the second person exists in your business already, outsourcing mostly duplicates them. You’d be paying twice for the same capability.
Your industry needs a sector-specialist, not a generalist. Aged care, construction, higher education, and a few other sectors have Award structures and enterprise agreement environments that require deep, specific knowledge. A generalist HR provider may give you confident advice that turns out to be wrong in your specific Award context. In those industries, a sector-specialist is worth more than a capable generalist, even if the generalist is cheaper.
Your headcount has a genuine ceiling. If you’re running a 35-person business with a deliberate cap on growth, the compliance picture doesn’t get harder over time. A good set of contracts reviewed once, a reliable payroll provider, and an employment lawyer you can call for the situations you haven’t seen before may be all you actually need.
The compliance work is already done. If a specialist reviewed and redrafted all your contracts in the past 12 to 18 months, your Awards are correctly mapped, and you have written procedures in place for performance management and terminations, the incremental value of an ongoing retained arrangement is lower. A periodic review, once a year or when something material changes, may give you better value than a monthly retainer.
Cash flow is genuinely tight and the near-term risk is genuinely low. If you’re deferring outsourcing because money is tight, that’s defensible in the short term. But be precise about the second condition. “The risk is low” and “I’m hoping the risk is low” are two different things.
How VeiraMal works
1
Discovery call
A free conversation about your headcount, your current setup, and where the real HR risk sits.
2
Threshold review
Contracts, policies, and processes checked against the obligations that actually apply to your size.
3
Ongoing support
Expert advice on call when the difficult conversations arrive -- terminations, investigations, complaints.
Frequently asked questions
How much does outsourcing HR typically cost for a business with 20 to 50 staff in Australia?
A retained HR advisory arrangement for a business of 20 to 30 people commonly runs between $1,000 and $2,500 per month, depending on scope. That figure is most usefully compared against the cost of one Fair Work unfair dismissal claim handled incorrectly, which typically starts at $2,000 to $5,000 in legal fees before you factor in your own time. For a more accurate estimate based on your headcount and current HR setup, contact VeiraMal for a quote.
At what headcount should I hire a full-time HR manager instead of outsourcing?
For most businesses, the economics of a full-time internal HR hire start to work somewhere between 80 and 120 employees. Below that, the HR workload often doesn't fill a full-time role five days a week, and you'd be paying a salary for capacity you don't consistently need. Our post on when to bring on your first HR manager covers that specific decision -- the hire-versus-outsource calculation -- in more detail.
What does an outsourced HR provider actually do month to month?
At a practical level: reviewing and updating employment contracts as roles or conditions change, advising on specific situations like performance management processes or redundancies, keeping your business current on Award changes, handling parental leave and casual conversion processes, and being available when something unexpected arrives. The right provider reduces both the time you spend on HR and the risk you carry -- not just the complexity of individual tasks when they come up.
Can I outsource just part of my HR function?
Yes, and at 50 to 80 employees it's often the most cost-effective arrangement. Many businesses at this size run a hybrid: an internal HR coordinator handles day-to-day administration while an external provider covers specialist work -- investigations, complex terminations, award interpretation queries, and compliance reviews. This often delivers better value than either full outsourcing or a senior internal hire, because it matches the spend to the actual workload.
What HR compliance obligations change when I reach 100 employees?
The most significant new obligation is WGEA reporting. The Workplace Gender Equality Act requires businesses with 100 or more employees to report annually on gender composition, pay equity, and HR policy indicators across the workforce. It's a manageable process if your payroll data is structured by gender, level, and employment type. Most businesses find it easier to set that up before they cross the threshold rather than after. Payroll tax also becomes a near-certainty in most Australian states at this headcount if it wasn't already applying.
20 staff or 100 -- know your HR risk before it finds you
VeiraMal reviews your headcount, contracts, policies, and compliance obligations against what the Fair Work Act and your Awards actually require. Businesses across Melbourne, Sydney, and Hobart.
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info@veiramal.com
