True Cost of Employee Calculator
Calculate the full cost of employing staff in the UK, including employer's National Insurance, pension contributions, and other hidden costs for a selected tax year.
About the True Cost of Employment
The actual cost of employing someone in the UK is significantly higher than their basic salary. This calculator helps estimate these additional costs.
Key Employer Costs (Employees):
- •Employer's National Insurance: Calculated on earnings above the Secondary Threshold (ST). Rates and thresholds vary by tax year.
- •Auto-enrolment pension: Minimum 3% employer contribution on qualifying earnings for eligible staff (current rate).
- •Holiday pay: Statutory minimum 5.6 weeks (28 days inc. bank holidays for full-time).
Other Potential Costs (All Types):
- •Workspace: Office space, utilities, remote work stipends.
- •Benefits: Health insurance, life insurance, etc. (Typically for employees).
- •Overheads: Training, equipment, software licenses, recruitment, HR admin, potential bonuses, Apprenticeship Levy (if applicable).
These additional costs typically add 20-40%+ to an employee's base salary. Contractors have different cost structures.
Disclaimer: This calculator provides an estimate for informational purposes only.
Rates and thresholds are based on the selected tax year and our current data. Always verify with official HMRC guidance.
Consult a qualified accountant or HR professional for specific financial and legal advice.
Frequently Asked Questions
- What is the True Cost of Employee Calculator?
- The True Cost of Employee Calculator is a tool designed to help employers understand the full financial cost of hiring an employee in the UK. It factors in not just gross salary, but also employer National Insurance contributions, pension contributions, benefits, and other employment-related expenses.
- How does the calculator work?
- Simply enter the employee’s gross salary and optional extras like pension contributions, bonuses, benefits, and training costs. The calculator will then estimate the full annual cost to your business, giving you a clearer picture of what employing someone actually costs beyond their salary.
- Why is it important to calculate the true cost of an employee?
- Knowing the true cost of an employee helps businesses budget accurately, plan for hiring, and make informed decisions about workforce expansion. It ensures you understand the impact on cash flow and profitability when taking on new staff or increasing pay.
- Does the calculator include National Insurance and pension contributions?
- Yes, the calculator includes UK employer National Insurance contributions and allows you to add in employer pension contributions. You can also input custom percentages to reflect your company’s pension scheme or salary sacrifice arrangements.
- Can I include other employment costs like benefits or training?
- Absolutely. The calculator includes optional fields for benefits such as private healthcare, company car, training, equipment, and more. This gives a more complete view of your total cost per employee.
- Is this calculator suitable for small businesses and startups?
- Yes, the tool is designed to support businesses of all sizes, including startups and small employers who need to keep a close eye on hiring costs. It provides clarity when planning to scale your team or set salary budgets.
- Does it work for part-time or hourly employees?
- Yes, you can adjust the calculator for part-time roles or enter an hourly rate and expected weekly hours. The calculator will then annualise the cost and apply contributions accordingly.
- Is the data up to date with UK employment laws and tax rates?
- We regularly update the calculator to reflect the latest UK tax rates, National Insurance thresholds, and statutory employer obligations. You can be confident that the results are based on current legislation.
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