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Employer Cost of Hiring Calculator

Employer Cost of Hiring Calculator

Employer Cost of Hiring Calculator – See the true cost of adding a new team member.
Enter a salary (or hourly rate) and this calculator estimates your full employer cost—including Employer NI, pension contributions, optional Apprenticeship Levy, benefits and overheads—with results shown per year, per month, per week and per hour.

Tip: All assumptions are editable so you can match your payroll settings.

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Employer Cost of Hiring Calculator

Employer Cost of Hiring (UK 2025/26)
E.g., health plan, car allowance, subscriptions.
Optional allowance for equipment, software, premises, etc.
Shown separately; not included in recurring totals.
On‑cost settings
Rate above the secondary threshold.
Earnings above this incur Employer NI.
Optional pro‑rata share. Leave at 0 if you don’t want to offset Employer NI here.
Note: Apprenticeship Levy applies only if your organisation’s annual pay bill exceeds £3m. Employment Allowance is an employer‑level relief—this field merely offsets NI for this role.
Results
Annual employer cost
£0
Monthly employer cost
£0
Weekly employer cost
£0
Cost per hour
£0
Breakdown
Disclaimer: Estimates only – not tax or legal advice.
Defaults reflect UK 2025/26: Employer NI 15% with secondary threshold approx £5,000/yr; auto‑enrolment qualifying earnings band £6,240–£50,270; Apprenticeship Levy 0.5% (if pay bill > £3m). All fields are editable.
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How to use this calculator

  1. Choose pay frequency (annual, monthly, weekly, daily or hourly).

  2. Enter base pay and contracted hours (for hourly calculations).

  3. Add any benefits (e.g., car allowance, health plan) and optional overheads (% of salary to cover software, equipment, premises).

  4. In On‑cost settings, confirm your Employer NI rate and secondary threshold, set the pension % and basis (qualifying earnings or full salary), and toggle Apprenticeship Levy if it applies.

  5. (Optional) Add a pro‑rata share of Employment Allowance to offset Employer NI for this role.

  6. Review the Annual / Monthly / Weekly / Hourly totals and the breakdown beneath.

What’s included in the “employer cost”?

  • Gross salary (or annualised pay from hourly/daily).

  • Employer National Insurance (NI) on earnings above the secondary threshold.

  • Employer pension contributions (qualifying earnings by default, or full earnings if you choose).

  • Apprenticeship Levy (0.5%) — optional toggle; generally applies if your total annual pay bill exceeds £3m.

  • Benefits — any fixed annual cash cost you add.

  • Overheads — a % uplift to reflect real‑world costs (software, laptop, desk space, tools, etc.).

  • One‑off recruitment cost is shown separately so you can distinguish setup from ongoing spend.

Who is this tool for?

  • Owners & directors planning headcount and budgets.

  • HR & finance teams modelling offers and compensation packages.

  • Recruiters & hiring managers who need quick, shareable estimates.

  • Agencies & contractors comparing day rates with employed costs.

Why the “true cost” matters

Salaries rarely tell the full story. NI, pension and operational overheads can add a meaningful uplift to the headline figure. Accurately modelling this helps you:

  • Set sustainable salary bands.

  • Compare employee vs contractor options.

  • Price projects and services with healthy margins.

  • Forecast cash flow with fewer surprises.

Employer Cost of Hiring Calculator Assumptions & notes

  • Employer NI applies above the secondary threshold (you can change both the rate and threshold in the settings).

  • Employer pension defaults to 3% on qualifying earnings but you can switch to full earnings if that’s how your scheme is set up.

  • Employment Allowance is an employer‑level relief; the optional field simply offsets NI for this role in your model.

  • Overheads are intentionally flexible. Start at 0% and increase as you estimate software seats, equipment, training, travel, workspace, etc.

Practical tips to reduce hiring cost (without cutting pay)

  • Optimise benefits mix: sometimes a targeted benefit (e.g., training budget) delivers more value than a blanket increase.

  • Use equipment cycles wisely: plan laptop/phone refresh cycles across the team, not ad‑hoc.

  • Right‑size tools: audit SaaS seats regularly; remove unused licences.

  • Invest in onboarding: better onboarding reduces churn and recruitment fees.

Sole Trader Vs Limited Company Calculator FAQ

Is holiday pay included?

Yes—holiday pay is part of employed salary. The calculator annualises pay, so leave entitlement doesn’t require a separate entry.

What about bonuses or commission?

Add expected annual bonuses/commission to base pay if they’re employer‑NIable, or add them under Benefits if you want them itemised separately.

Does Employment Allowance reduce every employee’s NI?

The allowance applies at the employer level. If you want to reflect its impact in role‑by‑role modelling, add a pro‑rata share in the optional field.

Should I use qualifying earnings or full earnings for pension?

Check your pension scheme rules. Many auto‑enrolment schemes use qualifying earnings; some employers choose full pay for simplicity—our tool supports both.

Do I include statutory payments (SMP/SSP)?

Those vary and may be reclaimable in part. For planning, most employers model base costs first, then scenario‑test these items separately.