Employer on-costs (as % of salary)
Example starting rates are filled in — replace them with your own pension, insurance, and payroll-tax percentages.
Fixed annual costs (per employee)
How to use the true employee cost calculator
The formula
True annual cost = gross salary + (salary × each on-cost %) + fixed annual costs. Monthly cost = true annual cost ÷ 12.
Why the salary is not the real cost
On top of gross pay, employers usually pay pension contributions, payroll taxes or social contributions, and insurance or benefits — plus fixed per-person costs like equipment, software licences, training, and workspace. Depending on the country and scheme, the true cost is often 15–40% above salary.
Your rates, your country
Rates differ widely: UK employers pay National Insurance and workplace pension contributions; US employers pay FICA, unemployment insurance, and often health insurance. That is why this calculator never hard-codes a rate — enter the percentages from your own payroll and replace them whenever they change.
Planning only
Results are estimates for hiring and budgeting decisions, not payroll figures. Confirm exact employer obligations with your payroll provider.
Example
Salary $50,000 + 20% total on-costs (pension, payroll taxes, insurance) = $60,000 true annual cost — $5,000 per month, before any fixed costs like equipment.
Frequently asked questions
How much does an employee really cost on top of salary?
It varies by country and benefits package. A common planning range is 15–40% above gross salary once pension, payroll taxes, insurance, and equipment are included. Enter your own rates above for a figure based on your payroll.
What should I include as fixed costs?
Anything you pay per employee per year regardless of salary: laptop and equipment, software licences, phone, training budget, and a share of office or remote-work costs.
Does this include income tax?
No. Employee income tax is normally deducted from the employee's gross pay, so it is already inside the salary figure. This tool adds only employer-side costs.
Can I use it for a part-time hire?
Yes — enter the part-time gross salary. Percentage on-costs scale automatically; just adjust fixed costs if they differ.
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