Cost of Employing Someone Calculator

The total employment cost is the gross salary plus the employer's statutory on-costs: Class 1 employer National Insurance and the minimum auto-enrolment pension contribution. For 2026/27 these are the two main fixed additions that HMRC and The Pensions Regulator require on top of cash pay, and they are the figures most small businesses miss when budgeting a new hire. The total does not include discretionary benefits, training, equipment or office space — it is the legal minimum on-cost.

Gross salary is the contractual cash pay. Employer NI is 15% on the salary above the £5,000 secondary threshold for a standard employee, so a £30,000 salary generates £3,750 of NI ((£30,000 − £5,000) × 15%). Employer pension defaults to 3% of qualifying earnings, which is £712.80 on a £30,000 salary using the qualifying earnings band. Add the default pension to salary and NI and a £30,000 employee costs around £34,462.80 before additional annual costs or Employment Allowance. The figures below compare default total cost at common salary points in 2026/27.

The Employment Allowance lets eligible employers knock up to £10,500 a year off their total employer NI bill. It applies to the business as a whole, not per employee, so it is claimed through payroll rather than calculated per salary. For a single £20,000 employee the £2,250 of NI is more than offset by the allowance, and the net NI cost is zero. For a payroll of multiple higher salaries the allowance can still be worth a chunk against the bill.

Three thresholds matter for the total cost in 2026/27. The £5,000 secondary threshold is the floor under which no employer NI is due. The £10,000 auto-enrolment trigger is the salary at which an eligible worker must be enrolled into a workplace pension. The £10,500 Employment Allowance is the maximum offset against the annual employer NI bill. None of these apply automatically in the calculator output — they are decisions and checks the employer makes on top.

This figure covers salary, employer NI and the minimum pension. It excludes holiday pay (already inside salary), recruitment, equipment, training, payroll software, workplace insurance and any enhanced pension or benefits above the statutory minimums. As a rule of thumb, all-in cost is roughly 1.3 to 1.4 times the gross salary for most UK employees, once you add overheads, benefits and the cost of any office space. Plan for the legal minimum first, then add the discretionary layer.

Enter the gross salary to read off the three components and the total employment cost. Adjust for the Employment Allowance if the business is eligible, then add the discretionary on-costs for a full all-in figure. The employer NI calculator and the workplace pension calculator are useful companions for a deeper look at each line.

The cost of one employee is useful, but hiring decisions often involve headcount. Multiply salary, employer NI, pension and additional annual costs by the number of roles, then adjust for any shared costs. Payroll software, HR admin and insurance may not rise linearly for every hire, while equipment and recruitment usually do. For a team budget, separate per-person costs from shared overheads so the final number is not overstated or understated.

A remote admin role may need laptop, software, payroll and light training. A field engineer may need van, fuel card, tools, insurance, PPE and certification. An office role may carry desk cost, occupancy cost and local travel. Use the additional annual costs input to model the role-specific layer. The calculator starts with statutory on-costs, then lets you add realistic overheads rather than relying on a single rule of thumb.

When comparing employee cost with a contractor day rate, include more than salary. Employees bring employer NI, pension, holiday, management and equipment costs, but contractors may carry a higher day rate and IR35 risk. A simple comparison is annual contractor cost versus total employment cost plus recruitment and ramp-up. The IR35 calculator is the next step where the contractor works through a company.