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Question time – How much does it really cost to employ a member of staff?

Obviously we are going to delve into our particular industry and our specialist areas. That being said, this is a popular topic of discussion in many industries. Some think there is a simple answer to the question.  If you need a new employee you would think it would be fairly  straight forward to work out the hourly rate or the annual salary. Is it actually straight forward?

If you answered no, you are correct. There are  unfortunately all the hidden costs that need to be considered  and these have to be forecasted and therefore taken into account.

You might think that you’re going to pay your new employee say £45,000 per year, but on top of you need to allow for Employer’s National Insurance Contributions.

And you might have told your new employee that they will work a 37 hour week, but how many productive hours will they really work during the year after you have taken out statutory holiday allowance, sick leave, training, and other non productive time (like visiting the loo, brewing coffee, surfing the internet, socialising).

Suddenly the cost start to look quite different.  That £45,000 a year you started with is growing bigger.

It’s no longer the £23.4 per hour (for a 37 hour week) that you budgeted.

In fact, it will be almost double that amount.  A £45,000 per year employee is likely to cost  £83000 Thats a staggering 83% increase. Or this equates to a daily cost of £315.00

And if you offer company benefits – life assurance , medical cover ,  the cost will be higher.

And then ask yourself whether taking on a new employee is essential for your business or whether you could contract the job to a specialist outsource service such as

Page Building Consultants Ltd




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