What does it really cost to hire someone in the UK?
More than the salary. You pay employer’s National Insurance above the threshold, contribute at least 3% to a workplace pension once they are enrolled, and owe 5.6 weeks of paid holiday a year. You also need employer’s liability insurance. Then add equipment, training and the weeks before they are fully productive.
Employer’s National Insurance
Above a threshold, you pay employer’s National Insurance on top of the salary. Rates and thresholds change, so check gov.uk each tax year. Smaller employers may be able to claim the Employment Allowance to reduce the bill.
Workplace pension
Most employees must be automatically enrolled in a workplace pension, and you pay at least 3% of their qualifying earnings, with the employee paying more. It is a legal duty, not an optional benefit.
Holiday and sick pay
Almost all workers are entitled to 5.6 weeks of paid holiday a year, which is 28 days for someone working five days a week. Statutory Sick Pay may also apply when they are off ill.
Insurance and the rest
Employer’s liability insurance is compulsory for most employers. Then add a van or mileage, tools, safety equipment, training and your own time while they learn.
Also asked
- Can bank holidays count toward the 5.6 weeks?
- Yes. There is no extra legal right to bank holidays on top, but they can be included in the 5.6 weeks.
- Are self employed subcontractors cheaper?
- Only if they are genuinely self employed. Employment status depends on how the work is done, and getting it wrong can mean back tax and National Insurance.
- Where do I check the current rates?
- On gov.uk, which publishes National Insurance, pension and Statutory Sick Pay figures for each tax year.
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