UK Cost of Employing Someone Calculator
Estimate what an employee really costs a UK employer above gross salary — employer National Insurance, workplace pension, benefits, overheads and one-off costs — per year, month, week, day and hour.
Your employer cost estimate
Based on a £35,000 gross salary, 37.5 hours a week for 52.0 weeks a year. This is a planning estimate built from the figures you entered, not payroll software, legal advice or an HMRC calculation.
Total annual employer cost
Monthly employer cost
£3,221.90Weekly employer cost
£743.52Daily employer cost
£148.70Hourly employer cost
£19.83On-cost above salary
10.5%£3,663 a year above gross salaryLargest on-cost
Recruitment and onboarding41.0% of the on-cost above salary- Employment Allowance fully offsets employer National Insurance at this salary and headcount — check this is still accurate if the employer has other employees not entered here, since the allowance is shared across the whole PAYE scheme.
Summary
- Total annual employer cost
- £38,663
- Monthly employer cost
- £3,221.90
- Employer National Insurance
- £0
- Employer pension
- £863
- Other employer costs
- £2,800
- On-cost above salary
- £3,663 (10.5%)
- Note
- This is a planning estimate built from the figures you entered — not payroll software, a tax filing tool, legal advice or an official HMRC calculation, and not a recommendation to hire, replace or budget for any role.
Breakdown
| Category | Annual cost |
|---|---|
| Gross salary | £35,000 |
| Bonus | £0 |
| Commission | £0 |
| Overtime | £0 |
| Employer National Insurance | £4,500 |
| Employment Allowance applied | −£4,500 |
| Employer pension | £863 |
| Benefits | £0 |
| Overheads | £1,300 |
| Recruitment and onboarding | £1,500 |
| Other employer costs | £0 |
| Total annual employer cost | £38,663 |
Assumptions used in this result
| Working hours used for hourly cost | 1,950 hours a year (37.5 hrs × 52.0 weeks) |
|---|---|
| Working days used for daily cost | 260 days a year (5.0 days × 52.0 weeks) |
| Employer NI secondary threshold | £5,000 |
| Employer NI rate | 15% |
| Employment Allowance | Applied — up to £10,500 a year, £0 already used elsewhere, £10,500 remaining headroom, once per employer across the whole PAYE scheme |
| Pension basis | Qualifying earnings between £6,240 and £50,270 |
| Employer pension rate | 3% |
| Headcount used in this result | 1 |
Team total
Sensitivity
Illustrative scenarios, not forecasts. Each varies one figure at a time from the base case above.
| Scenario | Annual employer cost | Change |
|---|---|---|
| Base case | £38,663 | — |
| Salary −10% | £35,058 | -9.3% |
| Salary +10% | £42,268 | +9.3% |
| Pension rate −1pp | £38,375 | -0.7% |
| Pension rate +1pp | £38,950 | +0.7% |
| Benefits budget −20% | £38,403 | -0.7% |
| Benefits budget +20% | £38,923 | +0.7% |
| Employment Allowance applied | £38,663 | +0.0% |
| Employment Allowance not applied | £43,163 | +11.6% |
How to use this calculator
Enter the employee's pay and working pattern, then work through each cost group. Every figure defaults to a working example with current statutory National Insurance and pension figures — replace it with your own numbers, or leave a group at zero if it genuinely does not apply.
- Enter gross annual salary, hours and days per week, working weeks per year and headcount.
- Check or change the employer NI rate, secondary threshold, and whether Employment Allowance applies — enter any amount already used against other employees not in this calculator.
- Choose the employer pension contribution rate and whether it is worked out on qualifying earnings or the whole salary.
- Enter any bonus, commission or overtime as a flat amount or a percentage of salary, plus any employee benefits, workplace overheads, recruitment costs or other annual employer costs that apply — leave any of them at 0 if they do not.
Results update as you change any figure. Use Reset to return to the worked example.
How does this calculator work?
The total annual employer cost adds gross salary, bonus, commission, overtime, net employer National Insurance, employer pension, benefits, overheads, recruitment and onboarding, and any other annual costs you enter. Employer National Insurance and pension are both worked out on earnings — salary plus bonus, commission and overtime — and are statutory calculations you can override — see the UK Take-Home Pay Calculator for the employee's side of the same salary.
total annual employer cost = salary + bonus + commission + overtime + net employer NI + employer pension + benefits + overheads + recruitment + other costs
- Earnings = salary + bonus + commission + overtime
- Employer NI = max(0, earnings − secondary threshold) × NI rate
- Employment Allowance headroom = allowance amount − amount already used elsewhere, then deducted once from total employer NI across every employee entered, not once per employee
- Pension (qualifying earnings) = (min(earnings, upper limit) − lower threshold) × contribution rate
- Pension (whole salary) = earnings × contribution rate
- Monthly = annual ÷ 12; weekly = annual ÷ 52
- Daily = annual ÷ (days per week × weeks per year)
- Hourly = annual ÷ (hours per week × weeks per year)
- On-cost above salary = total annual employer cost − gross salary
For example, a £35,000 salary with a 15% employer NI rate above a £5,000 secondary threshold, Employment Allowance applied, a 3% pension on qualifying earnings, £1,300 of overheads and £1,500 of recruitment cost gives a total annual employer cost of £38,662.80 — an on-cost of £3,662.80, or about 10.5%, above the £35,000 salary. That works out at £3,221.90 a month, £743.52 a week, £148.70 a day and £19.83 an hour on a 37.5-hour, 5-day week.
What does this calculator assume?
- Every figure — salary, rates, thresholds, benefits and overheads — is one you enter or a clearly labelled statutory default you can change. Nothing is inferred on your behalf.
- Employer NI and pension defaults reflect current UK secondary threshold, Employment Allowance and auto-enrolment qualifying-earnings figures, which are reviewed periodically at fiscal events — always check the current rates on GOV.UK before relying on this for real payroll decisions.
- Bonus, commission and overtime are included as earnings for employer National Insurance and pension, alongside gross salary. Only the Apprenticeship Levy allocation stays a separate flat annual cost — the real Levy is charged on an employer's whole pay bill above a shared allowance, not on one employee's earnings.
- Employment Allowance is one amount per employer, not per employee. If you employ others not entered into this calculator, enter what's already been used against them so only the genuine remaining headroom offsets this employee's National Insurance.
- Working weeks per year already reflects paid time off for a salaried employee, so no separate statutory-leave line is added — it would double count against the salary already entered.
- For the employee's own take-home pay from the same gross salary, see the UK Take-Home Pay Calculator.
Important information
Important: This calculator is a planning estimate built entirely from the figures and assumptions you enter or edit. It is not payroll software, a tax filing tool, legal advice, or an official HMRC calculator, and it does not recommend hiring, replacing or budgeting decisions.
Run real payroll through payroll software or a payroll provider, and check current statutory rates, thresholds and treatment with HMRC or a qualified accountant.
Frequently asked questions
How much does an employee really cost above their salary?
This calculator adds employer National Insurance, employer pension contributions, benefits, workplace overheads, recruitment and onboarding, and any other annual employer costs you enter to the gross salary. The result is the total annual employer cost, shown alongside the on-cost above salary — the amount and percentage on top of gross pay. For the worked example on this page (a £35,000 salary), the on-cost above salary is about £3,662.80 a year, or roughly 10.5% on top of gross pay, mostly because Employment Allowance offsets employer National Insurance at this headcount.
How is employer National Insurance calculated?
Employer National Insurance = max(0, earnings − secondary threshold) × the employer NI rate, where earnings is gross salary plus any bonus, commission and overtime you've entered — all three are genuinely subject to employer NI, so they join salary in the earnings base. If you apply Employment Allowance, the amount already used elsewhere this tax year (against other employees not entered here) is deducted first, and only the remaining headroom offsets this employee's NI, once per employer rather than once per employee. For a single low-to-mid earner, Employment Allowance commonly reduces employer NI to zero, which is a real and expected outcome for many small employers, not a calculation error.
How is employer pension calculated?
On the qualifying-earnings basis (the auto-enrolment default), pension = (the lower of earnings and the upper earnings limit, minus the lower qualifying threshold) × the employer contribution rate. On the whole-salary basis, pension = earnings × the employer contribution rate, with no threshold applied. Earnings here means gross salary plus bonus, commission and overtime, since employer pension applies to those too. Choose whichever basis matches your scheme.
Are bonus, commission and overtime taxed and pensioned like salary?
Yes. Enter each as a flat amount or as a percentage of gross salary that recalculates if salary changes, and all three are added to gross salary to form the earnings employer National Insurance and pension are calculated on — they are real pay, not a separate flat extra. The only cost on this page that stays outside employer NI and pension is the Apprenticeship Levy allocation, because the real Levy is charged on an employer's whole pay bill, not on one employee's earnings.
How are the monthly, weekly, daily and hourly costs worked out?
Monthly employer cost divides the total annual employer cost by 12. Weekly divides by 52. Daily divides by working days per year (days per week × working weeks per year). Hourly divides by annual working hours (hours per week × working weeks per year) — the same working-hours and working-days figures used are shown in the assumptions table so the result stays auditable.
Does this include the cost of multiple employees?
Yes, optionally. Enter a headcount above 1 to see a team total, using the same salary and cost profile for every employee. Employer National Insurance and Employment Allowance are worked out correctly for a team: Employment Allowance is deducted once from the team's total employer NI, not once per employee, exactly as HMRC applies it. The headline figures on this page remain a single employee's average annual, monthly, weekly, daily and hourly cost; the team total appears in its own section once headcount is above 1.
What are the sensitivity scenarios?
Each scenario changes one figure at a time from your base case — salary, the employer pension rate, the benefits budget, or whether Employment Allowance is applied — and recalculates the total annual employer cost with everything else held constant. They are illustrative what-if scenarios, not forecasts or a prediction of what will actually happen.
Does this calculator include the Apprenticeship Levy?
Only if you choose to. The real Apprenticeship Levy is charged at 0.5% of an employer's whole annual pay bill above a £15,000 allowance, calculated per employer across every employee on the payroll — not per employee and not something this single-employee planning tool can work out correctly on its own. If you want a levy allocation reflected in this result, enter your own annual amount for this role under "Other costs".
What does 'Employment Allowance already used elsewhere' mean?
Employment Allowance is one amount per employer, shared across every employee on the payroll — not a fresh allowance for each one. If this employer has already used some of it against other employees not entered into this calculator, enter that amount here so only the genuine remaining headroom offsets this employee's National Insurance. Leave it at £0 if this is the only employee, or if you want to see the allowance applied in full.
Is this calculator payroll software, tax software, or an HMRC calculator?
No. It is a planning estimate built entirely from the figures and statutory defaults you enter or edit. It is not payroll software, a tax filing tool, legal advice, or an official HMRC calculator, and it never recommends hiring, replacing or budgeting decisions. Run real payroll through your payroll software or provider, and check statutory rates, thresholds and treatment with HMRC or an accountant.