UK Employer Cost Calculator 2025/26

What does an employee really cost?

When you hire someone on a £50,000 salary, the true cost is significantly more. Employer NI adds £6,750 (15% on earnings above £5,000), pension auto-enrollment adds at least £1,321 (3% of qualifying earnings), and you may have additional costs for benefits, insurance, and training. The total cost of a £50,000 employee is typically £58,000-£60,000+.

Employer National Insurance (15%)

Since April 2025, employer NI is 15% on all earnings above the Secondary Threshold of £5,000 per year. This is the single largest hidden cost of employment. For a £30,000 salary, employer NI is £3,750. For £100,000, it's £14,250.

Pension auto-enrollment

All employers must auto-enroll eligible workers into a workplace pension. The minimum employer contribution is 3% of qualifying earnings (salary between £6,240 and £50,270). Many employers contribute more — 5-8% is common for competitive packages. Qualifying earnings are capped at £50,270, so the maximum 3% contribution is £1,320.90/year.

Apprenticeship Levy

Employers with a total annual payroll above £3 million pay the Apprenticeship Levy at 0.5% of their total payroll. A £15,000 annual allowance offsets this. Most SMEs are exempt, but large employers should factor this in — it adds roughly 0.5% to the cost of each employee.

Other employer costs

Beyond statutory costs, employers often pay for: employer liability insurance, private health insurance, training and development, equipment and software, office space, and recruitment costs. These vary widely but typically add £1,000-£5,000+ per employee per year.

Cost per hour

Based on a standard 37.5-hour working week (1,950 hours/year), you can calculate the true hourly cost of an employee. A £50,000 salary with on-costs works out to approximately £30/hour in total employer cost — useful for project pricing and contractor comparisons.