True Cost of an Employee Calculator
Work out what an employee really costs after employer NI, pension, holiday and overheads.
Formula
employer NI = (salary − secondary threshold) × 15%
Tips
- Employer NI is 15% above a £5,000 secondary threshold, so it starts biting at low salaries — a change that hit part-time-heavy employers hardest.
- The Employment Allowance offsets up to £10,500 of employer NI across the whole payroll, not per employee. Companies whose only employee is also a director cannot claim it.
- Cost per productive hour assumes 5.6 weeks of statutory holiday and a 37.5-hour week. It is usually a far more useful number for pricing work than the headline salary.
- A realistic on-cost for a UK employee is typically 20–30% above salary before recruitment and equipment.
Frequently asked questions
Does the Employment Allowance apply to every employee?
No. It is a single annual allowance of £10,500 set against your total employer NI bill, not a per-employee relief. This tool shows the effect if you allocate it here, which is only realistic if it is not already consumed elsewhere on the payroll.