The true cost of an employee
A salary is only the start. Employer National Insurance, the auto-enrolment pension and overheads push the real bill well past the headline — and holiday and sickness mean each worked hour costs more still.
The role
Time actually worked
The build-up
The salary is the start, and the state adds its share
Hire at £35,000 and the payslip is only the opening bid. Employer National Insurance runs at 15% on everything above £5,000 a year, auto-enrolment obliges a pension contribution of at least 3% of qualifying earnings, and the equipment, software and insurance that follow a hire around add their own line. On this page's defaults the £35,000 hire costs £41,363 a year, 18.2% above the headline. The £10,500 Employment Allowance can absorb a chunk of employer NI for eligible smaller employers, and the calculator applies it when you tell it to.
The cost per hour actually worked
Divide the true cost by hours on the rota and you'll still flatter yourself, because nobody works every rostered hour. Strip out 33 days of holiday and a typical five days of sickness and the £35,000 hire delivers around 1,665 real working hours, which puts the true price near £24.80 an hour against the £17.95 the salary alone implies. That gap belongs in every quoting, pricing and staffing decision the business makes, and hiding it is how businesses drift into unprofitable work.
Both sides of the same payslip
There's a neat symmetry worth showing your team: an employee wondering why rises are hard-won can see the employer's side here, while the employer can see the employee's with the take-home pay calculator, where the same £35,000 turns into £28,730 of spending money. Between employer NI above the salary and deductions below it, the state collects on both floors of the same building. Weighing a hire against contracting the work out? Price the freelance route with the hourly wage calculator for comparison.
Common questions
How much does an employee really cost on top of salary?
Typically 12–20% more. Employer National Insurance is 15% of pay above £5,000, the minimum auto-enrolment pension adds 3% of qualifying earnings, and kit, software and training add more. On a £35,000 salary that is roughly £41,000–£42,000 a year before recruitment or office costs.
What is employer National Insurance in 2026/27?
Employers pay 15% on each employee’s earnings above the £5,000 secondary threshold. Eligible employers can offset up to £10,500 a year across their whole payroll through the Employment Allowance — though companies whose only paid employee is a director cannot claim it.
What are qualifying earnings for the pension?
The minimum auto-enrolment contribution (3% employer, 5% employee) is calculated on earnings between £6,240 and £50,270, not the full salary — so the employer minimum on a £35,000 salary is 3% of £28,760, about £863. Many employers choose to pay a percentage of full salary instead, which this calculator can also model.
Why show the cost per hour actually worked?
Because nobody works 52 weeks. After around 33 days of holiday (including bank holidays) and average sickness, a full-timer delivers roughly 1,650–1,700 worked hours a year — so the true hourly cost is usually 35–45% higher than the headline salary divided by contracted hours. It is the honest number for pricing work and comparing hiring against contracting.
These results are estimates for general information only and are not financial advice. Employment costs vary with contracts, benefits and sector — budget with your accountant before hiring. Read the full disclaimer.