Get ready to recruit
Taking an employee on means your business is growing and you need support — that’s a good thing! But it’s important to have a clear picture of what employment actually costs, so you can plan ahead with confidence.
The salary you advertise is just the starting point. On top of that, as an employer, you’ll pay National Insurance contributions, which are currently 15% on earnings above the secondary threshold, plus auto-enrolment pension contributions of at least 3% of qualifying earnings. These alone can add 20% or more to your payroll costs.
Then there are statutory entitlements. Every employee is entitled to 28 days’ paid holiday (including bank holidays for a full-time worker), Statutory Sick Pay from day one of illness, and potentially Statutory Maternity, Paternity, or Shared Parental Pay. These are all manageable, but they need to be budgeted for.
Getting equipped
Beyond payroll, what does your employee need to actually do their job? A decent laptop or workstation, relevant software licences, and a secure internet connection are standard requirements in most roles. And don’t forget that new recruits may need training to use your office systems. If your business operates from a premises, there’s a share of that overhead to factor in, too; every employee needs office space, heating in winter, lighting, etc.
Depending on the role, you may also need to consider uniforms or workwear, a company vehicle or mileage allowance, and ongoing training or professional development. Many of these are investments in your team that pay back in productivity and loyalty – but they’re costs nonetheless.
The good news? Most of these expenses can be offset against your Corporation Tax or Income Tax bill. And a well-supported employee who has the right tools and training is far more likely to help your business thrive – and that’s the point of bringing in new people – to add value to your bottom line, so their employment must be justified in growing your company.
If you’d like help modelling the real cost of your next hire, or just want to make sure your profit margins can cope with the additional budget, get in touch with the Cook & Partners team and we’ll be happy to help.
