Cost to Hire Calculator

The total first-year cost of hiring an employee is typically 1.3-1.5 times their base salary. On a £45,000 salary: agency fee (£6,750 at 15%), employer NI (£4,954), pension (£1,350), training (£3,000), advertising (£500), and equipment (£1,500) = approximately £63,000 total. This excludes management time spent on interviews and onboarding.

Employer NI is 13.8% on earnings above the secondary threshold (£9,100 for 2025/26). On a £45,000 salary, employer NI costs £4,954 per year. This is a mandatory cost that significantly increases the true cost of employment. The Employment Allowance (£5,000) can offset employer NI for eligible small businesses.

Under auto-enrolment, employers must contribute minimum 3% of qualifying earnings (between £6,240 and £50,270). On a £45,000 salary, the minimum employer pension contribution is approximately £1,321 per year. Many employers offer more generous pension contributions as a recruitment tool, with 5-10% being common for professional roles.

Strategies include: building an employer brand to attract direct applicants, using employee referral programmes (typically £1,000-£3,000 bounty), negotiating lower agency fees for repeat business, using retained search for senior roles, leveraging LinkedIn Recruiter for direct sourcing, and building talent pipelines before you have vacancies.

The Employment Allowance allows eligible employers to reduce their annual employer NI bill by up to £5,000. To qualify, your employer NI bill in the previous year must have been under £100,000. Single-director companies with no other employees do not qualify. The allowance is claimed through your payroll software and effectively eliminates employer NI for many small businesses.