1. What is the Employer Hourly Cost?

The total hourly cost to an employer includes not just the gross wage paid to the employee, but also additional costs like National Insurance contributions and pension contributions. This gives a complete picture of the true cost of employment.

2. How Does the Calculator Work?

The calculator uses the following equation:

Where:

• Gross Hourly Wage — The base wage paid to the employee
• Employer NI — Employer's National Insurance contributions
• Employer Pension Contributions — Employer's pension contributions

Explanation: The equation sums all direct costs associated with employing someone for one hour of work.

3. Importance of Calculating Total Hourly Cost

Details: Understanding the full cost of employment helps businesses with budgeting, pricing decisions, and comparing different employment models (employees vs contractors).

4. Using the Calculator

Tips: Enter all values in GBP per hour. The calculator will sum them to show the total hourly employment cost.

5. Frequently Asked Questions (FAQ)

Q1: What's included in employer NI contributions?
A: Employer National Insurance is currently 13.8% on earnings above £175/week (2023/24 tax year).

Q2: Are pension contributions mandatory?
A: Yes, under auto-enrolment, employers must contribute at least 3% of qualifying earnings.

Q3: What other costs might employers have?
A: Additional costs may include apprenticeship levy, benefits, training, equipment, and workspace.

Q4: How does this differ from employee take-home pay?
A: Take-home pay is gross wage minus employee deductions (tax, NI, pension). This calculator shows employer costs before employee deductions.

Q5: Can I use this for salary employees?
A: Yes, convert annual salary to hourly rate (divide by hours worked per year) first.