True cost of an employee: the defensible number.
About to make an offer? The salary is the start, not the total. Employer NI, the pension minimum and only the extras you actually pay — every step shown, every rate dated.
Salary, NI, pension — the defensible total, with the working shown
£36,822.80a year — 1.15× salary (£4,050 employer NI, £772.80 pension)
The working
- Employer NI = (£32,000 − £5,000 threshold) × 15% = £4,050
- Qualifying earnings = £32,000 capped band − £6,240 = £25,760
- Employer pension = £25,760 × 3% = £772.80
- Total = £32,000 + £4,050 + £772.80 = £36,822.80 (1.15× salary)
Worth knowing
- Employment Allowance can cut up to £10,500 a year off employer NI — but it is per EMPLOYER, not per employee, so this calculator states it rather than silently subtracting it from one person's cost. If you qualify and this is an early hire, your real NI bill may be lower.
- The pension line is the statutory auto-enrolment minimum basis with your entered rate on qualifying earnings — a more generous scheme, salary sacrifice or a personal-allowance interaction changes it.
- This is the defensible payroll cost. Office space, equipment refresh, management time and recruitment are real costs this calculator refuses to invent from a salary figure — add what you actually know into 'other costs'.
Rules basis (2026/27): employer NI at 15% above the £5,000 annual secondary threshold; auto-enrolment employer minimum 3% on qualifying earnings £6,240–£50,270. Values from the shared statutory-rates source, reviewed 28 July 2026 · next review due by 6 April 2027 · Source: GOV.UK NI rates
The ratesEvery statutory value this calculator uses is on our UK statutory rates page — dated, sourced and shared with all seven calculators, so the numbers cannot drift apart. ↗How much does an employee really cost a UK employer?
Take the salary, add employer National Insurance at 15% of everything above the £5,000 secondary threshold, and add the auto-enrolment pension minimum — 3% of qualifying earnings between £6,240 and £50,270. For most salaries that lands the payroll cost around 1.1 to 1.2 times gross pay: a £35,000 hire costs about £40,363 a year before anything else. Add only the extras you actually pay — benefits, equipment, training — and you have a number you can defend in a budget conversation.
Two honesty points most calculators skip. Employment Allowance can cut up to £10,500 a year off employer NI, but it is per employer, not per employee — subtracting it from one hire's cost double-counts it on the next, so this calculator states it instead. And recruitment, office space and management time are real costs that cannot be computed from a salary figure, so they are yours to add, not ours to invent.
What matters
Start with the rule
Take the salary, add employer National Insurance at 15% of everything above the £5,000 secondary threshold, and add the auto-enrolment pension minimum — 3% of qualifying earnings between £6,240 and £50,270. For most salaries that lands the payroll cost around 1.1 to 1.2 times gross pay: a £35,000 hire costs about £40,363 a year before anything else. Add only the extras you actually pay — benefits, equipment, training — and you have a number you can defend in a budget conversation.
Write down the decision
Keep the policy, dates, calculation inputs and decision together so another person can understand what happened.
Check the current source
The calculator above computes the defensible payroll cost from dated statutory rates. Salary sacrifice, category-letter NI variations and scheme-specific pension bases change the exact figures — payroll software owns the penny-perfect version.
A practical checklist
For a small team, a short repeatable process beats an impressive policy nobody follows.
- Start from gross salary, not take-home
- Add employer NI above the secondary threshold — it is the employer's cost, not the employee's deduction
- Add your scheme's employer pension rate if it beats the 3% minimum
- Count Employment Allowance once, at employer level, if you are eligible
- Add only extras you actually pay; refuse invented overhead percentages
- Re-check the rates each April — this page's figures carry their verification date
Where software helps — and where it does not
HollyHR can keep the relevant people record, dates, documents, leave and working pattern in one place. It cannot decide a legal, medical or employee-relations question for you.
The calculator above computes the defensible payroll cost from dated statutory rates. Salary sacrifice, category-letter NI variations and scheme-specific pension bases change the exact figures — payroll software owns the penny-perfect version.
Check the source, not just our summary
Rules and product pages change. These are the first-party references behind this page.
Questions people ask
Is this legal advice?
No. It is a practical summary for UK small teams. Check the linked official guidance and take qualified advice for a specific or disputed case.
Why keep the source with the calculation?
Rates and rules change. Recording the inputs, date and source makes the answer reviewable instead of becoming an unexplained number in a spreadsheet.
Can HollyHR track this?
HollyHR can hold the underlying employee, working-pattern, leave and document records. It does not present itself as a legal-advice engine.
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Keep reading: UK statutory rates page · Absence cost calculator