Total cost per year of min wage employee

betsie

You also need to consider holiday entitlement and whether you will pay them for days not taken.

Savvy_Sue

betsie wrote: »

You also need to consider holiday entitlement and whether you will pay them for days not taken.

You can only pay for days not taken over and above the statutory minimum entitlement of 28 days (for a 5 day pw person). So if you give 28 days leave, you must allow them to take this, you can't legally buy it back from them. If you give 33 days leave, and they only take 28 days, then you can pay them for the additional 5 days, but you don't have to.

InsideInsurance

For a basic calculation it tends to be 130% to 160% of the salary but reality tends to be slightly more stepped than that, obviously with your first employee you need to start buying insurance, start running a payroll etc. Likewise when you have a whole office of people and you hit the building capacity then that next employee triggers a massive cost of relocation or creating a new extra location.

happywarmgun

Insurance? What type of insurance do I need?

Mistral001

I remember going for an interview 20 years ago and the person interviewing me, when it came to salary, said that for "internal accountancy purposes", the cost to them of paying staff was 115% of salary which I presume took into account sick pay insurance and employers National insurance and a few (very few I found out when I joined the firm) fringe benifits etc. With the dramatic increase in employer's National Insurance, this will be quite a bit more I should think. This did not take into account overheads of premises office furnature and admin staff etc as I was charged out to clients at 2.6 times the 115% of salary making it 3.0 times basic salary

By the way the reason for the employer mentioning it was probably down the interviewer naively trying to get me to accept less money - as if all employers did not have the same sort of costs.

Savvy_Sue

happywarmgun wrote: »

Insurance? What type of insurance do I need?

Employer's Liability Insurance. Of course, that's in addition to any other business insurance you might need - product liability if you're making something; personal liability if you could be sued for giving bad advice; premises in case someone trips over your carpet; I'm sure there's others.

somethingcorporate

Mistral001 wrote: »

I remember going for an interview 20 years ago and the person interviewing me, when it came to salary, said that for "internal accountancy purposes", the cost to them of paying staff was 115% of salary which I presume took into account sick pay insurance and employers National insurance and a few (very few I found out when I joined the firm) fringe benifits etc. With the dramatic increase in employer's National Insurance, this will be quite a bit more I should think. This did not take into account overheads of premises office furnature and admin staff etc as I was charged out to clients at 2.6 times the 115% of salary making it 3.0 times basic salary

By the way the reason for the employer mentioning it was probably down the interviewer naively trying to get me to accept less money - as if all employers did not have the same sort of costs.

For costing employees (at managerial grades) in our company we assume a 40% uplift on salary but this covers company car and pension so 15-20% does sound in the right ballpark.

Charityworker

If you pay them less than £107 a week you won't be required to pay any tax, NI, sick pay or maternity leave. You won't even have to register as an employer with the HMRC or give out p45's or P60's. All you need to do is pay your employee and give them a payslip which you can type out yourself.

CKhalvashi

happywarmgun wrote: »

So I've reached that point in my business growth where I realise I need a full time, my guy/gal, employee (currently sub this work).

Can someone help me with this question: What is the real cost to the employer of a min wage employee for a year (assume 38 hrs Pw) I mean not just hrs x salary, but also NI plus extra insurance plus running a payroll plus whatever else. What won't I have thought of when I do my back of envelope calculations? Every business must have gone through this. What are the real numbers?

I pay London Living Wage for all of mine, as a voluntary commitment during the economic downturn, however a good per-employee rate (for the girls on the desk who don’t have company cars, claiming around 3,000mi/year) is wage + around 40% per year, with the highest costs in year 1 and when major changes occur (such as office relocation however close and when computer systems are updated).

This may be more/less, depending on what industry you’re in (I’m in music), what systems you use (mine use iMac’s, as we’re on this system) and what the employees are doing (I will send many of mine out the office on small jobs, totalling an average of around 3,000mi/year).

C

CKhalvashi

Charityworker wrote: »

If you pay them less than £107 a week you won't be required to pay any tax, NI, sick pay or maternity leave. You won't even have to register as an employer with the HMRC or give out p45's or P60's. All you need to do is pay your employee and give them a payslip which you can type out yourself.

If we’re talking 38h/week, there is no way they would earn less than £107/wk.

I noticed that this was part of the top spec, however this is a valid point!