Employee Cost Calculator
Enter a salary and see the full yearly cost to your business: employer National Insurance, workplace pension, extras and the cost of each hour actually worked.
This is an estimate and not advice. Rates are for 6 April 2026 to 5 April 2027. Sick pay, recruitment, office space and management time are not included.
Worked examples
A £30,000 salary
Standard category, minimum pension, no extras
£34,462.80 a year
National Insurance £3,750.00 (15% of £25,000) and pension £712.80 (3% of £23,760). That is £2,871.90 a month, or 1.15 times the salary.
A £60,000 salary
Standard category, minimum pension
£69,570.90 a year
National Insurance £8,250.00 and pension £1,320.90, because the pension is worked out on earnings up to £50,270 only.
A £40,000 apprentice under 25
Apprentice category, no pension
£40,000.00 a year
No employer National Insurance is due on earnings up to £50,270 for an apprentice under 25.
About Employee Cost Calculator
When you take on an employee, the salary in the contract is only the start of what you will spend. You also pay employer National Insurance on earnings above £5,000 a year, a pension contribution under automatic enrolment, and usually some extras such as a laptop, software, training or a phone. Add those up and the real cost is often between 15% and 30% above the salary, which matters when you are deciding whether you can afford to hire.
This calculator uses the rates for the 2026/27 tax year. Employer National Insurance is 15% on pay above £5,000, or above £50,270 for employees under 21, apprentices under 25 and veterans in their first year of civilian work. The minimum pension contribution is 3% of earnings between £6,240 and £50,270 once someone earns £10,000 or more. If your business claims Employment Allowance, up to £10,500 of the bill is taken off. You also get a cost per hour actually worked, which is the number to use when you price the time of the person you are hiring.
How to use Employee Cost Calculator
- Enter the yearly salary and any bonus or commission, then the other yearly costs such as equipment and software.
- Choose the employer National Insurance category and how much pension you will pay.
- Enter the number of people on the same pay, their contract hours and their days off with pay including bank holidays.
- Tick Employment Allowance if your business claims it, then read the yearly, monthly and hourly cost.
Common uses
- Deciding whether you can afford a first hire
- Setting a day rate or hourly charge that covers a member of staff
- Comparing an apprentice with an experienced employee
- Budgeting a pay rise or a new team for next year
Sources
- HMRC rates and thresholds for employers 2026 to 2027
- The Pensions Regulator: automatic enrolment earnings thresholds
Last reviewed 18 October 2026.
Frequently asked questions
How much is employer National Insurance in 2026/27?
Employers pay 15% on an employee's earnings above the secondary threshold of £5,000 a year (£417 a month). For employees under 21, apprentices under 25 and veterans in their first year, the 15% only applies to earnings above £50,270.
How much must I pay into an employee's pension?
Under automatic enrolment you must pay at least 3% of qualifying earnings, which are earnings between £6,240 and £50,270 a year, once the employee earns at least £10,000 and is aged 22 or over. Many employers pay more. Choose the percentage option to see the cost of a higher contribution.
What is Employment Allowance?
It lets eligible employers take up to £10,500 off their employer National Insurance bill each year. Some businesses cannot claim it, for example where the only employee is also a director, so check the rules on GOV.UK. The calculator applies it once across the group of people you enter.
What is not included?
Sick pay, maternity pay, recruitment fees, office space, management time and the cost of covering holidays are left out. Include any you expect in the other yearly costs box.
Why is the cost per hour higher than the salary divided by hours?
Because you pay for holidays and bank holidays as well as the hours worked. The calculator spreads the whole cost over the hours the person is actually at work.