Employee Cost Calculator
What an employee really costs once contributions, benefits and overheads are added — and what contractor rate that is equivalent to.
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How it works
Salary is typically 65–80% of what an employee actually costs. Employer social contributions, insurance, equipment, software licences and a share of workspace all sit on top, and none of them appear in the offer letter.
The comparison against a contractor rate is where this becomes a decision tool. A contractor charging double the equivalent hourly rate is often still cheaper once you account for the employee’s paid leave, benefits and the overheads that come with a permanent headcount.
True cost = salary × (1 + contributions) + benefits + overheads
- Loaded cost — everything the business pays to employ one person for a year
- Productive days — working days less leave, holidays and sick days
- Break-even day rate — the contractor rate equivalent to the employee’s daily cost
Worked example
A 1,800,000 salary with 14% contributions, 240,000 of benefits and 360,000 of overheads
Inputs
Results
The employee costs 47% more than the salary suggests. A contractor at 12,000 a day is roughly cost-neutral.
Frequently asked questions
What overheads should I include?
Anything that scales with headcount: workspace, equipment, software seats, training, recruitment amortised over expected tenure, and management time. A common shortcut is 15–25% of salary.
Why is the cost per productive day so much higher than salary ÷ 365?
Because you pay for around 250 working days and get fewer once leave, public holidays, sickness and training are removed. Dividing by calendar days understates the daily cost by roughly a third.
Is a contractor cheaper if the day rate is lower than this figure?
On direct cost, yes — but the comparison is not complete. Contractors carry no notice obligation and no benefits, while employees build institutional knowledge and are available for whatever comes up. The number informs the decision; it does not make it.
Is my data sent anywhere?
No. The calculation runs entirely in your browser. Nothing you type is transmitted to us or stored.
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