What is the true cost of employing someone?

[Tiggy_dorset]

Not looking for all the calculations etc, just a simple roundabout figure.

Of course an employer needs to pay for sickness, holidays, employers tax ect,

If an employee was on a rate of £12/hour, what is the actual figure the company is paying for the employee... rough roundabout figure.

£20/hour?

 

[Ashley Burton]

Not looking for all the calculations etc, just a simple roundabout figure.

Of course an employer needs to pay for sickness, holidays, employers tax ect,

If an employee was on a rate of £12/hour, what is the actual figure the company is paying for the employee... rough roundabout figure.

£20/hour?

Don't forget pension contribution these days!

 

[8ob]

Its not as bad as you think, start with an employment contract and work back off of that.

https://www.rocketlawyer.co.uk/docu...393492#p-7687d5fa-9ef7-4fb7-9b1c-ddd6e28085da

Bob

 

[rtbcomp]

and insurance

 

[Tiggy_dorset]

ok...another slightly different, slightly similar question:

If an employment agency is paying their worker £12/hour, what are they likely charging the employer?

 

[ukracer]

Don't forget pension contribution these days!

I still cant fathom this out....how can you suddenly add a large bill to employers...especially those who do not have the funding.

 

[bigegg]

ok...another slightly different, slightly similar question:

If an employment agency is paying their worker £12/hour, what are they likely charging the employer?

A LOOOOOONG time ago, when I started in the ink trade, I was employed via an agency, but I also had to sign off the invoices/timesheets.
I was on £7 an hour, the agency was paid £18.

So, I'd guess for £12, an agency is going to get 23 - £30 an hour.

 

[gordon stephenson]

When we employed people via an agency, they were paid at least twice what the worker was getting, In our case it was so simple for them, We had a list of previously used people that we were happy with, So we ran the agency, told them who we wanted, they then collected their fees for doing next to nothing for the length of the employment, and it could be months on end.

 

[nickk]

whatever the cost ,its 'kin hard to employ & make a sensible profit to re-invest,im small just employ 2,& of course it varies where you live,& what people are available locally, the rules &regs are biased towards bigger companies, there should be exemptions/allowances,not just to help them grow into bigger ones, but more to help them exist & continue.

 

[knighty]

Don't forget pension contribution these days!

most of my employees have decided to opt out of the new pension contributions


I don't agree, but I understand the older ones doing it, figuring they'll only pay in for a few years so it won't make much difference in the long run (they're still paying NI etc.)

I really think the younger ones will regret it in the long run, but it's up to them not me :-o

 

[skotl]

To the original question, and looking for a ballpark figure, I've always gone with 50% on top of the salary to cover; workspace square footage, rates, finance + admin functions, pension, NI, sickness cover, recruitment costs, tribunal costs (yep ), etc.

Even when I look at all the detailed spreadsheets for P&L, cashflow, budget forecast vs actual, etc. salary + 50% always seems to be pretty close.

 

[seanc]

my wife got her pension statement through the other day. when she retires in about 30 years her pension will be worth £70 a year ! This forced pension system is a bit pointless unless you opt to pay a large amount extra into it.

 

[knighty]

my wife got her pension statement through the other day. when she retires in about 30 years her pension will be worth £70 a year ! This forced pension system is a bit pointless unless you opt to pay a large amount extra into it.

you can opt out of it it you want

to be fair... I don't see it as a pension, it's just tax in disguise

 

[evobilly666]

The litter pickers I know are on £7.50 and the agency charges £11.55 for them

 

[Burdekin]

An employee on £12 with 40 days off a year (25annual, 8public, 7sick) and the minimum pension contribution of 1% works out at £15.7/hr. This doesn’t include insurance, PPE, training etc.

Woops, made a mistake, would be £14.30.
40 x 8 x 12 = £3840 (non-chargeable cost)
220 x 8 = 1760hrs (working hours)
3840 / 220 / 8 + 12 = £14.18 (non-chargeable hours added on to chargeable hours)
12 x 0.01 = 0.12 (pension per hour)
£14.18 + 0.12 = £14.3

 

[Kayos]

Doing (rough) figures I’ve always thought i’d need to employ 2 or 3 people to make it worthwhile, as just 1 would be more outlay and hassle than it’s worth.

Alltho I’m not ever planning on being in that position

 

[Kayos]

@pdg what is your industry? What you put above sounds like mine, heating and plumbing. Working on my own I can control the quality, having worked with other employees and subbies I know keeping the quality at my level will be hard

 

[Kayos]

@Kayos - it's gardening with a bit of light landscaping.

In a way, your sort of stuff might be even worse - a good proportion of my clients are regular work (fortnightly visits etc.) which I imagine you don't get much of?

For me, it'd be a huge outlay to equip someone else to do it too - when it's me I can use the kit I've got which is pretty much all second hand - because I can keep it going.

Employees only seem to operate while the equipment does - it seems there's a physical link...

I did a bit of sub work for someone and one of the things I saw really brought home another disadvantage - a mower threw a belt, so instead of putting it back on the operator phoned him "machine broke down" and he called out the service company... Nigh on £300 to have it put back on the next day and effectively 6 days wages lost (the operator just sat and waited, and the guys running the strimmer and blower sat and waited with him because they said they couldn't carry on until he could...) Oh, and the strimmer guy was the one who wrote off a month old stihl strimmer by sticking neat petrol in it...


Like I say, I just can't see the viability of expansion for me unless I could jump to at least 3 employees, preferably 5+, which would mean bigger contracts that would cover the restart.

With any luck, I won't be a gardener any more by this summer.

"Regular customer" is a bit of an oxymoron, a lot of my regular customers go small job > small(ish) job > big job then I go back a year later to service the boiler but yearly is about as regular as it gets.

My dad used to do gardening/landscaping and when I was young there was a bit of a boom, huge landscaping projects, Koi ponds, driveways as long as roads etc, employing lads, setting up an office etc etc but his lack of business/saving ethic and later a gambling problem means he now has effectively zero, only gets a pension because he went truck driving in the winter...

Anyway, I digress. I've survived and even prospered in my first proper year, made some good contacts but employing someone is not on the cards, people are now waiting for me to do the job, rather than have me sub it out. I'm not the cheapest but I don't shy away from complicated jobs and my reputation is now landing me more work

 

[rtbcomp]

Health and Safety are more strict if you have employees. A friend of mine is self-employed and if he wanted to employ someone he would have to update all his machinery to current standards. I had a visit from the HSE and they told me pretty much the same, they said they would close me down if I was employing anyone! (home-made machinery, yard a mess &c&c).

 

[eLuSiVeMiTe]

Dabbled with the idea but like pdg and kaos I would end up earning less for more work. Subbing unfortunately is the only option for me. Not to mention outlay on tools vehicles etc
Carpenter/builder.