Free tool
Employee cost calculator
Estimate a hire's full cost before making the offer, including employer taxes, benefits, equipment and first-year recruiting. Enter cash and net burn to see how much runway the ongoing monthly cost would use. UK mode includes National Insurance and qualifying-earnings pension calculations for the 2026/27 tax year.
True monthly cost
$7,650
ongoing, after year one
First-year cost
$99,800
includes recruiting
Cost multiplier
1.31x
of base salary
Runway cost
2.0
months lost
Where the ongoing cost goes: salary 76% ·employer taxes 15% ·benefits 5% · equipment and software 3%
This hire takes you from 11.4 months of runway to 9.4. That still leaves room, but it puts the next raise inside the next year, which is worth deciding deliberately rather than discovering later.
The formula
A hire costs salary plus employer taxes, benefits and equipment every year, with recruiting on top in year one. Divide the ongoing cost by salary to get the multiplier, usually 1.25 to 1.4 times. The thing people get wrong is stopping there: the cost only matters against your cash, so the last line converts it into months of runway spent.
employer taxes = salary x employer tax rate
ongoing cost = salary + employer taxes + benefits + equipment
first-year cost = ongoing cost + recruiting
monthly cost = ongoing cost / 12
cost multiplier = ongoing cost / salary
runway cost = cash / burn - cash / (burn + monthly cost)
The multiplier is the part people quote, usually as 1.25 to 1.4 times salary. It is a reasonable sanity check and a poor decision tool, because it says nothing about whether you can carry the cost. And carry it you will: a salaried hire is the purest form of a fixed cost, arriving every month whether revenue does or not; why that distinction decides so much is laid out in fixed vs variable costs.
The last line is the one that decides hires. A €6,000-a-month person is affordable at a €35,000 burn with two years of cash and reckless at the same burn with seven months. Same cost, different answer, and only the runway calculation tells you which you are in. The wider argument is in what a hire really costs.
One caution on employer taxes: the rate varies enormously by country, from roughly 8 percent to over 40. Use your own figure rather than a benchmark, because this input moves the total more than anything else on the form.
This page prices one hire. To cost a whole team (hourly and salaried staff together, with overtime) use the labor cost calculator, and to sanity-check the total against what the business earns, the payroll percentage calculator turns it into a share of revenue.
A worked example
A €60,000 offer with 25 percent employer contributions, modest benefits and an agency search costs the company €81,000 a year ongoing, 1.35 times salary, and €93,000 in year one. Most of the gap is employer taxes, a line that never appears on the candidate's payslip, so it is the one people miss.
The candidate hears €60,000. The company pays €93,000 in year one and €81,000 every year after, and the €21,000 recurring gap is dominated by one line, employer taxes, that never appears on a payslip. Run the same offer through the calculator above with your own country’s rate, because that single input moves the answer more than every other field combined.
UK employer cost: National Insurance and pension
In the UK, the cost on top of salary is mostly employer National Insurance and a workplace pension, both set by law. For the 2026/27 tax year (6 April 2026 to 5 April 2027), employer NI is 15 percent of pay above £5,000 a year and the minimum employer pension contribution is 3 percent of qualifying earnings. The Employment Allowance can reduce the NI bill once per business.
- Employer National Insurance: 15% of each employee’s pay above the secondary threshold of £5,000 a year (£417 a month).
- Workplace pension: auto-enrolment applies to employees aged 22 to State Pension age who earn at least £10,000 a year. The minimum employer contribution is 3% of qualifying earnings, the slice of pay between £6,240 and £50,270, and 8% in total with the employee’s share.
- Employment Allowance: up to £10,500 off your employer NI bill for the year, once for the whole business.
The worked example is a £45,000 salary:
If the Employment Allowance is unused, it covers the whole £6,000 of NI and the total falls to £47,662.80, or £3,971.90 a month. Now carry the monthly figure into runway: with £300,000 in the bank and a net burn of £25,000 a month, runway goes from 12.0 months to 10.2, so this hire spends 1.8 months. Plainhub’s People page takes the full monthly cost of each person into burn, and a draft plan on the Plans page shows runway before and after you commit it.
Limits of this mode: it uses the standard category A NI rate, it assumes the pension contribution is on qualifying earnings, and it does not model salary sacrifice or employees under 22. The Apprenticeship Levy (0.5% of the pay bill above £15,000 a year) only applies to employers with a pay bill over £3 million, so it is not in the calculation. Employment Allowance eligibility has exclusions, so check it before you rely on it. This is a planning tool, not payroll or tax advice.
Sources, tax year 2026/27: GOV.UK, rates and thresholds for employers; GOV.UK, Employment Allowance; GOV.UK, Employment Allowance eligibility; GOV.UK, workplace pension contributions; The Pensions Regulator, earnings thresholds; DWP statement, 18 December 2025 (thresholds unchanged for 2026/27).
What the burden is made of
Salary is only part of what a hire costs. The rest is employer taxes and contributions (roughly 8 percent to over 40 percent of salary by country), benefits, equipment and software, and a one-off recruiting cost. Together they usually add 25 to 40 percent on top of base salary, according to Joe Hadzima of MIT Sloan. The common error is using a benchmark for taxes instead of your own country's rate.
Equipment and software carry no benchmark row on purpose: the figure is whatever your actual stack costs per person, and any published average would be someone else's stack. Count your real one.
Can I afford to hire?
It depends on runway, not on the salary. The loaded cost tells you what the hire is; only runway tells you whether you can carry it. Fill in the optional cash and burn fields above and the calculator answers in months rather than euros, which is the unit the decision is actually made in.
A workable rule of thumb: above 12 months of runway after the hire, the question is whether the role pays for itself, not whether you can afford it. Between 6 and 12, affordable if you can name what the hire must produce and by when. Below 6, the hire and the next fundraise have become the same decision.
Two checks worth running before committing: a cash flow forecast with the new cost in it, which shows the month the decision bites rather than the average, and your own pay, which belongs in the burn like any other salary. The framework for that is in founder salary: how much to pay yourself.
Common questions
How much does an employee cost in the UK?
Salary plus employer National Insurance plus the employer's workplace pension contribution, plus any benefits and equipment. For 2026/27, employer NI is 15% of pay above £5,000 a year, and the minimum employer pension is 3% of earnings between £6,240 and £50,270. On a £45,000 salary that is £6,000 of NI and £1,162.80 of pension, so £52,162.80 a year, about 1.16 times salary, before benefits and overheads.
How does an employer National Insurance calculator work?
Take annual pay, subtract the secondary threshold (£5,000 in 2026/27), and multiply what is left by 15%. Pay of £45,000 gives 15% of £40,000, which is £6,000. Pay at or below £5,000 gives nothing. This is the standard category A rate; some categories of employee are treated differently, so check yours on gov.uk.
What is the Employment Allowance?
A reduction of up to £10,500 a year in the employer National Insurance you owe, for 2026/27. It is one allowance for the whole business, not one per hire, and some employers cannot claim it, including public bodies doing most of their work in the public sector, and a company whose only NI-liable employee is its sole director. A single £45,000 hire's £6,000 of NI would be covered in full if the allowance is unused.
How do you calculate the true cost of an employee?
Start with base salary, then add employer taxes and social contributions, benefits, and the equipment and software they need. Recruiting is a one-off, so count it in year one only. Total employee cost = salary + employer taxes + benefits + tools, with recruiting added to the first year.
What is the employee cost multiplier?
Loaded cost divided by base salary. In most markets it lands between 1.25 and 1.4, meaning a €70,000 salary costs €87,500 to €98,000 a year. It varies widely by country, because employer contributions do.
How much does an employee actually cost?
Typically 1.25 to 1.4 times their salary, ongoing. A €60,000 hire runs €75,000 to €84,000 a year once employer taxes, benefits and equipment are counted, and more in the first year with recruiting on top. The country matters most: employer contributions range from under 10 percent of salary to over 40, so the same offer letter costs very different amounts in Texas and in Paris.
What is the real cost of an employee beyond salary?
Everything the payslip does not show: employer payroll taxes and social contributions, which are the largest item and invisible to the employee; pension and benefits; equipment and software seats; and recruiting, a one-off that often exceeds a month's salary. There is also a real cost with no line at all, the manager's time to hire and onboard, which no calculator prices but every first-time founder underestimates.
What is included in fully loaded employee cost?
Salary, employer payroll taxes and social security, pension contributions, health and other benefits, equipment, software seats, and a share of recruiting. Some companies also allocate office and overhead, which makes the number larger but harder to compare.
How much does a hire cost in runway?
Divide your cash by your burn before and after the hire, and take the difference. That is the honest cost of the decision. A €6,000-a-month person on a €35,000 burn with €400,000 in the bank takes runway from 11.4 months to 9.8, so the hire costs about 1.7 months.
Should I include recruiting fees?
In year one, yes. An agency fee of 20 percent of salary is real cash leaving the bank in the month you hire, and leaving it out makes the first year look cheaper than it is. From year two it disappears, which is why this calculator shows both figures.
What is the average cost per hire?
SHRM's 2022 benchmarking put the average cost per hire near $4,700, with executive searches running several times that. For agency-recruited roles the fee alone is typically 15 to 25 percent of first-year salary, which is why recruiting gets its own one-off line in this calculator instead of hiding inside overhead.
How do I know if I can afford to hire someone?
Compute runway before and after: cash divided by current net burn, then cash divided by burn plus the hire's loaded monthly cost. Above 12 months after the hire, the question is the role's value, not affordability. Between 6 and 12, affordable with a plan for what the hire must produce. Below 6, you are betting the company on the hire paying off before the cash ends.
Should founder salary be counted the same way?
Yes. If you pay yourself, you are an employee cost like any other, and leaving it out produces a burn figure the company can hit while you personally earn nothing.
One hire is a calculation. A team is a model.
Take the loaded monthly cost from this calculator into a draft plan in Plainhub. Compare runway before and after the hire, then commit the plan when you decide to proceed. The People page holds your ongoing team costs by department, with entries you maintain yourself.