What is the true cost of an employee?

Lets explore the numbers and what the cost of an employee really amounts to!

The risk factor

Business owners employ people to carry out roles that the business requires in order to operate and grow – it’s as simple as that.

However, employees cost money, operating the business costs money, growing the business costs money. It’s typically money well spent, although sometimes it’s not. Just sometimes employees don’t perform well, sometimes they are ill, sometimes they have accidents at work, and sometimes they like to question us legally for the business decisions we have to make. Plus, there are hidden costs such as holiday pay, training fees, management time, recruitment etc. These are what we call “business risks”.

Outsourcing these tasks doesn’t just minimise these business risks – it eliminates them.

"But it's so EXPENSIVE"

Some advisers feel outsourcing is expensive. The reason being that they directly compare the hourly rate we charge to the hourly rate of an employees salary. But thats not accurate – that hourly rate of the employee isn’t what that employee actually costs you.

So what is the cost of outsourcing compared to internal staff?

The true cost of an employee is unlikely to be less than 1.7 times basic salary.

The average employee has 4.4 days off sick a year. 12% of absences are not thought to be genuine.

Surveys have found that more than a third of the time is wasted or unproductive. It can be time socialising with colleagues, taking a refreshment break, walking from one office to another in the same building, visiting the restroom, distractions, etc.

Let’s not forget the time taken away from your team and management when training other team members…

If you take the salary of £35,000 per annum, add in all the taxation, the IT costs, the employee management, the sick pay, training and very quickly your £35,000 salary looks more like…


Why have these risks? Why not let someone else deal with these risks – like us? We love employees!