Hi - I'm hoping someone can help I have been asked to work out the true costs of hourly paid employee's for a company I deal with.
In a previous position we use to add on 12.07% for holiday pay and 12.8% (er's) NIC. Apart from the employers NI going up is there anything else I should take into account - should I allow for sick leave/pay and also a couple of their employees pay into a pension.
How do I get to a true employee cost? Any help would be greatly appreciated as I seem to be going round in circles with this and I'm getting dizzy!!
Hi, you may need to guide the company on what factors they wish to include and exclude from your calculations. If you do the payroll for them, a good start is to look at the rates, bonuses, leave and pension contributions listed; being careful to exclude anything that is already included in hourly pay. Reimbursements, if I'm not teaching grandmother to suck eggs, would have already been paid by the employee, so don't need to be accounted for and presumably 'downtime' is already in the hourly rate. I've always thought that redundancy pay should be factored in as it accrues like holiday pay and the client wished to do so the first time I was asked. I remember hearing a rule of thumb measurement of 1.5 x salary but I forget which sector this was referring to and this can vary to a huge degree. It might be an idea to calculate the salary costs, with the items you mentioned and then give an optional list of other factors.
The depth to which you go answering this question may be limited by how much time they want to pay you for doing so.
A large factor may be recruitment consultant fees and ask if they want accounting costs brought in? Do they want premises costs, liability insurance, training costs and other overheads etc. To start you off, you may find the basis for your formula amongst the following links but enter your question into a search engine and you may come up with a better suited template which you can tailor to your own requirements :
I'm sure others may volunteer any items I have not mentioned but try to think if there are any peculiarities to company remuneration policies which affect the true costs.
Hi - Thanks for your reply having read that and spoken to a few other people it does all seem to be quite vague and dependent on the company itself so think I will end up throwing it back to them to get some more detail.
