Before you sign off a headcount, before you agree a salary band, work out what that hire will actually cost your business over a full year — and every year after it.
Start-ups and scale-ups are the most exposed here. You're usually hiring without an HR function, without a payroll specialist, and against a set of rules that has shifted considerably in the last eighteen months. Employer National Insurance now runs at 15% and begins at £5,000 of earnings rather than £9,100. The National Living Wage rose again in April 2026. Statutory Sick Pay became payable from day one, with the earnings threshold removed altogether. And from January 2027, unfair dismissal protection starts at six months' service instead of two years, with the cap on compensation gone.
The figure discussed in the board meeting is almost always the salary. It is almost never the cost. We'd far rather tell you a hire doesn't stack up than take the brief anyway — because the most expensive outcome in a search isn't the fee. It's a role pulled at offer stage, or a hire unwound six months in, when the full picture finally arrives.
Answer eight straightforward questions about the role you're weighing up. We'll show you the approximate first-year cost, the approximate cost of every year after that, what the statutory elements are actually made of, and the liabilities worth pricing in before you commit.
Approximate cost, first twelve months
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Every year after that
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Per working day, ongoing
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Based on 232 working days — 260 weekdays, less the 5.6 weeks of statutory holiday every employee is entitled to.The salary sits at the bottom. Everything above it is the part that rarely makes it into the headcount conversation.
Since April 2026, Statutory Sick Pay is payable from the first day of absence and the lower earnings limit has been removed entirely. Short absences carry a cost they simply didn't before.
From 1 January 2027, employees can claim ordinary unfair dismissal after six months' service rather than two years, and the cap on compensatory awards is removed. Probation design and documented performance management matter far more than they used to.
Statutory notice, and statutory redundancy pay once two years' service is reached, are real liabilities if the role doesn't work out. Paternity leave and unpaid parental leave both became day-one rights in April 2026.
The first figure is what leaves the business between signing the contract and the first anniversary. The second strips out the one-offs — the fee, the laptop, the onboarding — and shows the standing annual commitment you're signing up to indefinitely.
The gap between them is usually what changes minds. So is the multiplier. On statutory minimums alone, the ongoing cost of a typical UK hire lands somewhere around 1.15 to 1.3 times the headline salary; the first year, once a search fee and setup are in, commonly runs to 1.4 times or more. That's before a single discretionary benefit.
Good — that's the point of the exercise. If the numbers work, the next conversation is about the role itself: what it genuinely needs to do, what the market will bear, and who is actually available. If they don't, we'd far rather know now than at offer stage.
Talk to us about the rolePlease read this bit. This calculator gives an approximate guide only, intended to help you think clearly before committing to a hire. It is built on published UK rates and thresholds for the 2026/27 tax year — employer National Insurance at 15% above a £5,000 secondary threshold, Class 1A National Insurance at 15%, auto-enrolment qualifying earnings of £6,240 to £50,270, and an Employment Allowance of up to £10,500 — and assumes a standard employee on National Insurance category letter A. Different rules apply to employees under 21, apprentices under 25, qualifying veterans, employees in freeports and investment zones, and to directors, whose National Insurance is calculated on an annual earnings basis.
The figures assume minimum statutory benefits only. Anything you choose to offer beyond that — private healthcare, enhanced pension, income protection, enhanced family leave — needs adding to the totals yourself, along with any employer National Insurance due on it.
This is not legal, tax, HR or financial advice, and it is no substitute for it. Rates and employment law change, sometimes at short notice. Before you commit, take formal guidance from a qualified HR professional, employment solicitor or accountant on your own circumstances.