Cost of an employee: find out how to calculate team investment

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Has your business grown and you need to hire more employees? Don't be scared by the multiplication of the numbers involved. O cost of an employee it's a calculation process that encompasses expenses such as salary, thirteenth pay, transportation, overtime, and more.

In this article, we'll talk about:

  • the importance of the cost of an employee in a company's financial and strategic planning;
  • the main monthly expenses with employees;
  • tips on how to assess the real cost of an employee.

Keep reading and learn more!

Why Calculate the Cost of an Employee?

The cost of an employee has a fundamental and decisive role in company results. But the question every business needs to ask and know the answer is: how much does an employee cost my company?

the UK has a labor legislation full of rules and complexities that demands more and more attention from the personal department. Companies that do not have control over employee spending can go bankrupt.

Having at the end of your pencil the value of wages, charges and rates can avoid labor lawsuits. Knowing the real burden to keep an employee is what decisively influences the financial health of your company.

Below, we list a step by step for you to be able to correctly measure the cost of an employee.

What information is needed to calculate the cost of an employee?

monthly expenses

Measuring the cost of an employee is essential for companies to calculate their monthly expenses. To start detailing each real that comes out of your box, you need to evaluate some costs that are almost fixed in most companies.

We've separated some of these expenses so you can start putting it on the tip of your pencil and be able to close the monthly bills in a calm way, and most importantly: without going into the red.

  • 13th salary;
  • Transport expenses;
  • Vacation (1/3 constitutional);
  • Health plan (benefit that some companies offer individually or in groups);
  • Life insurance (benefit offered by some companies);
  • Possible expenses absences or leave;
  • expenses with overtime;
  • social security contribution;
  • Annual expenses with mandatory salary adjustments, according to the union.

Taxes and charges

Did you know that the cost of an employee can be up to three times bigger than his own salary? This situation can vary according to the union, branch of activity, among other differentials of each profession.

Each company fits within a type of tax and we will talk about them later so that there is no doubt about the calculation of the cost of an employee.

Simple national

O Simple national is a tax regime with differentiated rates and aimed at companies that invoice up to £ 4.8 million. This value respects the Complementary Law No. 155, October 2016.

In addition to allowing the collection of taxes state, municipal and federal in a single guide, the Simples Nacional offers other types of benefits.

Competition in some government tenders, such as tie-breaking and ease in complying with social security and labor obligations, are some of the benefits of this regime.

Below are the Simples Nacional taxes:

  • Vacations: 11.11%;
  • 13th salary: 8.33%;
  • FGTS: 8%;
  • FGTS/Provision of fine for termination: 4%;
  • Social Security on 13th/Holidays/DSR: 7.93%.

Total monthly expense: 39.37%

Read and understand the calculation of termination of employment contract.

Actual profit and presumed profit

O presumed profit it's the tax regime that fits for companies that bill up to a maximum £ 78 million annually. Real profit, on the other hand, has almost the same form of taxation as the presumed one, only with different values.

At the real profit, taxation is calculated based on net income. Below, we set out the rules for provisioning the cost of an employee, if the tax regime adopted by the company is this one.

  • Vacations: 11.11%;
  • FGTS: 8%;
  • 13th salary: 8.33%;
  • Social Security on 13th/Holidays/DSR: 7.93%;
  • EHIC: 20%;
  • Work Accident Insurance (SAT): 3%;
  • Education salary: 2.5%;
  • Incra / SENAI / SESI / SEBRAE: 3.3%;
  • FGTS/Provision of fine for termination: 4%.

Total monthly expense: 68.18%

How to calculate the cost of an employee?

To exemplify the calculating how much it costs an employee for the company, we set up the accounts with a salary equivalent to £1,000 and based on the Simples Nacional tax regime.

Check out the cost of an employee if the company has adopted the Simples Nacional.

monthly expense

  • Base salary: £ 1000;
  • 8% of FGTS – £80;
  • Monthly provision (8% of annual FGTS/12 + vacation + 1/3 on vacation + 13th) – £210;
  • Meal vouchers – £15 per day = £330 (monthly/22 business days);
  • Transportation vouchers – R$ 8 per day = R$ 176 (monthly/22 working days – the employee pays 6% of their salary and the company pays the rest).

Monthly total: £ 1796

In this example, the company pays £1,656 and the employee pays 8% of EHIC (£80) and 6% of the transportation voucher (£60).

annual expenses

  • 8% of FGTS of the annual amount – £186.67;
  • Vacations – £1,000 (annual value);
  • 1/3 on vacation – £333.33 (annual amount);
  • 13th salary – £1,000 (annual amount);

Annual total: £ 21,392

Here, the value is approximate, as there may be variations, depending on days worked, overtime and other differentiated benefits for employees.

Training expenses

Spending on cappeasement and training need to be part of the cost of an employee. Qualification is necessary and even works as a motivation to obtain the desired results.

In addition, you can also include career plans and strategies for retain talents.

It is a fact that a better qualified and trained employee can generate a good impression of your company in the job market, also helping to attract talent.

Look on the bright side: up-to-date professionals tend to earn more and be more involved and satisfied with the company. For this reason, spending on education, training and training is nothing more than a type of profitable investment in the medium and long term.

having a strategic planning and knowing all the costs involving employees, it is easier to hire new talent to add to the team and, when necessary, carry out the necessary layoffs.

Heads up: never rate the cost of an employee based only on the salary he receives. It is important to measure the expenses mentioned above. This ensures that you don't make a wrong account, the result of which could lead to a hole in the company's finances.

As much as all shares of a company, the cost of an employee it needs planning and strategies before it can be executed.

For this, count on the help of up-to-date professionals who understand the tax rules and the rights of the employee.

Cost of an employee in the Labor Reform

THE Labor Reform 2017 brought changes regarding the cost of an employee for the company. Analyze and choose the most advantageous alternative for your type of business.

Hiring employees

As of March 2021, the MP 936 made the partial and intermittent working day real, as well as the home office and remuneration through working hours or working day. Such actions must be agreed upon when hiring companies and employees.

Possibility of outsourcing

The new law also allowed companies to hire outsourced service providers, without this attitude implying the relationship and hiring of their direct employees.

Thus, expenses related to labor taxes are the responsibility of the outsourced company, to which the employee is linked.

Listen to the podcast of CAE Trainings about Expenses vs. Investments and stay informed about your company's costs.

Want to know everything about financial intelligence for your employees? Follow HR Consultant on social media and stay tuned for news on Facebook, Instagram, Twitter and LinkedIn.

Help your employees work better

An employee who works better is worth all your investment.

Get to know the tool HR Consultant and learn how the system that implements the payment on demand, that is, the employees of a company can advance part of their salaries when they need it.

This tool is changing the way employees handle their salary and generating more satisfaction and motivation at work.

HR Consultant can be one of the benefits most valued by those who work in your company. Talk to an expert and learn more!

Conclusion

HR Consultant UK can help if you have any questions about Cost of an employee: find out how to calculate team investment
. Our HR consultant in London can assist you if you live in London. Suppose you live further afield thats not an issue! Visit our HR Consultants Near Me page to find the best consultancy nearest to you.
See you next time!

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