Has your business grown and you need to hire more employees? Do not be alarmed by the multiplication of the numbers involved. THE cost of an employee it is a calculation process that includes expenses such as salary, payment of thirteenth, transportation, overtime and much more.
In this article, we’ll talk about:
- the importance of an employee’s cost in a company’s financial and strategic planning;
- the main monthly expenses with employees;
- tips on how to assess an employee’s real cost.
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 that every business needs to ask and know the answer is: how much does an employee cost to my company?
Brazil has a labor legislation full of rules and complexities that demands more and more attention from personal department. Companies that have no control over spending on their employees can break down and go bankrupt.
Having the value of wages, charges and rates at the tip of the pencil can prevent labor lawsuits. Knowing the real burden to maintain an employee is what decisively influences the financial health of your company.
Below, we have listed a step by step for you to be able to correctly measure the cost of an employee.
What information is needed to calculate an employee’s cost?
Measuring an employee’s cost is essential for companies to calculate their monthly expenses. To start detailing each dollar that comes out of your cash, you need to evaluate some costs that are almost fixed in most companies.
We have separated some of these expenses for you to start putting on the tip of the pencil and being able to close the accounts of the month in a smooth way and the most important: without going into the red.
- 13th salary;
- Transportation 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 faults or leave;
- Spending on overtime;
- Social security contribution;
- Annual expenses with mandatory salary adjustments, according to the union.
Taxes and charges
Did you know that an employee’s cost can be up to three times bigger than his own salary? This situation may vary according to the union, industry, 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.
THE Simple national is a tax regime with different rates and directed to companies that bill up to £ 4.8 million. This value respects Complementary Law No. 155, October 2016.
In addition to allowing the collection of tributes state, municipal and federal in a single guide, Simples Nacional offers other types of benefits.
Competition in some government tenders such as tie breaking and ease to meet social security and labor obligations are some of the benefits of this regime.
Below the tributes of Simples Nacional:
- Holidays: 11.11%;
- 13th salary: 8.33%;
- FGTS: 8%;
- FGTS / Provision for fine for termination: 4%;
- Social security on 13th / Vacations / DSR: 7.93%.
Total monthly spend: 39.37%
Read and understand the calculation of termination of employment.
Actual profit and assumed profit
THE presumed profit it’s the tax regime that fits for companies that bill up to a maximum £ 78 million annually. The real profit, however, 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 separate the rules for provisioning the cost of an employee, if the tax regime adopted by the company is this.
- Holidays: 11.11%;
- FGTS: 8%;
- 13th salary: 8.33%;
- Social security on 13th / Vacations / DSR: 7.93%;
- EHIC: 20%;
- Occupational accident insurance (SAT): 3%;
- Education salary: 2.5%;
- Incra / SENAI / SESI / SEBRAE: 3.3%;
- FGTS / Provision for fine for termination: 4%.
Total monthly spend: 68.18%
How to calculate the cost of an employee?
To exemplify the calculation of 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 tax regime of Simples Nacional.
Check out the cost of an employee if the company has adopted the Simples Nacional.
- Base salary: £ 1000;
- 8% FGTS – £ 80;
- Monthly provision (8% annual FGTS / 12 + vacation + 1/3 on vacation + 13th) – £ 210;
- Food stamps – £ 15 per day = £ 330 (monthly / 22 working days);
- Transport vouchers – £ 8 per day = £ 176 (monthly / 22 working days – the employee bears 6% of his salary and the company with the rest).
Monthly total: £ 1796
In this example, the company pays £ 1,656 and the employee pays 8% of the EHIC (£ 80) and 6% of the transportation voucher (£ 60).
- 8% of FGTS of the annual amount – £ 186.67;
- Vacations – £ 1,000 (annual amount);
- 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 employee benefits.
Spending on ctraining and training they need to be part of an employee’s cost. Qualification is necessary and even works as a motivation to obtain the desired results.
In addition, it is also possible to include career plans and strategies for retain the 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 pay more and be more involved and satisfied with the company. For this reason, spending on training, qualification and training is nothing more than an advantageous type of investment in the medium and long term.
Having a strategic planning and knowing all the costs that involve employees, it is easier to hire new talents to add to the team and, when necessary, carry out the necessary layoffs.
Heads up: never rate cost of an employee based only on the salary he receives. It is important to measure the expenses mentioned above. This ensures that you do not make a wrong account, the result of which could open a hole in the company’s finances.
As much as all the shares of a company, the cost of an employee needs planning and strategies before it is executed.
For that, count on the help of updated professionals who understand the tax rules and the rights of the employee.
Cost of an employee in 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.
As of March 2020, the MP 936 made the partial and intermittent workday real, as well as the home office and remuneration through working hours or working days. Such actions must be agreed upon at the time of hiring between companies and employees.
Possibility of outsourcing
The new law also allowed companies to hire third-party service providers, without this attitude implying in the relationship and the hiring of their direct employees.
Thus, the expenses related to labor taxes are the responsibility of the outsourced company, to which the employee is linked.
Listen to the podcast CAE Training on Spending vs. Investments and stay informed about your company’s costs.
Help your employees work better
An employee who works better, is worth all of your investment.
Get to know the tool HR Consultants UKy and learn how the system that implements the on-demand payment, that is, the employees of a company can anticipate part of their wages when they need it.
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HR Consultants UKy can be one of the most valued benefits for those who work at your company. Talk to an expert and learn more!