Whether you’re setting up a UK presence or expanding headcount, it’s important to understand the true cost of hiring, not just the salary.
Here’s a breakdown of the key cost areas:
1. Salary + On-Costs
This includes:
• Base salary
• Employer National Insurance (currently 13.8% above a threshold)
• Pension contributions (minimum 3%, though many companies offer 5–10%)
• Holiday pay (a legal minimum of 28 days including the 8 public holidays)
2. Recruitment Fees
• Contingent recruitment: Typically 20-25% of first-year salary.
• Retained executive search: Structured fees (often one-third up front, one-third shortlist, one-third on acceptance), usually 25–35%, but with higher engagement, sector expertise, and candidate access.
• Optional add-ons may include psychometrics, referencing, or onboarding coaching.
3. Payroll and Admin
If you’re new to the UK, consider the cost of:
• Setting up a PAYE scheme (via an accountant or payroll provider)
• HR software or outsourced payroll
• Contracts and legal compliance support
4. Equipment & Onboarding
Laptop, software, workspace, travel budgets. Each hire has operational costs, especially for hybrid or client-facing roles.
5. Long-Term Costs
Think about:
• Bonus and incentive structures
• Retention schemes or LTIPs (in senior hires)
• Employer liabilities if restructuring or exiting a hire
Why it matters
The total cost of hiring is often 1.3x–1.6x salary once everything is factored in. For leadership or commercial roles, it’s worth viewing the hire as an investment, not just in output, but in growth, culture, and market capability.
Need help building a hiring budget or understanding salary benchmarks?
We’d be happy to guide you based on your role type, location, and growth plans.
