There are many things to factor in when it comes to growing a team or replacing an outgoing employee, but the cost of a new hire in the first year of their employment could shock many business leaders.

New research from NerdWallet has shown that an employee earning the average UK salary of £31,722 could in fact cost their employer £62,892.78 – over double the initial pay packet. The cost breakdown to employ the average UK worker is as follows:

  • Salary: £31,722
  • Office rent per desk: £15,600
  • Recruitment: £6,544.40
  • National Insurance: £3,412.14
  • Business energy bill (for five-person office): £3,103
  • Training: £1,530
  • Pension contributions: £764.52
  • Work social function per head: £150
  • Employers’ liability insurance (lowest estimate): £66.72
  • Total: £62,892.78

On top of these costs, there are other expenses to factor in too. Bonuses, new equipment, company benefits and travel – including vehicle use – can also stretch the balance sheet.

A recent NerdWallet survey of 2,000 employed UK adults showed that workers are more interested in flexible hours and commuting time over team social events and office refreshments, so there is potential to make savings in some areas.

Connor Campbell, business finance expert at NerdWallet, comments on hiring:

“Businesses are under a lot of financial pressure at the moment and things don’t appear to be getting easier with a rise in inflation on top of spiralling energy costs.

“It’s clear to see why a jobs market that favours the employee would be a struggle for some businesses, as not only do you have a salary to account for, but other expenses, such as National Insurance, pension contributions, and training, to add to your balance sheet.

“There are ways to bring the cost of an employee down, such as by paying less in recruitment fees, or by reducing the number of working days in the office to help limit utility costs. It’s a balancing act for business owners right now, but with careful planning and good recruitment choices, the short-term investment may pay off longer term.”





Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.