What this measures
A salary is only part of what an employee costs a business. This calculator adds payroll taxes, benefits and overhead on top of the salary, so you can see the real annual cost of a hire before you make an offer, not after the first payroll run surprises you.
The formula
The math behind the numbers above is simple once it's broken down. Start with the salary, then add the costs that come with employing someone.
If you're hiring someone new, add recruiting and onboarding costs on top for the first year only, since those don't repeat every year after that.
A quick example
Say you're offering a base salary of $65,000. Using the standard defaults, payroll taxes, benefits and overhead add up to about $19,500, which brings the annual cost to roughly $84,500. That works out to about $7,040 a month, before counting any one time hiring costs.
Frequently asked questions
What counts as the true cost of an employee?
It's the salary plus payroll taxes, benefits like health cover and retirement, and a share of overhead such as equipment, software and office space. If you're hiring right now, one time recruiting and training costs belong in the first year too.
Why is the total so much higher than the salary I'm offering?
Because taxes, benefits and overhead typically add 15% to 45% on top of a salary. A $60,000 offer can easily turn into $69,000 to $87,000 once everything is included, which is exactly why it's worth checking before you set a budget.
What percentages should I use?
The defaults are a reasonable starting point, but payroll tax rates and typical benefits vary a lot from one country to the next, and even between states or provinces. If you know your own numbers, switch to Advanced mode and swap them in for a more accurate result.
Should I include one time hiring costs every year?
No, recruiting and onboarding are usually a one off cost in an employee's first year. After that, the ongoing annual cost, without those one time costs, is the number worth using for future budgets.
Can I compare two roles or candidates at once?
Yes. Select "Compare a second role" above and you'll get two calculators side by side, along with a line summarising how much more or less one role costs than the other.
Is this the same as figuring out full time equivalent headcount?
Not quite. Full time equivalent (FTE) tells you how many people or hours you have, while this tool tells you what those people cost. The two are useful together but they answer different questions.