Employee costs refer to all of the expenses that are incurred when hiring and employing an individual. These costs go beyond just the employee’s salary and may include benefits such as healthcare, retirement plans, and other perks. In some cases, the total cost of employing an individual may be significantly higher than their salary, especially in certain industries or professions, or in countries with higher labor costs. Therefore, it is important for organizations to carefully consider all of the costs associated with hiring and employing employees when making staffing decisions. The following are common types of employee cost.
The direct costs of recruiting an employee.
The cost of human resources overhead divided by the number of employees. This captures cost related to compliance and administration of employment.
Annual salary or hourly wage.
Payroll taxes and social security payments that are paid by the employer based on the employee’s salary such as pension, unemployment insurance, medical insurance, disability insurance, maternity and child benefits. These differ greatly by nation, state or province.
Benefits that are paid by the employer such as medical insurance, disability insurance, dental insurance, life insurance and pension.
Incentives such as profit sharing plans, bonuses and stock options.
Paid time off including public holidays, vacation, sick days, personal days, bereavement leave, maternity and paternity leave.
Training & Development
Training and development programs including the cost of onboarding.
Costs related to office space per employee such as rent and facility management costs.
Office consumables such as coffee, food and stationery.
Insurance attributable to employees such as employee liability insurance.
Furniture, fixtures and equipment such as computers and mobile phones.