Calculators
Employee Cost Calculator
Calculate the full annual cost of an employee beyond salary, the labour burden rate and the cost per productive hour.
- Runs in your browser
- Nothing uploaded
The tool
Enter your numbers below. Results update as you type, and nothing leaves your browser.
Everything you enter stays on your own machine. Nothing is sent to us or to anyone else, which you can confirm in your browser network tab.
What people use it for
- Budgeting a new hire
- Pricing billable services
- Comparing employees with contractors
- Workforce planning
About this tool
What the Employee Cost Calculator does
An employee costs much more than their salary. Employer payroll taxes, health benefits, retirement contributions, insurance, equipment and software all add to it. The labour burden rate expresses these extras as a percentage of salary, and dividing the total by productive hours gives the true hourly cost.
It also works as a payroll burden calculator or a cost of an employee calculator.
Formula
- Extras = salary × (payroll tax + retirement + workers’ comp) + unemployment + benefits + equipment
- Burden rate = extras ÷ salary
- Productive hours = 2,080 − paid days off × 8
Worked example
Using the starting values in the calculator above:
| Input | Value |
|---|---|
| Annual salary | $60,000 |
| Employer payroll taxes | 7.65% |
| Unemployment insurance per year | $600 |
| Health and other benefits per year | $9,000 |
| Retirement contribution | 4% |
| Workers’ compensation | 1% |
| Equipment, software and training per year | $2,500 |
| Paid days off (holidays, leave, sick) | 25 |
| Result | Value |
|---|---|
| Total annual cost | $79,690 |
| Labour burden rate | 32.8% |
| Cost per productive hour | $42.39 |
| Cost above salary | $19,690 |
| Cost per month | $6,641 |
How to read the result
Use the cost per productive hour, not salary per hour, when pricing billable work or deciding between hiring and outsourcing.
Burden rates of roughly 25% to 40% of salary are common, higher where employers pay for health insurance.
Related calculators
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- PTO Accrual Calculator: Calculate paid time off accrual per pay period and per hour worked, and project the balance with usage and a cap.
- Severance Pay Calculator: Estimate a severance package from years of service, weeks of pay per year, minimum and maximum weeks, and benefits continuation.
- Employee Turnover Cost Calculator: Calculate the turnover rate and the cost of staff turnover from recruiting, onboarding and lost productivity.
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Questions
Questions about this tool
The things clients actually want to know — costs, timelines, ownership and what happens after launch.
Salary plus employer taxes, benefits, insurance and equipment, often 1.25 to 1.4 times salary.
The cost of an employee above wages, expressed as a percentage of wages.
Paid time off is paid but not worked, so the real cost of each working hour is higher.
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