Using an employee cost calculator is crucial when working in international recruitment, as clients often focus solely on the salary when hiring in a new country. However, many are surprised to find that the total cost of employment can be more than double the salary. This is especially true for hourly or daily rate workers who accrue holidays, sick pay, and 13th and 14th-month salaries. Even for permanent staff, clients often underestimate the total cost of employment when considering international expansion. Here are some key points to keep in mind:
1) Understanding the Annual Salary with a Employee Cost Calculator
Leap29 has developed an employee cost calculator to help clients understand the true cost of hiring based on an annual salary. The annual aspect is crucial as it accounts for 13th and 14th-month accruals. For example, in Brazil, it’s common to pay a 13th-month salary, which significantly impacts the total employment cost.
2) Additional Costs Not Covered by Calculators
Calculators can’t account for all costs, such as sick pay, paternity, maternity leave, jury service, and any periods your employee isn’t actively working but isn’t reimbursed by the authorities. In Germany, for instance, employers must cover six weeks of sick pay at full salary, which can add up quickly.
3) Non-Mandatory Benefits
If you want to offer non-mandatory benefits like healthcare, additional pension contributions, life insurance, meal vouchers, and other perks, these costs won’t be included in a calculator. In France, providing meal vouchers is a common practice, adding to the overall employment cost.
4) Individual Circumstances and Packages
Individual packages and circumstances vary, affecting not only income tax but also the total employment cost. Factors such as job type, collective labour agreements, job seniority, location, and personal circumstances all play a role. For example, in Italy, collective labour agreements can dictate additional benefits and protections, influencing the overall cost.
5) Legislative Changes
Employment costs can change due to legislative updates. Some countries adjust contribution percentages yearly, while others change with new governments or introduce different levies. For instance, Spain frequently updates its social security contribution rates, impacting employment costs. It’s always best to consult an expert and have your payroll provider keep you informed of any legislative changes.
Leap29’s cost calculator is available for use in 180 countries, or for a detailed breakdown, reach out to [email protected].
By keeping these points in mind, you can better understand the true cost of employment and avoid surprises down the line. Happy hiring!
