Why Hiring New Staff Costs You More Than You Think

Taking the plunge and expanding your business is a tough decision for anyone. But if we’re going to make our businesses successful, it’s imperative that we take on new colleagues. There’s just one problem: hiring new employees is expensive. It’s not just their wages you have to consider. It’s all the other associated costs of employment. Here are some of the ways that new employees will cost you money and what to do about it.


The first place where you’ll start spending a lot of money is in recruitment. Recruitment doesn’t come cheap. And according to some estimates, can be as much as 20 percent of their first year’s salary if you go through an agency. There are, of course, cheaper ways to recruit. One option is to use social media sites, like LinkedIn. But these should only be used as an initial way to engage with potential staff. A better way to advertise a position is for you to post your job on a social media site or job site. This way, you’ll immediately get the job advertised in front of the most relevant people.

National Insurance

As discussed, it’s not just wages that end up costing you money when you take on new staff. It’s the additional tax contributions that you have to make as an employer too. By far the biggest is national insurance contribution. Of course, employees have to pay a portion of their wages in national insurance if you pay by PAYE. But as an employer, you also have to pay a national insurance contribution.

To make the process easier, it’s best to have payroll overseen by a professional. They’ll be able to pick up on any mistakes and hopefully avoid any fines.


In the UK, absentee employees are a significant cost for business. In most circumstances, the absence is legitimate. But all too often, it’s not. The problem for companies is that it’s not just that they lose a valuable worker. It’s that they also have to pay statutory sick pay or SSP. When the absence is not legitimate, this payment adds insult to injury.

There are a couple of things you might consider doing. The first is setting out a clear sickness policy. This is a sort of code of behaviour you can refer to whenever there is a dispute. But you can also seek SSP guidance. Professional mediators are highly effective in resolving disputes concerning employee absence.

Employee Benefits

Many companies offer employee benefits in addition to basic wages. Often it’s win-win. The company can get a good deal on some employee perk, like a company car. And the worker is happy because they would have bought the car anyway. These sorts of deals are good news in one respect. But from the company’s point of view, they often end up costing more than if they’d paid a higher wage. Regardless, they’re a great way of retaining employees. Employees with company car benefits know that if they leave the company, they’ll have to buy their own car. And for many, that’s too big a hassle.

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